Tax rules, notary withholding and fees when selling property in Mexico City

Capital gains tax framework

Sellers of real estate in Mexico City are subject to national income tax on profits, known as Impuesto Sobre la Renta (ISR). Under the Ley del Impuesto Sobre la Renta (LISR), capital gains tax on real estate transactions is levied at progressive rates ranging from 1.92% to 35% on the net taxable gain in 2026. The net taxable gain is calculated in Mexican Pesos (MXN) by subtracting the original purchase price (adjusted for inflation based on national consumer price indices), allowable capital improvement costs, and transfer fees from the final sale price.

Individual tax residents in Mexico who sell their primary residence can claim an exemption under Article 93, Fraction XIX a) of the LISR. This relief exempts net gains up to the value of 700,000 Unidades de Inversión (UDIs), which equals approximately 6 million MXN in 2026. To qualify, the seller must possess a valid Mexican tax identification number (Registro Federal de Contribuyentes or RFC), provide utility bills from the Comisión Federal de Electricidad (CFE) or Telmex registered to that RFC at the property address, and must not have claimed the exemption within the preceding three years.

Non-resident tax treatment

Non-residents selling real estate in Mexico City are taxed under separate rules. Non-residents cannot claim the primary residence UDI exemption under Article 93. Instead, non-resident vendors must elect between two taxation methods at the time of closing.

The first option is a flat 25% tax levied on the gross sale price, with no deductions permitted. The second option is a 35% tax levied on the net gain. To elect the 35% net gain option, the seller must provide valid official electronic tax receipts, known as Comprobantes Fiscales Digitales por Internet (CFDIs), for the original purchase price, notary expenses, and any structural capital improvements. Non-residents electing the net gain method must also retain a representative in Mexico or process the calculation through a designated Notario Público.

Notary withholding and transaction execution

In Mexico City, real estate conveyancing is governed by a Notario Público, a legal official appointed by the head of government of the Federal District/Mexico City. The Notario Público acts as an impartial agent of the state, responsible for verifying title deeds (escrituras públicas) at the Registro Público de la Propiedad y de Comercio de la Ciudad de México (RPPC).

The Notario Público is legally required to calculate, withhold, and remit the seller's ISR directly to the national tax authority, the Servicio de Administración Tributaria (SAT). The seller does not receive gross proceeds and pay ISR later; the tax is deducted at closing before the net proceeds are disbursed.

Brokerage, legal, and administrative costs

Real estate agent commissions in Mexico City typically range between 5% and 8% of the agreed purchase price. By law, agent commissions are subject to a 16% Value Added Tax (Impuesto al Valor Agregado or IVA). A broker charging a 6% commission will incur an effective deduction of 6.96% from the transaction price once IVA is included. Brokers must issue a valid CFDI for their commission so the seller can deduct the fee from their ISR calculation.

While buyers cover the main notary fees and land transfer taxes (Impuesto Sobre Adquisición de Inmuebles), the seller is responsible for obtaining clearance certificates. These include the Certificado de Libertad de Gravamen (confirming the property is free from encumbrances) and certificates showing full payment of local property tax (Predial) and water services (Sistema de Aguas de la Ciudad de México). If the property was held through a bank trust (fideicomiso), the seller must also pay a trust cancellation fee charged by the trustee bank, typically costing between $1,000 USD and $1,500 USD.

Repatriation of sale proceeds

Once the Notario Público executes the deed and remits ISR to SAT, the seller's net funds are released. Domestic disbursements occur via the Banco de México SPEI electronic transfer system.

For international sellers repatriating funds abroad, transactions are subject to compliance checks under the Ley Anti-Lavado (Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin). Financial institutions require the notarised deed, proof of ISR remittance to SAT, and official bank details matching the title owner's name. Funds are converted from MXN to foreign currencies at market exchange rates and transferred directly to the seller's international bank account.