Capital-Gains Tax (ISR) When You Sell Your Riviera Maya Property

How ISR on a property sale actually works

ISR (impuesto sobre la renta) is the seller's tax in Mexico, not the buyer's. The buyer pays a separate acquisition tax called ISAI; ISR is yours alone. The important structural fact for a foreign seller is that you do not file and pay this yourself. The notario público who closes the sale is legally liable for getting your ISR right, so the notary calculates the tax, withholds it directly from your sale proceeds at the closing, and remits it to SAT on your behalf. You receive your net amount after the tax has been taken out. There is no way to bypass this and no opt-out.

The notary computes the bill two ways and applies the result the law requires. Method A is roughly 25% of the gross sale price with zero deductions. Method B is the net-gain method, taxing your actual profit on a progressive scale that reaches up to 35%. For residents the net method runs on a progressive scale from 1.92% to 35%; for non-resident foreign sellers electing the net method, it is effectively a flat 35% on the gain. Once you have documented costs, the net method is usually far cheaper, which is why documentation is the single biggest lever you control.

Because the notary is on the hook for the number, they will not accept hand-waving. They want to see the original escritura (deed), the CFDI digital tax receipt tied to it, and valid facturas for any cost you want to deduct. If you arrive at closing without that paperwork, the notary defaults to the 25%-of-gross method, which is almost always the worst outcome. Treat the tax as a known, plannable closing cost, not a surprise, and the documents you gather before you list are what decide how large that cost is.

The real numbers: 25% gross vs up to 35% net

The two rates that matter are the 25% gross-method rate and the up-to-35% net-method rate. The gross method applies 25% to the full sale price with no deductions whatsoever. It is the fallback the notary uses when you cannot prove what you originally paid. The net method taxes only your gain, which is the sale price minus your inflation-adjusted acquisition cost and your allowable, factura-backed costs. For residents the net scale runs from 1.92% up to 35%, with the top bracket reached on large gains (roughly above about USD 250,000 of annual gain). For non-residents the net election is effectively a flat 35% on the gain.

Net gain is built from real, documented inputs. You start with your acquisition cost, which Mexico then adjusts upward for inflation using SAT's INPC index based on how many months you owned the property. That inflation adjustment shrinks your taxable gain even if you never touched the home. From there you subtract documented capital improvements and allowable closing and selling costs, including the notary fee, the ISAI acquisition tax you paid when you bought, the agent commission, and the appraisal. Every one of those deductions must be backed by a factura (CFDI).

One nuance that surprises long-term owners: the construction (building) portion of your basis depreciates 3% per year of ownership and cannot be written below 20% of its original value, while the land portion does not depreciate at all. So the inflation adjustment pushes your basis up while building depreciation pulls part of it down, and the net effect depends on how long you held the property. This is why long-held properties often show a larger taxable gain than owners expect. The exact figures for your specific sale are confirmed by the closing notario and your accountant.

• Gross method: 25% of the gross sale price, no deductions (the fallback when you can't prove cost).
• Net method: up to 35% of net gain; progressive 1.92% to 35% for residents, effectively flat 35% for non-residents.
• Net gain = sale price minus inflation-adjusted acquisition cost, documented improvements, and allowable selling costs.
• Building portion of basis depreciates 3% per year, with a 20%-of-original floor; land does not depreciate.
• Cost basis is adjusted upward for inflation via SAT's INPC index based on months of ownership.

The casa-habitación exemption and why most foreign sellers can't use it

Mexico does have a powerful primary-residence exemption, called the casa-habitación exemption, but it is built for residents, not for non-resident foreign owners. It exempts the gain on a sale value up to 700,000 UDIs. The UDI is an inflation-indexed unit published daily by Banxico; as of June 2026 it is about 8.835 MXN, which puts the exemption cap at roughly 6.18 million pesos, or about USD 330,000 at around 18.7 MXN/USD. Gain above that threshold is taxed, and you must recompute the peso and USD figures at the day's actual UDI value because they move with inflation and the exchange rate.

The exemption is not automatic and it is not generous on frequency: it can be used only once every three years, meaning you must not have claimed a casa-habitación exemption on another home in the three years before this sale. Eligibility requires three things together: Mexican tax residency with an RFC (and CURP); proof the home was genuinely your primary residence, such as your INE voter ID at the address, utility bills, and bank statements in your name at the address; and a land area that does not exceed three times the constructed area, since any excess land is taxed even for an otherwise eligible resident.

Here is the uncomfortable truth we tell foreign sellers up front: if you are a non-resident for tax purposes, you cannot claim this exemption. Holding an RFC, or even a residente temporal or residente permanente visa, does not by itself make you a Mexican tax resident; tax residency is a separate test (center of vital interests, more than 183 days, and so on) that the notary and your accountant must confirm. Some notaries will extend the exemption to temporary or permanent residents who genuinely live in the home and can document it, but a tourist-visa or purely non-resident owner cannot. If the home is co-titled with a spouse or family member who is also a Mexican resident with an RFC using it as their primary residence, each owner can apply their own 700,000-UDI exemption on their share.

• Exemption cap: 700,000 UDIs, about MXN 6.18 million / USD 330,000 in June 2026 (UDI ≈ 8.835 MXN); recompute at the transaction date.
• Frequency: usable once every three years.
• Eligibility: Mexican tax residency + RFC (and CURP), primary-residence proof, and land ≤ 3x the constructed area.
• Non-resident foreign sellers are excluded; a visa or RFC alone does not equal tax residency.
• Co-ownership stacks: each qualifying resident co-owner can apply their own 700,000-UDI exemption on their share.

The documentation trap that can tax you on the whole sale price

The most expensive mistake a foreign seller can make has nothing to do with rates and everything to do with paperwork. For any purchase after December 31, 2013, the deed value alone is not accepted as proof of what you paid. The original deed must carry the CFDI, the digital tax receipt. If there is no CFDI, SAT treats your cost basis as zero and you are taxed on essentially the full sale price, which is the worst possible result. This single rule explains most of the horror stories foreign sellers tell.

The same logic applies to improvements. Capital improvements such as adding a pool, building a room, or doing structural upgrades only count if you have a factura (CFDI) from the contractor. General maintenance and cosmetic work, like a remodeled kitchen, repainting, or new bathroom fixtures, generally do not count as capital improvements at all. The rule is blunt: no factura, no deduction, full stop. So before you list, gather your CFDI, your original escritura, and every improvement factura you can find. That paperwork is what pushes the notary toward the net-gain method on a much smaller gain, instead of the 25%-of-gross fallback.

There is also a trap that originates years before you sell. Under-declaring the price on either the purchase or the sale is illegal, and it backfires badly. If you declared a low purchase price when you bought, your paper gain when you sell is artificially huge and creates a catastrophic ISR bill. A reputable notario will not under-declare anyway, and we never participate in it. Always record true market value on the deed; a correct, higher declared value also gives the next buyer a cleaner future cost basis.

• CFDI cutoff: purchases after Dec 31, 2013 need the CFDI on the deed, or cost basis = zero.
• No CFDI means SAT taxes you on nearly the whole sale price.
• Improvements deduct only with a contractor factura; cosmetic and maintenance work usually does not count.
• Under-declaring the deed price is illegal and inflates your future taxable gain.

Step-by-step: lowering the bill as a non-resident seller

Even without the casa-habitación exemption, a non-resident foreign seller has real, legal levers. The goal is to give the notary enough documentation to use the net-gain method on the smallest honest gain, rather than defaulting to 25% of the gross. Everything below is general guidance; the specific numbers and what qualifies for your deal are confirmed by the closing notario and a Mexican contador (accountant).

Start with the cost basis: produce the CFDI tied to your original deed so your real purchase price counts, then let SAT's INPC inflation adjustment lift that basis for the months you owned the property. Next, collect facturas for every capital improvement, and claim allowable selling costs, the notary fee, the ISAI you paid on purchase, the agent commission, and the appraisal, each backed by a factura. Where it genuinely applies and you have planned far enough ahead, establishing Mexican tax residency before selling can unlock the primary-residence exemption, but that is a planning decision to make well in advance with professional advice, not a last-minute fix.

Finally, keep proof of the tax that was withheld. The notary issues you official documentation showing the ISR taken out of your proceeds, and that receipt is your evidence of foreign tax paid when you reconcile with your home country.

• Produce the CFDI on your original deed so your true purchase price is recognized.
• Let the INPC inflation adjustment raise your basis for the months you held the property.
• Collect facturas for every capital improvement.
• Claim allowable selling costs with facturas: notary fee, ISAI paid on purchase, agent commission, appraisal.
• If planned well in advance, establishing Mexican tax residency can unlock the exemption (get professional advice).
• Keep the notary's official receipt of the ISR withheld as proof of foreign tax paid.

City notes across Quintana Roo: Cancún, Playa, Tulum, Puerto Morelos, Bacalar

The ISR rules are federal, so the core framework, 25% gross or up to 35% net, the 700,000-UDI exemption for qualifying residents, the CFDI-since-2013 basis rule, is identical everywhere in the Riviera Maya. What changes from town to town is which trap bites hardest. In Cancún, the same federal rules apply; the state-level acquisition mechanics in Quintana Roo affect the buyer's ISAI, not your seller ISR, and a correctly declared (higher) sale value simply means more buyer ISAI and a cleaner future cost basis for whoever buys from you.

Playa del Carmen runs on the identical ISR framework, but its strong appreciation means sellers who under-declared on purchase years ago face the biggest phantom-gain shock; documenting the true CFDI cost basis matters most here. Tulum follows the same rules, but many Tulum lots are larger, so if you are an eligible resident counting on the exemption, watch the land must be no more than three times the construction test, because excess land is taxed even for someone who otherwise qualifies. Confirm with the notary before relying on it.

Puerto Morelos follows the same federal ISR path; coastal, ejido-origin, or fideicomiso-held properties still run the standard seller-ISR calculation at the notary, and the fideicomiso bank issues the instruction to transfer but does not change how ISR is computed. Bacalar uses the same rules too, but its faster recent appreciation plus larger land parcels make both the inflation-adjusted basis and the 3x-construction land test especially relevant, so work with a notario experienced in Quintana Roo land titling.

• Cancún: same federal ISR; state mechanics affect the buyer's ISAI, not your seller ISR.
• Playa del Carmen: high appreciation magnifies phantom-gain risk; the true CFDI basis matters most.
• Tulum: larger lots; watch the land ≤ 3x construction test for the exemption.
• Puerto Morelos: fideicomiso-held properties follow the standard seller-ISR path unchanged.
• Bacalar: fast appreciation plus large parcels; use a notario experienced with Quintana Roo land titling.

Common myths and red flags to avoid

The most persistent myth in marketing articles is that holding a property for five years makes the gain tax-free. It does not. There is no holding-period exemption anywhere in Mexican law. The only way to exempt the gain on a sale is the residency-based casa-habitación rule, which requires Mexican tax residency plus an RFC plus primary-residence proof, is capped at 700,000 UDIs, and can be used only once every three years. If someone tells you to just wait five years and sell tax-free, they are wrong.

The second red flag is any suggestion to declare a low price on the deed to save tax. It is illegal, a reputable notario will refuse, and it sabotages you because a low declared purchase price inflates your paper gain on the eventual sale. The third red flag is missing documentation: arriving at closing with no CFDI on your original deed and no improvement facturas forces the notary into the 25%-of-gross method on the full sale price. Documentation is the deal, not a formality.

On the international side, the good news is that you generally are not taxed twice. Tax treaties let you credit the Mexican ISR against your home-country tax: US sellers use the Foreign Tax Credit (Form 1116); Canadians report the worldwide gain and claim a foreign tax credit for the Mexican tax paid; Europeans rely on their country's Mexico treaty. Keep the notary's official receipt of the ISR withheld as your proof of foreign tax paid, and use a cross-border accountant to apply the treaty correctly.

• Myth: 'hold five years and sell tax-free.' False. No holding-period exemption exists in Mexican law.
• Red flag: any advice to under-declare the deed price. Illegal and self-defeating.
• Red flag: no CFDI on the original deed and no improvement facturas at closing.
• Generally no double tax: US Form 1116, Canadian foreign tax credit, European treaty relief, plus a cross-border accountant.

Talk to our team before you list

ISR is not a surprise; it is a known cost you can plan for, and the difference between a phantom-gain tax bill and a fair one is almost always the paperwork you assembled before you listed. From the day you buy, the smart move is to keep the CFDI on your deed, every improvement factura, and, if you ever intend to qualify for the exemption, your proof of residency. Years later, that is what lets the notario compute tax on your real gain instead of a phantom one.

We work with licensed brokers, a licensed notario, and cross-border accountants on the transaction, and we are happy to walk you through your specific situation before you commit to a sale. We will be candid about whether the casa-habitación exemption can apply to you, quote the exemption in today's UDI, peso, and USD terms with the date attached, and never participate in price under-declaration. The exact figures for your deal are confirmed by the closing notario and a Mexican contador, never guessed.

If you are thinking about selling, or buying with an eye to a clean future exit, message us or book a viewing. We will help you build the documentation plan that keeps your eventual tax bill on your real gain, not a number you never actually earned.