Taxes alone don't make or break a Mexican real estate investment, but not knowing them can cost you 30% more than necessary or land you in trouble with the tax authority. This guide gives you the full picture — from closing to sale — so you enter with clear numbers.
The three tax moments of a property
- At purchase: ISAI + notary fees + public registry + (foreigners) bank trust
- While you own it: annual property tax + HOA
- At sale or rental: capital gains income tax or rental income tax
1. Purchase taxes (closing)
ISAI — Real Estate Acquisition Tax
State tax, paid once at closing. Varies by state:
| State | ISAI | Tax base |
|---|---|---|
| Quintana Roo (Cancún, PDC, Tulum, Isla Mujeres) | 3-4% | Highest of sale price, cadastral value or appraisal |
| Yucatán | 2% | Operation value |
| Mexico City | Progressive 1.89-4.5% | Operation value |
| Jalisco | 2% | Operation value |
| Baja California Sur (Los Cabos) | 2% | Operation value |
In Quintana Roo, for a $5M MXN property (~$280K USD), ISAI is $150,000–$200,000 MXN (3-4% — that's ~$8,400–$11,200 USD). It's the buyer's responsibility, not the seller's.
VAT — does it apply?
Quick rule:
- Residential housing: no VAT — neither national nor foreign
- Land: no VAT (non-commercial real estate)
- Commercial property (offices, warehouses, retail): 16% VAT
- Mixed-use property: VAT only on the commercial portion
Notary fees and public registry
Mandatory but not taxes — they're fees. The notary collects ISAI, registry rights, certificates, and coordination taxes:
- Notary fees: 0.5-1% of operation value
- Public registry rights: 0.2-0.5%
- Certificates (free-of-liens, no property tax debt, water): $170-$450 USD
- Tax appraisal: $450-$1,100 USD
Bank trust (foreigners only)
Only foreigners buying in restricted zone (50 km from coast or 100 km from border — all of Riviera Maya falls here). Not a tax but a mandatory fiduciary contract under the Mexican Constitution:
- Setup cost (SRE permit + opening): $2,800-$4,500 USD
- Annual cost (management): $850-$1,400 USD
For full fideicomiso details, see our bank trust guide.
2. Taxes while you own the property
Property tax (predial) — annual
| Municipality | Tax rate | Example ($5M MXN cadastral) |
|---|---|---|
| Benito Juárez (Cancún) | 0.15-0.30% | $7,500 – $15,000 MXN/year |
| Solidaridad (Playa del Carmen) | 0.10-0.25% | $5,000 – $12,500 MXN/year |
| Tulum | 0.14-0.28% | $7,000 – $14,000 MXN/year |
| Isla Mujeres | 0.12-0.25% | $6,000 – $12,500 MXN/year |
Tip: municipalities offer 15-20% discount for annual prepayment in January or February. Your property manager can handle it.
Income tax on rental income
If you rent your property (long-term or Airbnb), you create a taxable event. The scheme depends on how you rent:
| Rental type | Automatic withholding | Additional obligations |
|---|---|---|
| Airbnb/Booking (platform) | Platform withholds 16% VAT + 4-10% income tax | RESICO Plataformas if you want RFC |
| Long-term with RFC | Tenant withholds 10% (if corporate) | Monthly + annual declaration |
| Long-term without RFC (non-resident foreigner) | Tenant withholds 25% | Declaration via representative |
Lodging tax (Quintana Roo)
All lodging services in Quintana Roo pay an additional 3.5% that the platform (Airbnb, Booking) must collect and remit. If you rent off-platform, you are personally responsible.
3. Taxes at sale — the big question
This is where most foreigners lose money by not planning. Capital gains tax can be brutal if you don't meet residency requirements.
Mexican tax resident
If you have RFC with a Mexican fiscal domicile and spend more than 183 days a year in Mexico, you qualify as a tax resident. Advantages:
- Progressive income tax rate (1.92% to 35%) on net gain (sale price − purchase price − investments − inflation)
- Primary residence exemption up to 700,000 UDIs (~$6.4M MXN in 2026) if held in your name for 3+ years
- You can deduct improvements, real estate commissions, notary fees
Non-tax resident
A foreigner who doesn't live in Mexico pays under the non-resident regime. Two options:
- Option A: 25% of total sale price (no deductions)
- Option B: 35% of net gain (with all deductions)
The notary helps you choose the cheaper option. Generally, option A works if your gain is low; option B if appreciation was high.
Real example: property bought for $200,000 USD 5 years ago, sold for $300,000 USD. Gross gain: $100,000 USD. Option A: 25% of $300K = $75K. Option B: 35% of ~$75K (after deductions) = $26K. Option B saves $49K.
Inheritance / succession
Mexico has no inheritance tax. Heirs don't pay income tax on receiving property, but they do pay ISAI on transfer (3-4% in QRoo). If you structured the purchase through a fideicomiso, beneficiary transfers are shielded.
Total tax cost summary
For a $5M MXN property in Quintana Roo bought by a foreigner, total taxes across the full cycle:
| Moment | Item | Amount (MXN) |
|---|---|---|
| Closing | ISAI 3.5% | $175,000 |
| Closing | Notary + registry | $60,000 |
| Closing | Initial fideicomiso | $70,000 |
| Annual (5 yrs) | Property tax 0.20% × 5 | $50,000 |
| Annual (5 yrs) | Fideicomiso × 5 | $100,000 |
| Sale | Income tax option B (35% net gain $2M) | ~$700,000 |
| Total 5-year cycle | ~$1,155,000 MXN |
That 23.1% of initial value is the "total tax cost" over the full cycle. Sounds high, but spread across 5 years with $2M appreciation it's a fraction of the return. Well-planned sale timing can cut income tax by 30-50%.
Final recommendations
- Hire a Mexican CPA specializing in real estate, not your home country CPA
- Get your RFC from day one even as a foreigner — it opens doors
- Save every receipt for improvements, commissions, expenses — you deduct these at sale
- Always declare rental income — SAT cross-references Airbnb and Booking
- Plan the sale 6-12 months ahead to optimize regime