Mexico's Tax System for Foreign Buyers: Clearer Than You Think
Mexico has a well-defined tax regime for non-resident property buyers. With proper advice, the fiscal burden is perfectly manageable. This guide covers what you pay, when and how.
Taxes and Closing Costs When Buying
Acquisition Tax (ISAI): 2–4% of the purchase price or cadastral value (whichever is higher) in Quintana Roo. One-time payment at closing. On a USD 200,000 property: USD 4,000–8,000.
Notary fees: 1.5–2.5% of the transaction value, including property registry fees. On USD 200,000: USD 3,000–5,000.
Bank trust (fideicomiso) setup: USD 800–1,500 one-time + USD 500–700 annual maintenance. Required for foreign buyers in coastal zones (within 50 km of the coast).
Total closing costs estimate: 4–7% of purchase price.
Annual Taxes While You Own
Property tax (predial): Very low in Mexico. For a USD 200,000 property in Quintana Roo: approximately USD 200–600/year.
If You Rent: Income Tax Options
Non-resident: 25% ISR on gross rental income (no expense deductions). Airbnb retains and remits automatically since 2020.
Mexican tax resident: Can deduct expenses (maintenance, HOA, depreciation, insurance). Significantly lower effective rate.
Mexican corporation: 30% on net profits after all deductions — most efficient for multiple properties or high rental income.
Capital Gains Tax When Selling
Non-residents choose between: (A) 25% on total sale price, or (B) 35% on net gain (sale price minus original cost plus improvements). Option B typically results in an effective rate of 15–20% on actual gain.
Mexico has double taxation treaties with 50+ countries (USA, Canada, most of Europe), allowing taxes paid in Mexico to be credited against home-country taxes.
Frequently Asked Questions
Can I buy property in Mexico without a fideicomiso?
Only if the property is outside the "restricted zone" (more than 50km from the coast and 100km from the border). Most Riviera Maya properties require a fideicomiso for foreign buyers.
Does the fideicomiso give me the same rights as direct ownership?
Yes — full rights to use, rent, sell and inherit the property. The bank is the nominal title holder; you are the beneficiary with complete control.
Does Airbnb automatically withhold taxes in Mexico?
Yes. Since 2020, Airbnb withholds VAT (16%) and provisional income tax (4%) on Mexican host income, regardless of the host's tax residency. Annual tax declaration is still required.
Do I need to declare my Mexican property in my home country?
Likely yes. US citizens/residents must declare foreign assets under FBAR and FATCA above certain thresholds. Canadian residents face similar requirements (T1135). Consult a cross-border tax specialist.
Need personalized tax advice? At L'Agence MX we connect you with top specialists in foreign real estate investment. Email us at bonjour@lagencemx.com, WhatsApp at +52 56 3370 9470 or visit lagencemx.com.