Countries › Mexico › Guide › 11. Real estate and land › Selling property: income tax for resident individuals and non residents, the 700,000 UDI home exemption, the 5 percent state payment and notary withholding

Selling property: income tax for resident individuals and non residents, the 700,000 UDI home exemption, the 5 percent state payment and notary withholding

Argentina. For full detail on Argentina, go to The Argentine Thread.

Last verified: 2026-10-26 · Status: Stable

Resident individuals pay income tax on the gain from selling property, spread over up to 20 years of holding, with inflation adjusted cost, a 3 percent a year reduction of the building cost and a minimum cost of 10 percent of the price; the notary computes and pays the provisional tax within 15 days. The sale of one's own home is exempt up to 700,000 UDIs per sale, once every three years, if done before a notary; on top, a 5 percent payment on the gain goes to the state and is credited. Non residents pay 25 percent of the gross price, or 35 percent of the gain if the sale is by public deed; a Mexican tax appraisal above the price by over 10 percent creates taxable income for a foreign buyer.

USD conversions use MXN 18.6638 per US dollar, the US Federal Reserve H.10 noon buying rate in New York for 23 October 2026 (FRED series DEXMXUS), the latest observation available when this page was verified. Legal conversions in Mexico use the Banxico FIX, which differs slightly. Conversions are for orientation only.

Key facts

Tax on a non resident's sale of Mexican real estate, gross basis	25 %LISR art. 160, as of 2026-10-26 · in force
Optional tax on a non resident's gain when sold by public deed (top rate of LISR art. 152)	35 %LISR arts. 152 and 160, as of 2026-10-26 · in force
Payment on the gain from a real estate sale to the state, creditable	5 %LISR art. 127, as of 2026-10-26 · in force
Home sale exemption cap per sale, resident individuals	700000 UDIsLISR art. 93, section XIX a), as of 2026-10-26 · in force
Years that must pass between uses of the home sale exemption	3 yearsLISR art. 93, section XIX a), as of 2026-10-26 · in force
Annual reduction of building cost for gain computation (floor 20 percent of cost)	3 % per yearLISR art. 124, as of 2026-10-26 · in force
Minimum adjusted cost of real estate as a share of the sale price	10 %LISR art. 121, as of 2026-10-26 · in force
Days after signing for the notary to pay the seller's provisional tax	15 daysLISR arts. 126 and 160, as of 2026-10-26 · in force

The rule

1. Resident individuals: how the gain is computed. The seller deducts the cost of acquisition, the cost of construction, improvements and additions, notary fees, taxes and duties on the purchase and sale deeds paid by the seller, the local tax on the sale, appraisal costs and commissions. For real estate, the land portion is separated (20 percent of total cost if it cannot be separated); the building cost is reduced by 3 percent a year down to a floor of 20 percent; land and building costs are then adjusted for inflation; and the adjusted cost is at least 10 percent of the sale price. Losses on real estate may be used in the year and the next three.
Cost to do it: Deductible costs include the seller's notary fees, local taxes and appraisal costs (art. 121, section III).
Example: A building bought 10 years ago for MXN 2,000,000 of construction cost is reduced by 30 percent to MXN 1,400,000 before inflation adjustment (art. 124, section II). / MXN 2,000,000 is about USD 107,159.Ley del Impuesto sobre la Renta, DOF 11 December 2013, arts. 121, 122, 123 and 124, LISR arts. 121 to 124, 2013-12-11 official text · verified 2026-10-26

2. Resident individuals: tax and provisional payment. The gain is divided by the years held, up to 20; that slice is added to the year's income and taxed at the progressive tariff, and the rest is taxed at the seller's average rate (current year or five year average). For each sale, a provisional payment is computed with the monthly tariff accumulated for the months of the year applied to the gain divided by years held, multiplied back by those years. In deeds, the notary computes the payment under its own responsibility and pays it within 15 days after the deed is signed, and issues an invoice for the tax withheld. Installment sales over 18 months may defer tax if it is guaranteed. Companies selling real estate pay provisional payments under the same article, which for most companies are final payments.
Cost to do it: Tax only; notaries collect it at signing.Ley del Impuesto sobre la Renta arts. 120 and 126, LISR arts. 120 and 126, 2013-12-11 official text · verified 2026-10-26

3. Five percent payment to the state. Sellers of land and buildings also make, per transaction, a payment of 5 percent of the gain to the state where the property lies. It is credited against the federal provisional payment; if it exceeds the federal provisional payment, only the federal amount is paid to the state. Notaries compute and pay it in the same 15 day period.
Cost to do it: Not an extra cost when the federal provisional payment is higher; it is a credit.
Example: A gain of MXN 1,500,000 generates a 5 percent state payment of MXN 75,000, credited against the federal provisional payment on the same sale. / Gain about USD 80,369; state payment about USD 4,018.Ley del Impuesto sobre la Renta art. 127, LISR art. 127, 2013-12-11 official text · verified 2026-10-26

4. Home sale exemption. Income from selling the taxpayer's own home is exempt if the price does not exceed 700,000 UDIs and the transfer is formalized before a notary; tax is computed only on the excess, with deductions in proportion. The exemption applies only if the seller did not use it for another home in the previous three years and so declares to the notary, who checks with the SAT whether the exemption was used in the previous five years and reports the sale.
Cost to do it: No tax up to 700,000 UDIs; the peso value of the UDI is published daily by Banxico in the DOF and was not verifiable from an official source in this session, so no peso figure is given.
Example: A resident sells the house they live in through a notary for a price below 700,000 UDIs and has not used the exemption in the previous three years: no income tax.Ley del Impuesto sobre la Renta art. 93, section XIX, item a), paragraph reformed DOF 18 November 2015, LISR art. 93, section XIX a), 2015-11-18 official text · verified 2026-10-26

5. Non residents. Income from selling real estate located in Mexico is Mexican source. A non resident pays 25 percent of the gross price with no deductions, withheld by a buyer resident in Mexico or with a permanent establishment; otherwise the seller files within 15 days. If the sale is in a public deed (no representative needed in that case), the seller may instead pay the top rate of the LISR art. 152 tariff, 35 percent, on the gain computed under the individual rules, without deducting prior losses; the notary computes the tax, records it in the deed and pays it within 15 days. If the tax authority appraises the property at more than 10 percent above the price, the whole difference is income of a non resident buyer taxed at 25 percent. Free acquisitions are taxed at 25 percent of the appraised value. Installment sales over 18 months by public deed may pay tax as installments fall due if guaranteed.
Cost to do it: Tax only; the gain option requires a public deed.
Example: A non resident sells a house for MXN 5,000,000. Gross option: MXN 1,250,000. Gain option by public deed with a gain of MXN 1,500,000: MXN 525,000. / Price about USD 267,898; gross option about USD 66,975; gain option about USD 28,129.Ley del Impuesto sobre la Renta arts. 152 and 160, fifth paragraph reformed DOF 12 November 2021, LISR arts. 152 and 160, 2021-11-12 official text · verified 2026-10-26

6. Cash reporting. Individuals who receive more than MXN 100,000 in cash (pesos or foreign currency) or gold or silver coins for a sale must report it to the SAT by the 17th of the following month.
Cost to do it: No fee; see the AML page for the cash ban on real estate payments above 8,025 UMA.Ley del Impuesto sobre la Renta art. 128, LISR art. 128, 2013-12-11 official text · verified 2026-10-26

Seller	Tax base	Rate	Who collects
Resident individual	Gain, spread over up to 20 years	Progressive tariff, top 35 percent	Notary, within 15 days
Resident individual, own home	Exempt up to 700,000 UDIs; excess taxed	Progressive tariff on the excess	Notary
Any seller of land or buildings	Gain	5 percent to the state, credited	Notary
Non resident, gross	Gross price	25 percent	Resident buyer or seller's own return in 15 days
Non resident, public deed	Gain	35 percent	Notary, within 15 days

Mexican income tax on selling Mexican real estate, by seller (LISR arts. 93, 120 to 127 and 160). Treaties and home country rules are not shown.

Worked example

A resident individual sells for MXN 5,000,000 (about USD 267,898) a rental apartment held 8 years. After separating land, reducing the building cost by 24 percent (3 percent a year), adjusting for inflation and deducting the purchase deed costs and the broker's fee, the gain is MXN 1,500,000. The gain is divided by 8, MXN 187,500 is taxed with the year's other income and the rest at the average rate; the notary pays the provisional tax and the 5 percent state payment of MXN 75,000 within 15 days (LISR arts. 120, 124, 126 and 127).
If the same seller were a non resident, they could pay 25 percent of the price, MXN 1,250,000, or 35 percent of the MXN 1,500,000 gain, MXN 525,000 (about USD 28,129), by public deed (LISR art. 160).

Step by step

1. Assemble the cost file: purchase deed, construction and improvement invoices, notary and appraisal invoices, broker invoices.
2. Get the RFC and e.firma or have the notary handle the filing; non residents decide between the gross and gain options.
3. For a home sale, confirm residence evidence and that the exemption was not used in the last three years.
4. Sign the deed; the notary computes and pays the federal provisional tax and the state 5 percent within 15 days and issues the invoice.
5. Residents include the sale in the annual return; non residents check treaty relief and home country credit.

Common traps

Selling without invoices for the cost: the deductible cost needs proof; without it the seller relies on the 10 percent minimum adjusted cost (LISR art. 121).
Using the home exemption twice in three years: it applies once every three years and the notary checks with the SAT (LISR art. 93).
Low declared price: an appraisal over 10 percent above the price is taxed in the hands of a non resident buyer at 25 percent (LISR art. 160).
Non residents selling outside a public deed: only a deed allows the 35 percent gain option without a representative (LISR art. 160).
Assuming a tax treaty removes Mexican tax: treaties generally let the country where the property sits tax it; check the treaty with your country of residence and how your home country credits Mexican tax. For investors based in Argentina, see The Argentine Thread guide for the home side.

Sources

← Leases: 10 and 20 year maximum terms, one year minimum for housing, rent in pesos, tenant preference to buy, termination notice and registrationRental income tax: resident landlords (35 percent blind deduction, 10 percent withholding by companies, trusts) and 25 percent withholding for non residents →