Capital Gains Tax When Selling Property in Mexico: ISR, Exemptions and How to Lower the Taxable Base Legally

Selling a condo in Playa del Carmen, a villa in Tulum or an apartment in the Cancún Hotel Zone almost always produces one unwelcome surprise at the notary’s table: the Mexican income tax on the transfer of real estate, which everyone in the Riviera Maya calls “plusvalía” in daily conversation. It is the single largest tax cost of a property sale in Mexico, and it is also the cost that depends most on how you prepared the transaction years before you ever sat down to sign.

This guide explains, with the exact references from the Ley del Impuesto sobre la Renta (LISR, Mexico’s income tax law), the Código Fiscal de la Federación (the Federal Tax Code) and the Ley de Hacienda del Estado de Quintana Roo (the state revenue law), how that tax is calculated, who withholds it, which deductions reduce the taxable gain, when the sale of your primary residence is exempt up to 700,000 UDIs, how the arithmetic changes if you are a non-resident, and what makes Quintana Roo different thanks to its 5% state cedular tax. It is written for owners who bought either to live or to invest and now want to sell well — without shocks, and without paying a peso more than the law requires.

What follows is general information from a team that works every day in the municipalities of Playa del Carmen (called Solidaridad until 2025), Tulum and Benito Juárez. It is not a tax opinion on your specific case. Before you accept an offer, validate the numbers with the notario público who will formalize the sale and with your accountant — and, if you are American, Canadian or British, with your tax adviser at home as well.

Key takeaways in nine points

• There is no such thing as a “plusvalía tax” in Mexico. What you actually pay is ISR on the transfer of assets (LISR, Title IV, Chapter IV), calculated on the gain, not on the price.
• The gain is the sale price minus the authorized deductions: acquisition cost indexed for inflation, improvements, notary fees, taxes and registry duties on both deeds, appraisals and commissions (LISR, art. 121).
• If the property is your primary residence (casa habitación), the sale is exempt up to 700,000 UDIs, once every three years, formalized before a notary and documented with proof of address (LISR, art. 93, section XIX; Reglamento, arts. 154 and 155).
• The notario público calculates the provisional payment under his own professional responsibility, withholds it from the price and remits it within fifteen days of signing (LISR, art. 126).
• Quintana Roo additionally charges a 5% state cedular tax on the same taxable base, withheld by the notary; that payment is credited against the federal provisional ISR (Ley de Hacienda del Estado, arts. 19 to 26 Bis; LISR, art. 127).
• A seller who is a tax resident abroad pays 25% on gross proceeds or, when the sale is recorded in a public deed, may elect the top marginal rate of the individual tax table on the net gain (LISR, art. 160).
• Selling through a bank trust (fideicomiso) or through a Mexican corporation does not escape the tax; it only changes who the taxpayer is and which title of the law applies.
• Sales of land and of buildings used as dwellings do not attract IVA (value added tax); sales of retail units, offices or hotel-use units do (Ley del IVA, art. 9).
• Every deductible peso needs a Mexican tax invoice (CFDI) or a deed to support it. Planning your sale begins on the day you buy.

“Plusvalía” is not a tax: what is actually being taxed

Mexico has no federal tax called plusvalía on the sale of real estate. The word travelled in from other tax systems and from the vocabulary of agents and developers, but what the notary withholds when you sign in Playa del Carmen or Tulum is the impuesto sobre la renta on income from the transfer of assets — governed by Chapter IV of Title IV of the LISR for resident individuals, and by article 160 of the same law for tax residents abroad.

The starting point is the definition of enajenación (transfer of ownership for tax purposes) in article 14 of the Código Fiscal de la Federación: every transfer of ownership, including sales with retention of title; adjudications, even in favour of a creditor; the contribution of a property to a company; certain transfers effected through a trust; and the assignment of the rights a person holds over assets held in trust. That last item is the one that catches most foreign owners in the Riviera Maya, who hold their condo through a bank trust for foreign buyers: when the beneficiary assigns those rights or instructs the trustee to transfer the property to a buyer, the law treats it as a taxable transfer.

Article 119 of the LISR points back to that catalogue and adds three things every seller should know. First, in a swap there are two transfers, each with its own calculation. Second, the income is the total consideration obtained, including any portion agreed on credit; and where there is no consideration, the value of an appraisal performed by a person authorized by the tax authority is used instead. Third, transfers by death, by gift and by corporate merger are not treated as income from a transfer. Inheriting your parents’ house in Cancún does not trigger this tax; selling it afterwards does, with special rules for determining cost that we cover below.

It is worth fixing the central idea now: the tax is calculated on the gain — the difference between what you receive and what the law allows you to subtract. A high price does not automatically mean a high tax bill; a poorly documented purchase almost always does.

Who pays: tax resident, non-resident and other structures

The first question your notary asks is not what your condo is worth. It is where you are resident for tax purposes. That answer determines which chapter of the law applies, which rate you face and which deductions you may take.

Tax residency under the Federal Tax Code

Article 9 of the Código Fiscal de la Federación treats as residents in Mexico those individuals who have established their home (casa habitación) in the country. If they also have a home in another country, they are Mexican residents when their centre of vital interests is in Mexican territory — which happens, among other cases, when more than 50% of their total annual income has its source of wealth in Mexico, or when the main centre of their professional activities is here. Mexicans by nationality are presumed resident in Mexico unless proven otherwise, and anyone who ceases to be a resident must file a notice with the tax authority within the 15 days preceding the change and evidence their new tax residency; whoever fails to evidence it keeps Mexican tax residency status.

This has very practical consequences on the Riviera Maya. A Canadian who winters in a Playacar condo but keeps his home, his job and his income in Toronto is, almost certainly, a resident abroad. A retired couple from Manchester who sold up in the UK, obtained permanent Mexican immigration residency, live year-round in Tulum’s Región 15 and run a small local business will be Mexican tax residents even if they still own a flat in England. Immigration residency and tax residency are not the same thing, though they tend to converge once real life moves to Mexico.

Resident individuals: Chapter IV of Title IV

If you are a Mexican tax resident selling a property that is not part of a business activity, you are taxed under the transfer-of-assets regime in articles 119 to 128 of the LISR: a provisional payment withheld by the notary, authorized deductions, the possibility of the primary-residence exemption, and the obligation to include the transaction in your annual return.

Residents abroad: Title V

If you are not a Mexican tax resident, the source of wealth is in Mexico because the property is here (LISR, art. 160, first paragraph) and Title V applies, with the general rule of 25% on gross income and the option to be taxed on the gain when the sale is recorded in a public deed. We devote a full section to this scenario because it is by far the most common among foreign sellers in Tulum, Playa del Carmen and Puerto Aventuras.

Companies and individuals with business activity

When the seller is a Mexican corporation — for example the entity many foreigners incorporate to buy in the restricted zone through a Mexican company for rental purposes — the sale is not governed by Chapter IV: the property is a company asset, the profit flows into the taxable result and is taxed at the 30% corporate rate of Title II (LISR, art. 9), with no primary-residence exemption and no spreading of the gain across years of ownership. Something similar happens with an individual whose property is allocated to a business activity: the Ley de Hacienda del Estado de Quintana Roo relieves the notary of calculating and remitting the cedular tax when the seller declares before him that the property forms part of the assets of his business activity and attaches to the deed a current certificate of state tax obligations and the acknowledgement of the transfer notice issued by the SATQ (art. 24), precisely because the tax will be paid through another route.

How the gain is determined: authorized deductions

Article 121 of the LISR lists what a resident individual may subtract from the income of the sale. Each item has its own indexation rule and its own documentary requirement. This is the part of the law that saves you the most money — or costs you the most — depending on what you have kept in your file.

Deduction (LISR, art. 121)	What it covers	How it is indexed	Supporting document
I. Documented acquisition cost	What you paid for the property, excluding interest (art. 123)	Land by INPC; building depreciated 3% per year then indexed (art. 124)	Purchase deed (escritura) and the CFDI from the notary or developer
II. Investments in construction, improvements and extensions	Work that adds value; excludes maintenance	Same treatment as the building (art. 124)	CFDI from contractors and suppliers; construction permits and notices
III. Notary fees, taxes and duties	Fees and duties on the purchase deed and the sale deed, ISAI paid on purchase, appraisals, local transfer tax	INPC from the month of the expense to the month before the sale	CFDI from the notary, official receipts from the treasury and registry
IV. Commissions and brokerage	Commission paid to the agency on the purchase or on the sale	INPC from the month of the expense	CFDI from the agency or agent

The documented acquisition cost and its indexation

The cost is the consideration you paid, without interest or ancillary expenses (art. 123). Article 124 requires you to separate the cost of the land from the cost of the building; if the deed does not distinguish them, the land is deemed to be 20% of the total cost. The building is reduced by 3% for each year elapsed between acquisition and sale, but never below 20% of the initial cost, and the result is then indexed for inflation from the month of purchase to the month immediately preceding the sale. The land is indexed in full, with no depreciation. Inflation is measured with the Índice Nacional de Precios al Consumidor (INPC) published by INEGI.

Two practical consequences follow. First: in a newly built condo purchased from a developer in Tulum, most of the cost is building, and it will depreciate for tax purposes at 3% per year even while its market value rises. Second: the longer you hold, the more the inflation indexation works in your favour, because a historic cost is restated into today’s pesos. The law also sets a protective floor: the indexed cost of a property will never be less than 10% of the sale amount (art. 121, section I), which prevents an old deed with a token value from leaving the seller with no deduction at all.

Inheritance and gifts: the cost of the deceased or the donor

If you acquired the property by inheritance, legacy or gift, the acquisition cost and the acquisition date are those of the deceased or the donor; if they in turn received it for free, the same rule applies further back (art. 124). Where the gift itself triggered ISR, the cost is the appraised value used to calculate that tax. This explains why selling an inherited house in downtown Playa del Carmen — bought by parents decades ago on a deed showing a tiny value — can generate an enormous gain: inflation indexation helps, but the starting point is still that historic price.

Commissions and improvements: where the Riviera Maya loses money

In markets with a lot of informal brokerage, as in some segments of Tulum, the seller pays a meaningful commission and receives no invoice. Without a CFDI, section IV is a dead letter. The same happens with the kitchen remodel or the terrace extension done “off the books”: for the law, they never happened. Demand a Mexican tax invoice from the agency and from every contractor from day one; it is the difference between deducting and not deducting hundreds of thousands of pesos.

Losses on the sale

If deductions exceed income, there is a loss. Article 122 allows you to divide it by the years of ownership (up to ten) and offset the resulting portion against your other income of the year or of the following three years — excluding salary income and business and professional income — with specific crediting rules for the remainder. It is a useful mechanism for anyone selling at a genuine loss, which happens more often than marketing suggests, especially with pre-construction units resold too early.

From provisional payment to annual tax: how the calculation works

The tax on the gain is not a flat rate. The LISR uses a “de-accumulation” mechanism designed so that a gain built up over many years is not taxed as if it were the income of a single year.

The provisional payment withheld by the notary (art. 126)

In transactions recorded in a public deed, the notary calculates the provisional payment under his own professional responsibility and remits it within the fifteen days following signature. The procedure is as follows: the gain is divided by the number of years elapsed between acquisition and sale, capped at 20; an annualized tax table built from the monthly table of article 96, published by the authority in the Diario Oficial de la Federación, is applied to that quotient; and the resulting tax is multiplied by the same number of years. The notary must give you the details of the calculation (dates, historic and indexed cost, deductions, tax withheld) and issue the tax invoice showing the transaction and the tax remitted. The SAT page on the transfer-of-assets regime spells out the data that statement must contain.

The more years of ownership, the smaller the slice of gain exposed to each bracket of the progressive table, which in practice usually lowers the effective rate. Selling a Playa del Carmen condo after ten years rarely pays the same proportion as flipping one bought fourteen months ago.

The annual tax and the non-cumulative portion (art. 120)

As a resident, you must then include the sale in your annual return. The gain is divided by the years of ownership (capped at 20); that fraction is added to your other taxable income for the year and taxed under the table of article 152. The remainder — the non-cumulative portion — is multiplied by a rate you may choose between two methods: the effective rate of the year of sale, or the average of the effective rates of the last five tax years including the year of sale. If you had no taxable income in the four preceding years, the law lets you build that average rate as if you had accumulated the proportional part of the gain each year. The provisional payment withheld by the notary is credited against the annual tax; if it exceeded the annual liability, the balance in your favour may be claimed as a refund or offset under article 152.

For someone with low Mexican income — say a retiree living on a US or UK pension who sells a house in Puerto Morelos — the five-year average rate option can produce an annual tax noticeably lower than the amount withheld, with a right to a refund. It is worth running the numbers with an accountant before you consider the matter closed.

Instalment sales

Where the price is collected in instalments over a period longer than 18 months and the tax interest is secured, the tax on the non-cumulative portion may be paid in the years in which the income is actually received, in proportion to what is collected (art. 120, final paragraph). This is uncommon in the Quintana Roo residential market but relevant in private land sales.

The primary-residence exemption: 700,000 UDIs and its conditions

This is the most valuable tax benefit the LISR offers an individual, and the one most often misunderstood in the Riviera Maya. Article 93, section XIX, subsection a), exempts income from the transfer of the taxpayer’s casa habitación — the home they actually live in — provided the consideration does not exceed 700,000 unidades de inversión and the transfer is formalized before a notary or equivalent public officer.

What 700,000 UDIs means

The UDI (unidad de inversión) is a unit of account that Banco de México updates daily for inflation and publishes in the Diario Oficial and on its portal (series CP150). The cap is measured in UDIs, not pesos, so it adjusts automatically to the cost of living. A purely illustrative example: if on signing day the UDI were worth 8.50 pesos, the cap would be 5,950,000 pesos; at 9.00 pesos per UDI it would be 6,300,000 pesos. Check the exact value for the day on the Banxico site, because your notary certainly will.

The excess is taxed

If you sell your primary residence above the cap, you do not lose the exemption entirely: the gain is determined on the excess and both the annual tax and the provisional payment are calculated on it, taking the deductions in the proportion that results from dividing the excess by the total consideration (art. 93, section XIX, subsection a), first paragraph). Selling for 8,000,000 pesos a house that qualifies as a primary residence with a hypothetical cap of 6,000,000 means a quarter of the price is taxable, and a quarter of the deductions is used to compute that gain. The notary queries the SAT to confirm there were no previous exempt sales and files the notice of the transaction.

Once every three years, sworn before the notary

The exemption only applies if, during the three immediately preceding years, the taxpayer did not sell another primary residence using the same exemption — and this must be stated under oath (bajo protesta de decir verdad) before the notary. The notary is required to consult the SAT website to verify whether there was a previous exempt sale and to file notice of the new transaction, with the amount and, where applicable, the tax withheld. Lying in that statement is not a shortcut; it is a false declaration before a public officer with both tax and criminal consequences.

How you prove it was your home

Article 155 of the Reglamento de la LISR requires you to evidence to the notary that the property is your casa habitación with one of these documents, whose address must coincide fully, or in its essential elements, with the property sold: the INE voter credential; tax invoices for electricity or landline telephone service; or statements from financial institutions, department stores or non-bank credit cards. They may be in the name of the taxpayer, the spouse, or ascendants or descendants in a direct line, and the notary must record the situation in the deed.

Article 154 of the Reglamento adds a surface-area rule: the casa habitación comprises the land up to three times the area covered by the buildings. In a 200 m² house built on a 2,000 m² lot in the Tulum jungle, the exemption covers the building and 600 m² of land; the rest of the land is treated like any other taxable property.

Who can realistically use it

The exemption is designed for resident individuals who actually live in the property. A condo on Quinta Avenida run as a vacation rental, with electricity bills in the name of the property manager and no INE credential showing that address, is not a casa habitación no matter how many weeks a year its owner sleeps there. Co-owners are each taxed on their share, so a married couple under a joint marital property regime selling the family home should analyse the cap with their accountant considering each spouse’s proportion; review it case by case with the notary instead of assuming the outcome.

For foreigners who own through a fideicomiso, the question is more delicate: formal ownership sits with the trustee bank, and the non-resident regime of article 160 does not contemplate this exemption. Anyone who is a Mexican tax resident and genuinely lives in the property should raise the point with the notary and the trustee bank well in advance — not on the morning of signing.

The notary’s role in Quintana Roo: withholding, CFDI and filings

In a purchase and sale in Playa del Carmen, Tulum or Cancún, the notario público is not merely the person who drafts the deed. The law turns him into the calculator, withholding agent and filer of the seller’s taxes, with personal responsibility attached. Understanding his obligations helps explain why he asks for so many documents and why a closing cannot be improvised; our guide to the notary process and closing in Quintana Roo describes the full sequence.

Calculation and remittance within fifteen days

Under article 126 of the LISR, in transactions recorded in a public deed the notary calculates the tax under his own responsibility, remits it to the authorized offices within the fifteen days following signature, delivers the calculation details to the seller and issues the tax invoice evidencing the transaction and the tax withheld. Article 127 imposes the same duty for the payment to the state, and article 160 for sales by residents abroad — even where no tax is payable, in which case a return is filed anyway.

The CFDI with the notary complement

When the seller is an individual who is not required to issue invoices for the sale, the notary issues the CFDI (the Mexican digital tax invoice) for the transaction with the complemento para notarios públicos published by the SAT. That document is what will allow the buyer to prove their acquisition cost when they sell in turn. If you bought after this complement became standard and your notary did not issue it, fixing it now will be hard; if you are about to buy, insist on it.

DeclaraNOT and reporting to the SAT

Notaries file the informative return for notaries and other public officers (DeclaraNOT en línea) with details of the transfers and acquisitions in which they intervene, within the deadlines set by the LISR and the Resolución Miscelánea Fiscal and detailed on the SAT website, in addition to the query and notice relating to the primary-residence exemption. Whatever you declare before the notary is cross-checked against your RFC (Mexican tax ID).

Anti-money-laundering rules and cash limits

The Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita classifies the notarial certification of transfers of real property rights as a vulnerable activity and obliges the notary to file a report when the price, the cadastral value or the market value — whichever is highest — equals or exceeds 8,000 times the daily value of the UMA (art. 17, section XII, part A, subsection a). Real estate intermediaries have their own reporting obligation from 8,025 UMAs (art. 17, section V). And article 32 prohibits settling the transfer of real property rights in cash when the value equals or exceeds 8,025 UMAs. Separately, article 128 of the LISR requires the seller to report to the SAT any consideration received in cash, gold or silver above 100,000 pesos. The operational conclusion: the price is paid by identifiable bank transfer, ideally through an escrow or secure payment arrangement, and the notary will record the method of payment in the deed.

The Quintana Roo cedular tax (5%) and how it is credited

Here is the local twist that sellers arriving from other Mexican states rarely expect. The Ley de Hacienda del Estado de Quintana Roo, in its Second Section “Del Impuesto Cedular por la Enajenación de Bienes Inmuebles”, establishes a state tax payable by individuals who receive income from the transfer of real estate located within the state (arts. 19 and 20).

Base, rate and payment

The taxable base and the exemptions are determined in accordance with the general provisions and with Chapter IV of Title IV of the LISR and its Reglamento (art. 21). In other words: the same gain the notary calculates for federal ISR, with the same deductions and, where applicable, with the primary-residence exemption, which the state law itself replicates up to 700,000 UDIs, instructing the notary to determine the gain on the excess using proportional deductions (art. 26). A rate of 5% is applied to that base for each transaction (art. 22), and the tax is remitted by return within the fifteen days following the transfer, using the forms approved by the Secretaría de Finanzas y Planeación through the SATQ, the Quintana Roo tax administration service (art. 23).

Notarial withholding and joint liability

In transactions recorded in a public deed, notaries calculate and withhold the cedular tax under their own responsibility and remit it within the fifteen days following signature (art. 24). The law makes them jointly liable for the payment, together with any state public officials and employees who authorize any procedure related to the transfer without confirming that the tax was paid (art. 26 Bis, added in 2024). That is why no notary in Playa del Carmen or Cancún will skip this withholding, and why you should build it into your closing budget from the start.

Why it is usually not an extra cost

Article 127 of the LISR is the piece that makes the scheme coherent: taxpayers who transfer land or buildings make a 5% payment on the gain to the state where the property is located, and that payment is creditable against the federal provisional payment on the same transaction. Where the 5% state amount exceeds the federal provisional payment, only the tax resulting under article 126 is remitted to the state. In practical terms, the Quintana Roo cedular tax redistributes to the state a portion of the ISR you would owe anyway, without doubling the burden in the normal scenario. What does change is the logistics: two returns, two remittances and two statements you must keep for your annual filing.

A note on the buyer’s ISAI

The seller does not pay the acquisition tax on real estate, but it is worth understanding because it affects the negotiation and the buyer’s total budget. Quintana Roo has no single rate: each municipality with its own revenue law sets its own, and the rest are governed by the Ley del Impuesto sobre Adquisición de Bienes Inmuebles de los Municipios del Estado. In the municipality of Playa del Carmen (called Solidaridad until 2025), the municipal revenue law calls this tax ISABI and calculates it by applying a 4% rate to the highest of the agreed price indexed for inflation, the cadastral appraisal and the appraisal by a valuer registered in the state registry — the latter two no more than 180 days old (arts. 23 Quáter and 23 Quinquies; the rate rose from 3% to 4% with the reform published in the state official gazette on 10 December 2025). Tulum also applies 4% under article 50 of its own municipal revenue law, amended on the same date, and Benito Juárez sets its rate in its own revenue law. Because these rates have moved several times in a few years, the one in force on signing day is confirmed by the notary with the municipal treasury, so do not take it as given when negotiating who absorbs which cost. Our guide to closing costs, ISAI, notary fees and predial develops the topic from the buyer’s side. For you as a seller, the ISAI you paid when you bought is an authorized deduction today (LISR, art. 121, section III), provided you still have the receipt.

Non-resident sellers: 25% on gross or the top rate on the gain

Most foreign owners in the Riviera Maya who do not live in Mexico are taxed under article 160 of the LISR. Understanding it properly can be the difference between handing over a quarter of the price and handing over a far smaller fraction.

The general rule: 25% of total income

The tax is determined by applying 25% to the total income obtained, with no deduction whatsoever. If the buyer is resident in Mexico, or a resident abroad with a permanent establishment in the country, the buyer must withhold; if not, the seller remits the tax by return within the fifteen days following receipt of the income. It is a simple rule and, for anyone who bought recently or paid a full price, a very expensive one: it taxes the price, not the profit.

The election: top marginal rate on the net gain

Taxpayers who have a representative in Mexico meeting the requirements of article 174 — and provided the sale is recorded in a public deed — may elect to apply to the gain the maximum rate for the excess over the lower limit of the table in article 152 (35% under the table in force). The gain is determined under the rules of Chapter IV of Title IV, that is, with the same indexed deductions available to a resident, although without the ability to offset losses from other transactions. The law clarifies that where the sale is recorded in a public deed no representative is needed to make the election; the notary calculates the tax under his own responsibility, records it in the deed and remits it within the fifteen days following signature, filing a return even where no tax is payable.

The logic is straightforward: 25% of the gross price versus 35% of the net gain. Where the gain is less than five-sevenths of the price, the election is better; where the gain is larger, the general rule may be preferable. In practice, almost every seller of a condo in Playa del Carmen or Tulum who kept the purchase deed, the developer’s CFDI and the invoices for improvements comes out ahead with the election. Anyone who bought in pre-construction at a very low price and is selling after extraordinary appreciation should run both numbers with the notary before deciding.

A detail that catches out sellers who think in dollars

Riviera Maya contracts are usually negotiated in US dollars, but the tax is computed in pesos: the purchase price is converted at the exchange rate of its date, and the sale price at the rate on the date of the transfer. If the peso weakened between the two dates, you can have a taxable gain in pesos even though in dollars you barely recovered your investment; if the peso strengthened, the reverse happens. Ask the notary for the calculation in both currencies so you understand what you are actually paying.

The article 174 representative and the RFC

Where the transaction takes place outside a public deed — for instance the assignment of rights under a pre-construction contract before delivery — the election requires a representative resident in Mexico who keeps the documentation for five years, assumes joint liability and has sufficient assets to respond (art. 174). With a public deed, the notary occupies that space. In both cases the notary will ask for a tax identification: many foreign sellers obtain an RFC as residents abroad, and failing that the notary uses the generic code provided for in the SAT rules.

Appraisals, gratuitous acquisitions and instalment payments

If the tax authority carries out an appraisal and it exceeds the agreed consideration by more than 10%, the difference is treated as income of the non-resident acquirer and taxed at 25% with no deduction (art. 160). Gratuitous acquisitions by non-residents pay 25% on the appraised value, except gifts between spouses and those received by descendants from ascendants in a direct line, which are exempt under article 93, section XXIII, subsection a). And in deeded sales with payment in instalments over more than 18 months, the tax may be paid as each payment falls due, provided the tax interest is secured. With that 25% on the appraisal difference on the horizon, deeding at a price below the real one is never a good idea — for either party.

Foreigners, fideicomiso and Mexican corporations: how the tax picture changes

The legal structure you used to buy determines who the taxpayer is and under which regime the sale is taxed. None of the lawful routes to acquire in the Quintana Roo coastal strip avoids the tax; each has its own mechanics.

Selling a property held in a bank trust

When the beneficiary assigns their rights or instructs the trustee to transfer the property to the buyer, the Código Fiscal de la Federación (art. 14, section VI) deems that the beneficiary acquired the asset when designated and transfers it when assigning or instructing. Article 126 of the LISR specifies that those who obtain income from the assignment of settlor or beneficiary rights over real estate calculate and remit the provisional payment under the general rules. If you are a tax resident, you are taxed under Chapter IV; if not, under article 160, with the election on the gain where the transaction is recorded in a public deed — which it normally is, because the trustee requires notarial intervention.

Three operational particularities: the trustee bank charges fees for the assignment or termination of the fideicomiso and requires the annual fees to be current; the foreign buyer may elect to substitute you as beneficiary within the same trust, with the bank’s authorization, or set up a new one with their own permit from the Secretaría de Relaciones Exteriores; and banking timelines stack on top of notarial ones, so plan the closing with several weeks of margin.

Selling through a Mexican corporation

If the property belongs to a company, there are two paths. The company sells the property: the profit forms part of its taxable result and pays 30% (LISR, art. 9), and if the property is not a dwelling — a retail unit or a hotel-operated apartment, say — the building attracts IVA even though the land does not (Ley del IVA, art. 9, sections I and II); distributing the money afterwards to foreign shareholders as a dividend has its own treatment. The alternative is to sell the shares of the company, which moves the transaction into the share-transfer regime, with its own rules for residents and non-residents and a far more demanding corporate due diligence for the buyer. Both paths require an accountant and a tax lawyer; neither gets resolved at the notary’s office in a single afternoon.

IVA: when it applies and when it does not

For a private seller of a home, the question is simple: the transfer of land and of buildings attached to the land intended for or used as dwellings does not pay IVA (Ley del IVA, art. 9, sections I and II). Hotels are expressly excluded from the exemption, and where use is mixed only the portion used as a dwelling is exempt. In Riviera Maya condominiums operated as hotel-condos or holding a hotel licence, this point deserves a specific review before you set the price, because IVA on the building changes the buyer’s arithmetic.

Double taxation treaties and relief in your home country

Paying ISR in Mexico does not necessarily mean paying twice. Mexico has an extensive network of treaties for the avoidance of double taxation in force, whose texts the SAT publishes in its tax treaties section. The United States, Canada, Spain, Italy, France, Germany and the United Kingdom, among many others, have a treaty in place.

In most of these treaties, following the OECD model, gains derived from the transfer of immovable property may be taxed in the State where the property is situated; the seller’s country of residence then eliminates the double taxation by granting a credit for the tax paid in Mexico or through an exemption, depending on its domestic law. For a US resident this usually translates into a foreign tax credit on the federal return; for a Canadian, into a credit against tax on the capital gain; for a UK resident, into relief against the capital gains tax charge on a foreign property. The exact mechanisms, credit limits and currency conversion rules depend on each country and on each personal situation, so coordinate your Mexican accountant with your tax adviser at home before the sale, not after it.

What does depend on you is the evidence: keep the sale deed, the withholding statement and the notary’s CFDI showing the tax remitted, both federal and state. Without those documents, the credit in your country of residence can be denied for lack of support. And remember that the treaty does not alter the Mexican mechanics: the notary will withhold under the LISR regardless of what you do afterwards at home.

Lawful planning: how to reduce the taxable base without risk

Reducing the tax legally is not about tricks at the notary’s office. It is about building documented deductions and meeting the requirements of the exemptions well in advance. These are the levers the law itself hands you.

1. Deed the purchase at the real value

Every peso missing from your purchase deed is a peso of extra gain when you sell. Deeding below the price to save ISAI on the purchase is a loan at a punishing interest rate, repaid at the sale — and it exposes both parties to the consequences of an appraisal exceeding the agreed price by more than 10% (LISR, arts. 125 and 160) and to anti-money-laundering law. If you are buying now, for instance a condo for sale in Playa del Carmen, this single decision matters more than any negotiation over fees.

2. Keep and demand tax invoices

Purchase deed with its CFDI, ISAI and registry duty receipts, appraisal invoice, brokerage commission invoice, invoices for every improvement and extension. Build a physical and digital file from day one and update it every time you invest in the property. The notary will deduct only what he can see.

3. Distinguish improvements from maintenance

The law deducts investments in construction, improvements and extensions — not maintenance expenses (art. 121, section II). Replacing the flooring, enclosing a terrace, building a pool or adding a room are investments; painting, waterproofing or repairing the air conditioning are maintenance. Ask your contractor for invoices with clear descriptions, and keep the permit or construction notice from the municipal urban development office whenever the work requires one.

4. Meet the primary-residence requirements in time

If you genuinely live in the property, update the address on your INE credential, put the electricity and landline in your name, and have your bank statements sent there. These are the documents of article 155 of the Reglamento and they must exist before the sale, not be manufactured for it. Respect the three years between exempt sales and, if you sell above the 700,000 UDI cap, have your deductions ready because they will be applied to the excess.

5. Use time and indexation to your advantage

Dividing the gain by the years of ownership and indexing the cost for inflation both reward patience. If the difference between selling in December and selling in January crosses an anniversary of your acquisition, the number of years in the calculation changes. Check with the notary how the years are counted in your specific case before you fix the signing date.

6. Choose the right regime if you are a non-resident

Always compare 25% on the gross price with the top marginal rate on the net gain. Gather the cost documentation in advance, because the election is only as good as the deductions you can prove. If you bought in pre-construction, make sure you have the developer’s CFDI for the full price and not only for the deposit.

7. Review the notary’s calculation and plan your annual return

The notary calculates under his own responsibility, but he works with the data you hand him. Ask for the draft calculation several days ahead and verify dates, historic values, indexation factors, deductions taken into account and the state withholding; an error is easy to correct before signing and very hard afterwards. As a resident, the sale flows into your annual return, and there you choose between the two rate options for the non-cumulative portion: if your other income is low, the annual tax may be lower than the amount withheld and generate a balance in your favour.

What is not lawful planning: simulating a gift in order to sell later at an appraised cost, declaring a vacation rental unit to be a primary residence, artificially splitting the price between the deed and “furniture” to lower the base, or fragmenting a single transaction across several deeds. Those practices are detected through SAT cross-checks, DeclaraNOT and anti-money-laundering reports, and they turn a tax bill into a problem.

Worked examples, step by step

The following cases use hypothetical figures chosen to illustrate the mechanics — not market values, and not results you should expect in your own transaction. Indexation factors, monthly tax tables and the UDI value all change; the notary will apply those in force on signing day.

Case A: a Mexican tax resident sells an investment condo in Playa del Carmen

Suppose you bought a condo in the Gonzalo Guerrero area exactly six years ago for 3,000,000 pesos, deeded at its real value, and you sell it for 5,000,000 pesos. It was never your primary residence, so no exemption applies.

1. Acquisition cost. The deed does not separate land from building, so the land is taken at 20% (600,000) and the building at 80% (2,400,000). The building is reduced by 3% for each of the six years (18%), leaving 1,968,000 before indexation. Applying a hypothetical indexation factor of 1.30 to both the land and the depreciated building, the indexed cost would be roughly 3,338,000 pesos.
2. Other deductions. ISAI, notary and registry paid on the purchase, 180,000 pesos with receipts; a terrace extension with CFDI, 150,000 pesos; sales commission with CFDI, 250,000 pesos. With hypothetical indexation factors, those come to about 640,000 pesos indexed.
3. Gain. 5,000,000 minus 3,338,000 minus 640,000: around 1,022,000 pesos.
4. Federal provisional payment. The gain is divided by six years (about 170,000 pesos per year); the notary applies the annualized table built from article 96 to that amount and multiplies the result by six. The effective rate comes out far below what the same gain would suffer if taxed all at once.
5. State cedular tax. 5% of 1,022,000: 51,100 pesos, withheld by the notary and remitted to the SATQ, creditable against the federal provisional payment.
6. Annual return. The cumulative portion (one sixth of the gain) is added to your other income; the non-cumulative portion is taxed at either the effective rate of the year or the five-year average, whichever suits you, and the withholdings are credited.

Compare that with the same condo deeded back then at 1,800,000 pesos “to save on ISAI” and with no invoice for the commission: the taxable gain would balloon, and the initial saving would be repaid several times over.

Case B: a non-resident couple sells a Tulum villa held in a fideicomiso

A couple resident in the United States bought a villa in Aldea Zama four years ago through a fideicomiso for the equivalent of 6,000,000 pesos at the exchange rate of the time, with a developer’s CFDI for the full price, and now sell it for 7,500,000 pesos before a notary.

• General rule (25% on gross): 25% of 7,500,000 = 1,875,000 pesos, with no deductions at all.
• Election on the gain: with the indexed cost (applying the building depreciation and a hypothetical inflation factor), the closing costs of the purchase and the sales commission with CFDI, assume a gain of 1,100,000 pesos (the trustee bank’s fees are not among the deductions of article 121, so they are not subtracted). The top rate of the table (35% under the current one) on that gain gives 385,000 pesos.

The gap between the two scenarios is enormous, and all of it rests on the existence of documents. Because the sale is recorded in a public deed, no Mexican representative is required to make the election; the notary calculates, records the tax in the deed and remits it within fifteen days. The state revenue law subjects to the cedular tax individuals who transfer real estate in Quintana Roo without distinguishing by residency, so the notary will also determine whether it applies and how it is calculated in this transaction. Back home, the couple will document the Mexican tax paid to support the foreign tax credit under the treaty and their domestic rules. A Canadian couple in the same position would follow the equivalent path with their own credit, and a British couple would look at relief against their UK capital gains charge.

Common mistakes when selling in the Riviera Maya

• Believing “plusvalía” is a fixed percentage of the price. For residents it is a progressive table applied to the de-accumulated gain; for non-residents there are two alternatives. Any round number quoted to you without sight of your purchase deed is a guess with no basis.
• Discovering the withholding on signing day. The tax is deducted from the price at the notary’s office. If you have a mortgage to pay off or a chained purchase, the cash flow may not close. Ask for the preliminary calculation before you accept the offer.
• Not having the CFDI from your purchase. Especially with pre-construction units delivered years ago: the developer should have invoiced the full price. If all you have is the private contract and the transfer receipts, the notary may limit the deduction to the value shown in your deed.
• Paying commissions and renovations without invoices. These are lost deductions, and they can represent a very significant share of the taxable gain.
• Confusing immigration residency with tax residency. Holding temporary residency does not automatically make you a tax resident, nor the other way round. The notary will apply the regime that matches your real situation and may ask for a certificate of tax residency from the other country.
• Assuming the primary-residence exemption covers a vacation rental condo. Without the article 155 documents in your name showing that address, it does not apply — and asserting it under oath is a serious risk.
• Ignoring the exchange rate. Selling “at no profit” in dollars can be a sale with a gain in pesos, and the ISR is computed in pesos.
• Deeding below the real price to “help” the buyer. Beyond the appraisal risk and anti-money-laundering exposure, you leave the buyer with a low tax cost that they will pay for when they sell, and yourself with a price difference that has no legal protection.

Document checklist before you sign the sale

Assembling the file before you list the property speeds up the closing and maximizes your deductions. For anyone choosing an agency, the ability to prepare this file together with the notary is a good indicator of professionalism; that is how we work at tu inmueble en Playa, and you can write to us through our contact page to review your case with the notary before you go to market.

Title and registry status

• Purchase deed (escritura) with its registration details at the Registro Público de la Propiedad y del Comercio of Quintana Roo; if you have doubts about liens or annotations, see our guide to title due diligence and the public registry.
• Trust agreement and paid annual fees, where applicable; letter from the trustee bank with the requirements for assignment or termination.
• Articles of incorporation, powers of attorney and tax status of the company, if the property belongs to a legal entity.

Deductions

• CFDI for the purchase (from the notary with the complement, or from the developer) for the full price.
• Official receipts for ISAI, registry duties and notary fees on the purchase; appraisal invoice, if there was one.
• Invoices for construction, improvements and extensions, with permits or construction notices where applicable.
• Invoice for the brokerage commission on the purchase, and the sales commission agreement with the agency that will issue a CFDI.

Primary-residence exemption (if applicable)

• INE credential showing the property address, or an electricity or landline CFDI, or bank statements with that address, in your name or that of your spouse or of ascendants or descendants in a direct line.
• Dates of any previous exempt sale, to confirm that more than three years have passed.

Tax and administrative status

• RFC and certificate of tax status; for non-residents, a certificate of tax residency from your country and, where relevant, the representative’s details.
• Certificate of no outstanding predial (the municipal property tax) from the municipal treasury of Playa del Carmen, Tulum or Benito Juárez as applicable, cadastral record, and no-debt certificates for water and condominium fees.
• Official ID, CURP, marriage certificate or marital property agreement where applicable.

Before signing

• The notary’s draft calculation: federal provisional payment, state cedular tax, deductions taken into account and exchange rate applied.
• Payment instructions by bank transfer and, if the foreign buyer uses one, the escrow conditions.
• A plan for the annual return and, if you are a non-resident, for claiming relief at home.

Closing thought: selling well starts when you buy

Selling well in the Riviera Maya is, to a large extent, a matter of having bought well and having kept every piece of paper. If you are thinking of putting your property on the market, or of buying another one to invest in vacation or long-term rentals, start with the tax file and with a conversation with the notary. Everything else, including the price, is negotiated better once you know exactly how much you will receive.