Taxes on Buying, Renting and Selling Property in Mexico: A Guide for Foreigners

In short: when you buy property in Quintana Roo as a foreigner, you pay, once, the ISAI acquisition tax (2% to 4% of value), notary fees, registration and the setup of the bank trust: in total, between 4% and 7% of the price. While you own it, you pay a low annual property tax (predial) and income tax (ISR) if you rent. When you sell, a non-resident pays ISR of 25% on the gross price or 35% on the net gain, the latter option requiring a representative in Mexico.

What taxes does a foreigner pay when buying property in Mexico?

The same as a Mexican buyer. The ISAI and closing costs are identical for nationals and foreigners; the difference comes later, when you rent or sell, because ISR depends on your tax residency.

Mexico has a clear regime for non-residents who buy property. It is not an obstacle, but the costs are real and many buyers underestimate them. It helps to understand them at four moments:

• When buying: ISAI, notary, registration, VAT on fees and the trust.
• While you own it: predial and the annual trust fee.
• If you rent: ISR on rental income.
• When selling: ISR on the sale price or on the gain.

Income taxes are governed by the Income Tax Law (Ley del ISR) and administered by the SAT. With the right advice, the tax burden is manageable and can be planned from day one.

How much is the ISAI in Quintana Roo?

The real estate acquisition tax (ISAI) ranges between 2% and 4% in Quintana Roo, with 3% as a frequent reference. It is the buyer's main tax, the equivalent of stamp duty in other countries.

It is a local tax, so the rate varies by state and municipality: Cancún, Playa del Carmen, Tulum and Puerto Morelos may have different rates. It is calculated on the deed value, the cadastral value or the purchase price, whichever is higher.

It is paid once, when the deed is signed before a notary, and is recorded in the public deed.

Example: on a USD 200,000 apartment in Playa del Carmen, the ISAI would be between USD 4,000 and USD 8,000, and about USD 6,000 at a 3% rate. It is paid in pesos at the current exchange rate, so include it in your budget from the start.

How much do the notary and closing cost in total?

Closing costs in Quintana Roo total between 4% and 7% of the property value, including the trust. The buyer always pays them, unless you negotiate otherwise with the seller.

Item	Reference	On a USD 200,000 property
ISAI	2% to 4% (3% common)	USD 4,000 to 8,000
Notary fees	1% to 2.5%, depending on the amount	USD 2,000 to 5,000
Public Property Registry	Around 0.5%	About USD 1,000
Certificates and administrative costs	Variable	Variable
Trust setup	One-time payment	USD 800 to 1,500
Estimated total	4% to 7%	USD 8,000 to 14,000

The notary also handles registration with the Public Registry. You can check that your notary is active through the Colegio Nacional del Notariado Mexicano. For a full breakdown, see our guide to buying costs in the Riviera Maya for foreigners.

Is VAT charged when buying property?

For housing, not on the property value. The 16% VAT (IVA) applies to notary fees and to some professional services linked to the transaction.

The situation changes if you buy for commercial purposes or in a development that operates under a commercial lease regime: there, VAT may apply to the sale price. It is a technical detail your legal advisor and the notary should clarify before you sign.

Always ask for a written breakdown of which items carry VAT, so the closing budget does not change at the last minute.

How much does the bank trust cost and when is it mandatory?

The bank trust (fideicomiso) is mandatory for foreigners buying residential property in the restricted zone: the strip within 50 km of the coast and 100 km of the borders, under Article 27 of the Constitution and the Foreign Investment Law. Almost all of the Riviera Maya lies in that zone.

• Setup: between USD 800 and 1,500, one time.
• Annual maintenance: between USD 500 and 700 per year.

The trust does not change the taxes on the sale: ISAI and the rest apply the same way. As beneficiary, you have rights equivalent to a direct owner: you can use, rent, sell and bequeath the property. The corresponding permit is processed with the SRE. Learn more in what a fideicomiso is and how it works.

How much is property tax (predial) in the Riviera Maya?

Very little compared with the United States or Canada. Predial is the annual tax you pay to the municipality as the owner.

As a reference, a USD 200,000 residential property in Quintana Roo pays between USD 200 and 600 per year, and a USD 300,000 one between USD 300 and 800, depending on its cadastral value.

It is paid in the first months of the year, and there are usually early-payment discounts in January and February. If you live abroad, a Mexican bank account or local property management makes it easier not to miss these deadlines.

What taxes do you pay if you rent out your property?

You pay ISR on rental income, and how it is calculated depends on your tax residency and how you hold the property.

Regime	How it is taxed	Best suited for
Non-resident for tax purposes	25% ISR on gross income, with no expense deductions	Occasional rentals; simple but costly
Tax resident (individual)	Can deduct maintenance, HOA fees, interest, predial, insurance and depreciation	People who live in Mexico or have their center of interests here
RESICO (resident individual)	Rates of 1% to 2.5% on gross income, for income under MXN 3.5 million per year	Residents with moderate income
Corporation (S.A. de C.V. or S.A.S.)	30% on net profit, with operating expenses deductible	Several properties or rental income above USD 30,000 per year

Platforms such as Airbnb have withheld VAT and ISR from hosts in Mexico since 2020, regardless of their tax residency. This simplifies compliance but does not replace the annual return. We explain it in how to report vacation rental income in Mexico as a foreigner.

How much ISR do you pay when selling as a non-resident?

As a non-resident for tax purposes, ISR on the sale has two options under the Income Tax Law:

• Option A: 25% on the gross sale price, with no deduction for the acquisition cost. The notary withholds it at closing.
• Option B: 35% on the net gain, meaning the sale price minus the original cost, improvements and other deductible items. To use it, you need a representative in Mexico.

Many well-advised buyers choose option B, because it taxes only the real gain. The key is to keep the invoices (CFDI) for closing costs and improvements: renovations, furniture and major maintenance. With them, you legally reduce your taxable gain.

The notary is required to withhold the seller's ISR and pay it to the SAT. That is why, when you buy, your advisors should check before signing that the seller is up to date with tax obligations: if not, the closing can become complicated.

Is there an ISR exemption for residents?

Yes. Mexican tax residents can exempt the gain on the sale of their primary residence up to 700,000 UDIs, under the conditions and frequency set by law.

The UDI is a unit of account whose daily value is published by the Banco de México, so its equivalent in pesos and dollars changes over time. The exemption does not apply to non-residents or to properties that are not your home.

If you plan to live in the Riviera Maya, a specialized accountant can help you structure the purchase from the start so you can use this benefit when you sell.

Does anything change if you buy pre-construction?

Yes, the timing. During construction, payments to the developer are advances, not a transfer of ownership. The ISAI and closing costs are paid when the final deed is signed, usually when the project is finished.

That gives you time to set aside the closing capital. Many foreign buyers are surprised at closing because they did not budget for these amounts. Some developers offer to cover closing costs: make sure this is explicit in the promise-to-purchase agreement. To avoid missing anything, use our pre-construction buying checklist.

Do you need a Mexican bank account, and how do you avoid double taxation?

A Mexican account is not mandatory, but funds must arrive through traceable banking channels. Notaries commonly ask for a documented international transfer showing the lawful origin of the money.

Opening an account with a Mexican bank makes it easier to pay utilities, predial and maintenance fees.

On double taxation, Mexico has tax treaties to avoid double taxation with more than 50 countries, including the United States, Canada, Germany, France, Spain and the United Kingdom. Taxes paid in Mexico can be credited against those in your country of residence. An accountant who knows both systems is essential.

Frequently asked questions

Do foreigners pay more taxes than Mexicans when buying?

No. The ISAI and closing costs are the same. The difference lies in ISR when renting and selling, which depends on tax residency.

Do I have to report my Mexican property in my home country?

It depends on your country. In the United States, citizens and residents must report foreign assets under FBAR and FATCA if they exceed certain thresholds; Canada has similar rules (form T1135). In general, closing costs add to the property's cost basis on your US return.

Is there an inheritance tax in Mexico?

Mexico has no federal inheritance tax. If the property passes to foreign heirs, there may be implications in their country of residence.

When does it make sense to buy through a Mexican company?

It usually makes sense if you have several properties, rental income above USD 30,000 per year or a long-term professional rental plan. For a single property used occasionally, the individual regime is usually enough. Compare both options in fideicomiso or Mexican corporation.

This guide is for information only and does not replace advice from an accountant. If you would like us to connect you with foreign investment specialists, write to us.

You may also be interested in: How the Notary Process Works in Mexico Step by Step for Foreigners and Power of Attorney for Remote Property Purchase: How to Close Your Property in Mexico Without Traveling.