Capital Gains Tax: A foreigner who sells property in Mexico is liable under special rules, much like the United States, for the payment of I.S.R. tax (Impuesto Sobre la Renta) which is the Mexican equivalent of the Capital Gains tax. Liability is either 20% of the declared value of the transaction or 28% to 30% of the net gain, less the improvements made, commissions paid, and other allowable expenses. The formula is complicated and the tax should be figured both ways and confirmed by the Notary Public who will be preparing the final deed and tax declarations.

Understanding Mexican tax law is an integral part of the purchasing process. What you do today dictates your tax liabilities tomorrow.

The following is an overview of the capital gains tax regulations currently in place for individuals. Note that the information is intended for individuals, not corporations. Over time these regulations may change, therefore it is important to make sure that the process outlined here is still in effect by contacting a certified accountant or a Mexican Notario.