Capital gains tax in Mexico

Does Mexico have a separate capital gains tax?

Mexico does not maintain a stand-alone capital gains tax. All gains from the disposal of property, shares, or other assets are captured under the Impuesto Sobre la Renta (ISR) -- the federal income tax administered by the Servicio de Administracion Tributaria (SAT). Depending on the type of asset sold, the applicable ISR rate ranges from a flat 10% for listed-share gains up to 35% for gains folded into the annual progressive return. The governing statute is the Ley del Impuesto sobre la Renta (LISR). Understanding which LISR chapter governs a particular disposal is the first analytical step for any Mexico capital-gains calculation [1].

How are gains from shares listed on the Mexican stock exchange taxed?

Gains from selling shares traded on a Mexican concessioned stock exchange -- the Bolsa Mexicana de Valores (BMV) or the Bolsa Institucional de Valores (BIVA) -- are subject to a 10% definitive (final) ISR under LISR Article 129 [1]. The tax is calculated on the net gain per issuing company: sale proceeds (minus brokerage commissions) less the inflation-adjusted average acquisition cost (plus acquisition commissions). The average cost is updated from the purchase date to the month before sale using the INPC (Indice Nacional de Precios al Consumidor -- National Consumer Price Index, published by INEGI) [2].

Because the 10% payment is definitive, these gains do not re-enter the progressive rate schedule in the annual return -- they are reported separately. Losses from listed-share sales may only be applied against gains from similar transactions in the same or following ten fiscal years. Shares of foreign companies listed on Mexico's International Quotation System (SIC) of the BMV also qualify for the 10% rate under Article 129. For residents who sell listed shares through a foreign broker (no Mexican intermediary to withhold), the 10% must be self-assessed in the annual Declaracion Anual filed with SAT [1].

How are real estate gains taxed in Mexico?

Gains from selling Mexican real property are included in a resident individual's annual ISR return and taxed at progressive rates from 1.92% to 35% depending on the size of the taxable gain [2]. The starting point for the gain calculation is:

Taxable gain = Sale price -- Deductible costs

Deductible costs include: (a) the original acquisition cost, inflation-adjusted using INPC factors for the holding period; (b) documented capital improvements supported by official electronic invoices (CFDI); (c) notary and legal fees paid at acquisition and disposal; and (d) real estate commissions [3]. Routine maintenance and repairs do not qualify.

The notario publico (public notary) plays a central withholding role in Mexican real estate transactions. At closing, the notario is legally required to calculate the provisional ISR payment on the gain and remit it directly to SAT on behalf of the seller. This withholding is provisional -- not definitive -- meaning the seller must include the real estate gain in the annual return filed the following April, where the provisional payment is credited against the final liability. If the notario's withholding exceeds the annual-return liability, a refund can be requested from SAT [3].

Since December 2013, every acquisition must be supported by a CFDI (Comprobante Fiscal Digital por Internet) electronic tax receipt from the notary. Without a valid CFDI for the original purchase, the cost basis defaults to zero, dramatically increasing the taxable gain [3].

What is the principal-residence exemption?

Resident individuals may exempt up to 700,000 UDIs of gain from the sale of their principal residence (casa habitacion) under LISR Article 93, Fraction XIX [1][3]. The UDI (Unidad de Inversion) is an inflation-indexed accounting unit published daily by Banco de Mexico. At mid-2026 values (approximately MXN 8.84 per UDI), 700,000 UDIs equals roughly MXN 6.19 million (approximately USD 310,000 at current exchange rates). This threshold rises automatically with inflation.

To qualify: (a) the property must be the seller's actual principal residence; (b) the sale must be formalized before a notario publico; (c) the seller must not have claimed the same exemption on a different property in the preceding three years; and (d) supporting proof-of-residency documents (utility bills, INE voter ID at the address, bank statements) must be presented to the notary. The exemption applies once per three-year window -- not once per property. Any gain above 700,000 UDIs is taxable at progressive ISR rates on the excess portion. Co-owners (such as spouses) who each hold title and each have a Mexican RFC (tax ID) may each independently claim 700,000 UDIs [3].

A co-owner who is a foreign tax resident and cannot prove the property was their principal residence in Mexico faces the non-resident rules described below rather than this exemption.

How are unlisted shares and private-company interests taxed?

Gains from selling shares in a privately held Mexican company (SA de CV, S. de R.L., or similar entities whose shares are not traded on a recognised exchange) are taxed at progressive ISR rates up to 35% and must be included in the seller's annual return [2][4]. The cost basis is the acquisition price, adjusted for inflation using INPC factors from acquisition to sale. Additional basis adjustments apply for movements in the issuing company's CUFIN (net after-tax earnings account), prior-year tax losses, and capital reductions received -- making unlisted-share gain calculations more complex than real estate transactions.

Capital losses on unlisted-share sales may be deducted only against gains from similar transactions in the same or following ten fiscal years, and only up to the value of those gains; they cannot offset wage income or other ISR categories. Where a corporate restructuring qualifies under LISR Articles 24 and 25, a tax-deferred reorganisation (merger or spin-off) may be available, subject to business-purpose tests and continuity-of-interest conditions.

How are non-residents taxed on Mexican-source capital gains?

Non-residents (individuals and entities without a permanent establishment in Mexico) who sell Mexican real property or shares in Mexican companies face two alternative ISR paths under the LISR:

The notario publico is required by law to calculate liability under both methods and apply the lower result [3]. The 35% net-gain path requires: (a) the sale to be formalized in a public deed (escritura publica) before a Mexican notario; and (b) the non-resident to appoint a legal representative in Mexico. Without a representative and deed, the 25% gross withholding is the default.

For listed-share sales, non-resident sellers face a flat 10% withholding on the net profit, consistent with Article 129 treatment for residents, collected by the Mexican broker-dealer intermediary [1]. Non-residents from countries that have an active tax treaty with Mexico should confirm whether the relevant treaty's capital-gains article reduces or eliminates Mexican source-country taxation -- Mexico maintains over 60 active tax treaties.

Example (non-resident real estate disposal):
Sale price:            MXN 5,000,000
INPC-adjusted cost:    MXN 2,200,000
Notary + legal fees:   MXN 150,000
Net gain:              MXN 2,650,000

Path A (Art. 160):  25% x MXN 5,000,000 = MXN 1,250,000
Path B (Art. 161):  35% x MXN 2,650,000 =   MXN 927,500  <- lower
Notario applies Path B

The gains framework in Mexico is shaped by asset type, residency status, and -- for real estate -- the documentary trail from original purchase to sale. For residents, consulting a qualified tax professional (contador publico or tax specialist registered with SAT) before completing a significant disposal ensures the INPC adjustments, deductible costs, and exemption eligibility are correctly applied. See the Mexico country overview for the broader ISR rate schedule and filing calendar.

For cross-border situations -- particularly sales involving both Mexico and another jurisdiction -- a professional who holds credentials in both countries is essential, as the interaction between Mexico's ISR and foreign home-country rules (including treaty positions) requires case-specific analysis.