Capital Gains Tax (ISR) in Mexico: What Foreign Sellers in Los Cabos Need to Know

If you're a foreign homeowner planning to sell your property in Los Cabos, one of the first questions you'll have is how much Mexican tax you'll owe on the sale. That tax is called ISR (Impuesto Sobre la Renta), Mexico's capital gains tax, and understanding it before you list your home can save you thousands of dollars and prevent surprises at closing.

What Is ISR and Who Pays It?

ISR is a federal tax on the profit, or "gain," you make when you sell real estate in Mexico. It applies to Mexican citizens and foreigners alike, and it is calculated and withheld by the notary public at the time of closing, then paid directly to the SAT (Mexico's tax authority). As a seller, you never have to file the payment yourself, your notary handles the calculation and withholding as part of a legally secure closing.

How ISR Is Calculated

There are two common methods notaries use to calculate ISR: a flat rate of 25% on the gross sale price, or roughly 35% on the net gain after allowable deductions. In most cases, the net-gain method results in a lower tax bill, especially when you have official invoices (facturas) for the purchase price, capital improvements, real estate commissions, and closing costs. This is why keeping your paperwork organized from the day you buy is so valuable.

Exemptions and Deductions for Foreign Sellers

Foreign sellers generally do not qualify for the primary-residence exemption available to Mexican residents with an RFC and CURP, but you can still significantly reduce your taxable gain through deductions such as the original purchase price (adjusted for inflation), documented improvements and renovations, real estate agent commissions, and notary and closing fees. Working with an experienced notary and a bilingual real estate team ensures every eligible deduction is applied correctly.

How Tu Casa Cabo Helps You Sell with Confidence

Tu Casa Cabo has guided American and Canadian homeowners through the sale of luxury properties across Cabo San Lucas and San José del Cabo for years. Co-Brokers Yolanda Ramos and Alex Sepulveda work alongside trusted notaries and tax advisors to help you estimate your ISR liability before you list, gather the right documentation to maximize deductions, and structure a clean, secure closing through escrow. Whether you're selling a beachfront villa, a condo, or a second home you're ready to pass on, our team makes sure the tax side of your sale is handled with the same care as the marketing and negotiation.

Thinking about selling in Los Cabos? Contact Tu Casa Cabo for a confidential consultation and a clear picture of your expected net proceeds.