{"id":95628,"date":"2025-01-22T12:22:42","date_gmt":"2025-01-22T17:22:42","guid":{"rendered":"https:\/\/staging.plalla.com\/how-to-exempt-income-tax-from-the-sale-of-a-home-in-mexico\/"},"modified":"2026-01-03T09:02:01","modified_gmt":"2026-01-03T14:02:01","slug":"how-to-exempt-capital-gains-tax-mexico","status":"publish","type":"post","link":"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/","title":{"rendered":"How to Save Capital Gains Tax When Selling Your Home in Mexico"},"content":{"rendered":"<p>Did you know that selling a property in Mexico could help you avoid paying <strong>Income Tax (ISR)<\/strong> ? For many homeowners, income tax can be a major concern, as it can significantly reduce the profit obtained from the sale of their home. However, the good news is that there are legal mechanisms to exempt you from paying income tax, as long as you meet certain legal requirements. If you&#8217;re planning to sell your home and want to maximize your income, this guide will help you understand how this tax works and what you need to do to avoid paying it.<\/p>\n<p>&nbsp;<\/p>\n<p>In this article, we&#8217;ll clearly and simply break down everything you need to know about Income Tax: what it is, why it applies, and, most importantly, how you can legally avoid it. Discover the requirements, necessary documents, and exceptions that will allow you to protect your assets. If you want to take advantage of this opportunity and sell your house without any tax surprises, keep reading and learn how to do it smartly and effectively!<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2b7d874320d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2b7d874320d\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#What_is_income_tax_and_why_is_it_paid_in_Mexico\" >What is income tax and why is it paid in Mexico?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#Requirements_and_Documents_to_Exempt_from_ISR\" >Requirements and Documents to Exempt from ISR<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#Necessary_documents\" >Necessary documents<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#What_happens_if_you_dont_meet_the_requirements\" >What happens if you don&#8217;t meet the requirements?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#Income_Tax_Exemption_Limit_How_Much_Is_It_in_2026\" >Income Tax Exemption Limit: How Much Is It in 2026?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#Explanation_of_the_700000_UDI_limit\" >Explanation of the 700,000 UDI limit<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#What_to_do_if_the_property_exceeds_this_value\" >What to do if the property exceeds this value?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#Practical_example\" >Practical example:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#How_Many_Times_Can_You_Exempt_Income_Tax\" >How Many Times Can You Exempt Income Tax?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#Restriction_of_one_exemption_every_three_years\" >Restriction of one exemption every three years<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#What_happens_if_you_sell_another_property_before_three_years\" >What happens if you sell another property before three years?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#Benefits_of_Exempting_from_ISR\" >Benefits of Exempting from ISR<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#How_much_can_you_save_by_exempting_income_tax_from_selling_a_home\" >How much can you save by exempting income tax from selling a home?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#Impact_on_the_net_profit_from_the_sale_of_your_property\" >Impact on the net profit from the sale of your property<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#Steps_to_follow_to_exempt_the_payment_of_income_tax_on_the_sale_of_a_house\" >Steps to follow to exempt the payment of income tax on the sale of a house<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#1_Notify_the_notary_of_your_intention_to_exempt_income_tax\" >1. Notify the notary of your intention to exempt income tax.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#2_Prepare_the_necessary_documents\" >2. Prepare the necessary documents<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#3_Verify_that_the_property_meets_the_requirements\" >3. Verify that the property meets the requirements<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#4_Request_exemption_from_the_notary\" >4. Request exemption from the notary<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#5_Final_review_and_delivery_of_documents\" >5. Final review and delivery of documents<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#6_Signing_of_the_deed_and_delivery_of_the_property\" >6. Signing of the deed and delivery of the property<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#7_Keep_your_documents_in_order\" >7. Keep your documents in order<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#What_to_Do_if_You_Cant_Exempt_from_Income_Tax\" >What to Do if You Can&#8217;t Exempt from Income Tax?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#1_Deduction_of_Expenses_and_Improvements\" >1. Deduction of Expenses and Improvements<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-25\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#2_How_to_Calculate_the_Income_Tax_You_Will_Have_to_Pay\" >2. How to Calculate the Income Tax You Will Have to Pay<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-26\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#3_Cases_in_which_you_can_deduct_notary_fees_improvements_and_commissions\" >3. Cases in which you can deduct notary fees, improvements and commissions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-27\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#4_Consult_with_a_Professional\" >4. Consult with a Professional<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-28\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#Exempting_Income_Tax_for_Foreigners_What_Changes\" >Exempting Income Tax for Foreigners: What Changes?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-29\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#1_Does_the_Income_Tax_Exemption_apply_to_Foreigners\" >1. Does the Income Tax Exemption apply to Foreigners?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-30\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#2_Taxes_for_Non-Residents\" >2. Taxes for Non-Residents<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-31\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#3_How_to_Reduce_Taxes_as_a_Foreigner\" >3. How to Reduce Taxes as a Foreigner<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-32\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#4_Recommendations_for_Foreigners\" >4. Recommendations for Foreigners<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-33\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#Frequently_Asked_Questions_FAQs\" >Frequently Asked Questions (FAQs)<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-34\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#1_How_can_I_exempt_income_tax_if_the_property_is_shared_with_my_partner\" >1. How can I exempt income tax if the property is shared with my partner?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-35\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#2_Is_it_possible_to_exempt_income_tax_on_the_sale_of_land\" >2. Is it possible to exempt income tax on the sale of land?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-36\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#3_What_happens_if_the_documents_are_not_in_my_name\" >3. What happens if the documents are not in my name?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-37\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#4_What_taxes_must_the_buyer_pay\" >4. What taxes must the buyer pay?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-38\" href=\"https:\/\/plalla.com\/en\/how-to-exempt-capital-gains-tax-mexico\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What_is_income_tax_and_why_is_it_paid_in_Mexico\"><\/span>What is income tax and why is it paid in Mexico?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><strong>Income Tax (ISR)<\/strong> is a federal tax that all individuals and businesses in Mexico must pay on their income. This tax is designed to contribute to the country&#8217;s public spending and is applied to various economic activities, such as salaries, leases, commercial activities, and the sale of real estate.<\/p>\n<p>&nbsp;<\/p>\n<p>When you sell a property, the income tax is calculated on the profit obtained, that is, the difference between the sale price and the original acquisition cost. For example, if you bought a house for $1,000,000 and sell it for $1,500,000, the tax will be applied to the $500,000 profit.<\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-59370 size-large\" src=\"https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/requisitos-y-documentos-para-exentar-el-isr-1024x576.webp\" alt=\"What is income tax and why is it paid in Mexico?\" width=\"1024\" height=\"576\" srcset=\"https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/requisitos-y-documentos-para-exentar-el-isr-1024x576.webp 1024w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/requisitos-y-documentos-para-exentar-el-isr-300x169.webp 300w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/requisitos-y-documentos-para-exentar-el-isr-768x432.webp 768w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/requisitos-y-documentos-para-exentar-el-isr-1536x864.webp 1536w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/requisitos-y-documentos-para-exentar-el-isr-1067x600.webp 1067w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/requisitos-y-documentos-para-exentar-el-isr-496x279.webp 496w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/requisitos-y-documentos-para-exentar-el-isr.webp 1600w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Requirements_and_Documents_to_Exempt_from_ISR\"><\/span>Requirements and Documents to Exempt from ISR<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p>Mexican law allows for exemption from paying income tax in certain cases, such as the sale of a <strong>home<\/strong> . To do so, the following requirements must be met:<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Be your primary residence<\/strong> : The property must have been your primary residence.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Not having used this benefit in the last three years<\/strong> .<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Property value<\/strong> : The maximum exempt amount is 700,000 UDIs (approximately $4.5 million pesos, depending on the value of the UDI at the time of sale).<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Necessary_documents\"><\/span>Necessary documents<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>To prove that the property was your residence, you must present the following documents to the notary public:<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Utility bills<\/strong> : electricity, water, gas, or landline telephone.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Voter ID (INE)<\/strong> : With the property address.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Bank or departmental account statements<\/strong> : Must show the address of the property.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Tax receipts<\/strong> : For services contracted on the property.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>It is important that these documents are between 2 and 6 months old and are in the name of the owner or immediate family members.<\/p>\n<p><img decoding=\"async\" class=\"alignnone wp-image-59371 size-full\" src=\"https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/que-sucede-si-no-cumples-con-los-requisitos.webp\" alt=\"What happens if you don't meet the requirements? Real Estate Income Tax Payment\" width=\"880\" height=\"495\" srcset=\"https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/que-sucede-si-no-cumples-con-los-requisitos.webp 880w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/que-sucede-si-no-cumples-con-los-requisitos-300x169.webp 300w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/que-sucede-si-no-cumples-con-los-requisitos-768x432.webp 768w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/que-sucede-si-no-cumples-con-los-requisitos-496x279.webp 496w\" sizes=\"(max-width: 880px) 100vw, 880px\" \/><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_happens_if_you_dont_meet_the_requirements\"><\/span>What happens if you don&#8217;t meet the requirements?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p>If you don&#8217;t qualify for the exemption, you can reduce your income tax amount through legal deductions, such as:<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Proven cost of acquisition<\/strong> : What you originally paid for the property.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Notary fees<\/strong> : Notary deeds and certifications.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Improvements or extensions<\/strong> : With valid invoices.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Real estate commissions<\/strong> : Billed at the time of sale.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>Having the proper documents not only makes the process easier, but also ensures you take full advantage of the available tax benefits.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Income_Tax_Exemption_Limit_How_Much_Is_It_in_2026\"><\/span>Income Tax Exemption Limit: How Much Is It in 2026?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p>One of the keys to exempting your home from paying <strong>Income Tax (ISR)<\/strong> is understanding the legally permitted value limit. This limit is regulated by the amount of <strong>700,000 Investment Units (UDIs)<\/strong> , and for 2024, this value is essential for calculating whether you qualify for the exemption.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Explanation_of_the_700000_UDI_limit\"><\/span>Explanation of the 700,000 UDI limit<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p><strong>UDIs (Investment Units)<\/strong> are an economic value regulated by the Bank of Mexico, and their value changes daily according to inflation. This system allows for up-to-date limits for tax benefits, such as the income tax exemption on real estate sales.<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li>In 2024, <strong>700,000 UDIs are equivalent to approximately 4.8 million Mexican pesos<\/strong> , although this amount may vary depending on the exact date of sale.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li>If the sale value of your property does not exceed this limit, and you meet the requirements established by law, you will be exempt from paying income tax.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_to_do_if_the_property_exceeds_this_value\"><\/span>What to do if the property exceeds this value?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>If the property you wish to sell is valued above the 700,000 UDI limit, you will not be able to fully exempt yourself from paying income tax. However, there are options to reduce the tax impact:<\/p>\n<p>&nbsp;<\/p>\n<ol>\n<li><strong>Deduction of expenses associated with the property:<\/strong>\n<ul>\n<li><strong>Acquisition cost:<\/strong> Present the original deed or invoice of the property purchase to deduct its original value.<\/li>\n<li><strong>Improvements or expansions:<\/strong> You can deduct investments made in renovations or expansions, as long as you have invoices in your name.<\/li>\n<li><strong>Notary fees:<\/strong> Notary fees and other legal expenses related to the sale are deductible.<\/li>\n<li><strong>Real estate commissions:<\/strong> If you hired the services of a real estate agent, you can also deduct their commission, as long as you have the corresponding invoice.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Consult with a notary or tax accountant:<\/strong> A professional can help you calculate the corresponding income tax and advise you on how to maximize the deductions allowed by law.<\/li>\n<li><strong>Pay only on net profit:<\/strong> Income tax is not applied to the total sale value, but rather to the net profit, that is, the difference between the sale price and the acquisition cost, minus deductible expenses.<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Practical_example\"><\/span>Practical example:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<blockquote><p><em>If you sell a property for 5 million pesos, but the original cost was 3 million and you carried out proven renovations for 500,000 pesos, the ISR will be calculated on the difference: <strong>5,000,000 &#8211; 3,000,000 &#8211; 500,000 = 1,500,000 pesos.<\/strong><\/em><\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<blockquote><p><strong><em>In this case, you will pay income tax only on the remaining amount.<\/em><\/strong><\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<p><img decoding=\"async\" class=\"aligncenter wp-image-59373 size-full\" src=\"https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/cuantas-veces-puedes-exentar-el-isr.webp\" alt=\"How Many Times Can You Exempt Income Tax?\" width=\"1000\" height=\"667\" srcset=\"https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/cuantas-veces-puedes-exentar-el-isr.webp 1000w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/cuantas-veces-puedes-exentar-el-isr-300x200.webp 300w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/cuantas-veces-puedes-exentar-el-isr-768x512.webp 768w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/cuantas-veces-puedes-exentar-el-isr-900x600.webp 900w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/cuantas-veces-puedes-exentar-el-isr-496x331.webp 496w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_Many_Times_Can_You_Exempt_Income_Tax\"><\/span>How Many Times Can You Exempt Income Tax?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p>One of the most common questions when selling a property in Mexico is: <strong>how many times can I exempt the Income Tax (ISR)?<\/strong> The law establishes a <strong>restriction of one exemption every three years<\/strong> , which means you can&#8217;t apply this tax benefit unlimitedly. Below, we explain how this rule works and strategies to get the most out of it.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Restriction_of_one_exemption_every_three_years\"><\/span>Restriction of one exemption every three years<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>According to <a href=\"https:\/\/www.sat.gob.mx\/articulo\/15199\/articulo-93\" target=\"_blank\" rel=\"noopener\"><strong>Article 93 of the Income Tax Law<\/strong><\/a> , owners are entitled to <strong>exempt income tax payments<\/strong> on the sale of a home if they meet the requirements established by law. However, this exemption can only be applied <strong>once every three years<\/strong> . This means:<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li>If you&#8217;ve already sold a property and applied the exemption, you&#8217;ll have to wait three years before you can exempt the income tax again on another sale.<\/li>\n<li>This period applies from the date the deeds of the exempt sale were signed.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<blockquote><p><em>For example, if you sold a home in January 2022 and applied the exemption, you can again exempt the income tax on a new sale until January 2026.<\/em><\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_happens_if_you_sell_another_property_before_three_years\"><\/span>What happens if you sell another property before three years?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>If you decide to sell another property before reaching three years from the last exemption, you won&#8217;t be able to avoid paying income tax, but you can <strong>deduct certain expenses<\/strong> related to the purchase and maintenance of the property, such as:<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li>The original acquisition cost.<\/li>\n<li>Investments in construction or remodeling.<\/li>\n<li>Notary and deed fees.<\/li>\n<li>Commissions paid to real estate agents.<\/li>\n<\/ul>\n<h4><\/h4>\n<p>The restriction on an exemption every three years doesn&#8217;t have to be an obstacle if you plan your sales properly. Take full advantage of this benefit to reduce your tax burden and consult with an expert to ensure you make the best financial decisions. A good strategy can make a difference in your profits!<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Benefits_of_Exempting_from_ISR\"><\/span>Benefits of Exempting from ISR<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p>Exempting <strong>income tax (ISR)<\/strong> when selling your home not only represents tax relief but also has a significant impact on the final profit from the transaction. Below, we explain the main benefits of this exemption and how it can improve your financial results.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"How_much_can_you_save_by_exempting_income_tax_from_selling_a_home\"><\/span>How much can you save by exempting income tax from selling a home?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>The income tax payable when selling a property can be as high as <strong>35% of the profit obtained<\/strong> , depending on your tax situation and the property&#8217;s value. Exempting this tax means <strong>you can save a considerable amount of money<\/strong> .<\/p>\n<p>&nbsp;<\/p>\n<p>For example:<\/p>\n<ul>\n<li>If you sell a property for a profit of $3,000,000 MXN, the income tax could be approximately <strong>$1,050,000 MXN<\/strong> (35%). By exempting income tax, you can keep this amount in your pocket.<\/li>\n<li>For properties valued up to <strong>700,000 UDIs<\/strong> (approximately $4,900,000 MXN in 2024), the exemption covers the entire gain, representing a significant savings.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<blockquote><p><em>In short, exempting income tax can make a big difference to your finances, especially if the property meets the legal requirements.<\/em><\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Impact_on_the_net_profit_from_the_sale_of_your_property\"><\/span>Impact on the net profit from the sale of your property<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>The main benefit of exempting income tax is that <strong>it increases the net profit obtained from the sale<\/strong> . Without this tax, you can use that money for other projects, investments, or personal goals.<\/p>\n<p>&nbsp;<\/p>\n<p>Let&#8217;s see the impact with a practical example:<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Without exempting ISR:<\/strong><br \/>\nSelling price: $4,000,000 MXN<br \/>\nAcquisition cost and other deductible expenses: $2,500,000 MXN<br \/>\nTaxable income: $1,500,000 MXN<br \/>\nISR to pay (35%): <strong>$525,000 MXN<\/strong><br \/>\n<strong>Net profit:<\/strong> $975,000 MXN<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>With ISR exemption:<\/strong><br \/>\nSelling price: $4,000,000 MXN<br \/>\nAcquisition cost and other deductible expenses: $2,500,000 MXN<br \/>\nTaxable income: <strong>$0 (exempt)<\/strong><br \/>\n<strong>Net profit:<\/strong> $1,500,000 MXN<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<blockquote><p><em>In this case, the ISR exemption represents a direct saving of <strong>$525,000 MXN<\/strong> , substantially increasing your final profits.<\/em><\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<p>Exempting from income tax not only helps you <strong>maximize your profits<\/strong> , but also gives you the peace of mind of maintaining a stable tax situation. This benefit is a powerful tool for optimizing your finances when selling a property, so complying with the requirements and properly planning the sale are key to making the most of it.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Steps_to_follow_to_exempt_the_payment_of_income_tax_on_the_sale_of_a_house\"><\/span>Steps to follow to exempt the payment of income tax on the sale of a house<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p>If you plan to sell your home and want to take advantage of the <strong>Income Tax (ISR)<\/strong> exemption, it&#8217;s important to follow a clear and orderly process to ensure everything is handled correctly. Below, we outline the essential steps you must follow to apply for this exemption.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"1_Notify_the_notary_of_your_intention_to_exempt_income_tax\"><\/span>1. Notify the notary of your intention to exempt income tax.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>The first step is to notify the <strong>notary public<\/strong> who will execute the deed of sale. The notary will calculate the corresponding income tax and verify whether you qualify for exemption from payment. It is essential to inform them from the beginning of the process to avoid misunderstandings or delays.<\/p>\n<p>&nbsp;<\/p>\n<blockquote><p><em><strong>Practical advice:<\/strong><\/em><\/p>\n<p><em>When<\/em> choosing a notary, make sure they have experience in this type of tax procedure and are familiar with SAT regulations.<\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_Prepare_the_necessary_documents\"><\/span>2. Prepare the necessary documents<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>Gather all documentation that proves the property is your home and that you meet the legal requirements. Some key documents include:<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Proof of address<\/strong> (electricity, water, or telephone bills in your name).<\/li>\n<li><strong>INE credential<\/strong> with the property address.<\/li>\n<li><strong>Bank or departmental statements<\/strong> indicating the address of the property.<\/li>\n<li><strong>Property deed<\/strong> .<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<blockquote><p><em><strong>Important:<\/strong> Documents must be between <strong>2 and 6 months old<\/strong> , as requested by the notary.<\/em><\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_Verify_that_the_property_meets_the_requirements\"><\/span>3. Verify that the property meets the requirements<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>To exempt from ISR, the property must:<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li>Let your home be your main room.<\/li>\n<li>Have a <strong>residential land use<\/strong> .<\/li>\n<li>It has not been sold within the last three years under the income tax exemption.<\/li>\n<li>Do not exceed the limit of <strong>700,000 UDIs<\/strong> (approximately $4,900,000 MXN in 2024).<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>If you meet these criteria, you can proceed with the exemption process.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_Request_exemption_from_the_notary\"><\/span>4. Request exemption from the notary<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>The notary will review the documentation and determine if you qualify for income tax exemption. If so, the notary will include this information in the public deed and waive the tax on the transaction.<\/p>\n<p>&nbsp;<\/p>\n<blockquote><p><em><strong>Important note:<\/strong> This procedure must be completed <strong>before signing the deed of sale<\/strong> , as it is not possible to request exemption after the sale process has concluded.<\/em><\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"5_Final_review_and_delivery_of_documents\"><\/span>5. Final review and delivery of documents<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>The notary will review all the information and perform the corresponding tax calculations. If everything is in order, they will proceed with the preparation of the public deed, indicating that the income tax has been exempted.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"6_Signing_of_the_deed_and_delivery_of_the_property\"><\/span>6. Signing of the deed and delivery of the property<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>Once the process is complete, you&#8217;ll sign the deed of sale and hand over the property to the buyer. The notary will provide you with a copy of the deed, which will indicate your exemption from income tax.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"7_Keep_your_documents_in_order\"><\/span>7. Keep your documents in order<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>Even if you&#8217;ve exempted your income tax, it&#8217;s important to keep all documents related to the transaction, as the SAT (Tax Administration Service) may request a review in the future. Keep copies of the deeds, proof of address, and any other relevant documents.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-59372 size-full\" src=\"https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/que-hacer-si-no-puedes-exentar-el-isr.webp\" alt=\"What to Do if You Can't Exempt from Income Tax?\" width=\"768\" height=\"480\" srcset=\"https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/que-hacer-si-no-puedes-exentar-el-isr.webp 768w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/que-hacer-si-no-puedes-exentar-el-isr-300x188.webp 300w, https:\/\/plalla.com\/wp-content\/uploads\/2025\/01\/que-hacer-si-no-puedes-exentar-el-isr-496x310.webp 496w\" sizes=\"(max-width: 768px) 100vw, 768px\" \/><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_to_Do_if_You_Cant_Exempt_from_Income_Tax\"><\/span>What to Do if You Can&#8217;t Exempt from Income Tax?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p>If you don&#8217;t qualify for <strong>Income Tax<\/strong> exemption on the sale of your home, don&#8217;t worry. There are legal alternatives that allow you to reduce the amount you owe by taking advantage of the deductions allowed by law. Below, we explain how to calculate the Income Tax and the deductions you can apply to minimize its impact on your profits.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"1_Deduction_of_Expenses_and_Improvements\"><\/span>1. Deduction of Expenses and Improvements<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>Even if you can&#8217;t exempt yourself from income tax, you are entitled to deduct certain expenses related to the acquisition, maintenance, and improvement of property. This can significantly reduce the tax base.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Common deductible expenses:<\/strong><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Acquisition cost:<\/strong> The original price you paid for the property.<\/li>\n<li><strong>Investments in improvements:<\/strong> Expansions, renovations, and major maintenance you&#8217;ve performed. These must be supported by tax receipts.<\/li>\n<li><strong>Notary fees:<\/strong> Notary fees and title deed rights paid during the purchase.<\/li>\n<li><strong>Real estate commissions:<\/strong> Payments made to real estate agents or brokers when selling the property.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<blockquote><p><em><strong>Practical advice:<\/strong> Make sure you keep all invoices and tax receipts related to these items. If you don&#8217;t have these documents, you won&#8217;t be able to apply them as deductions. <\/em><\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_How_to_Calculate_the_Income_Tax_You_Will_Have_to_Pay\"><\/span>2. How to Calculate the Income Tax You Will Have to Pay<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>The ISR (income tax) is calculated based on the profit obtained from the sale of the property. Follow these basic steps to estimate the amount:<\/p>\n<p>&nbsp;<\/p>\n<ol>\n<li><strong>Determine the profit obtained:<\/strong><br \/>\nSubtract the proven acquisition cost and deductible expenses from the property&#8217;s selling price. <strong>Formula:<\/strong><br \/>\nProfit = Selling price &#8211; (Acquisition cost + Deductible expenses)<\/li>\n<li><strong>Apply the corresponding rate:<\/strong><br \/>\nThe profit is taxed at a rate that can reach up to 35%, depending on the amount earned and your tax situation. The notary will calculate the exact amount.<\/li>\n<li><strong>Consider additional deductions:<\/strong><br \/>\nIf you applied improvements, commissions, or notary fees, these further reduce the taxable base.<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_Cases_in_which_you_can_deduct_notary_fees_improvements_and_commissions\"><\/span>3. Cases in which you can deduct notary fees, improvements and commissions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>Here are some examples of how deductions can benefit you:<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Improvements and renovations:<\/strong><br \/>\nIf you built an extra room or remodeled your kitchen, you can deduct the cost as long as you have invoices and documents supporting these works.<\/li>\n<li><strong>Notary fees:<\/strong><br \/>\nPayments made to the notary, such as fees for notarization or certificates, are deductible if you keep the receipts.<\/li>\n<li><strong>Real estate commissions:<\/strong><br \/>\nThe percentage paid to a real estate agent for the sale of the house can be deducted upon presentation of the corresponding invoice.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_Consult_with_a_Professional\"><\/span>4. Consult with a Professional<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>If you can&#8217;t exempt yourself from income tax, it&#8217;s recommended that you seek advice from a real estate accountant or the notary public who will handle the sale. They can help you calculate the tax and take advantage of all available deductions.<\/p>\n<p>&nbsp;<\/p>\n<p>Even if you can&#8217;t exempt yourself from income tax, you can significantly reduce the amount you owe by taking advantage of the deductions allowed by law. Keep your documents in order, request invoices for every property-related expense, and work with an expert to ensure you pay only what you owe. Proper planning will help you protect your finances and maximize your profits!<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Exempting_Income_Tax_for_Foreigners_What_Changes\"><\/span>Exempting Income Tax for Foreigners: What Changes?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p>When a foreigner sells a property in Mexico, the process for exempting or reducing <strong>Income Tax (ISR)<\/strong> may be different. Mexican laws have specific provisions for sellers who do not reside in the country. Below, we clarify how the ISR works for foreigners and what strategies can help minimize this tax.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"1_Does_the_Income_Tax_Exemption_apply_to_Foreigners\"><\/span>1. Does the Income Tax Exemption apply to Foreigners?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>Yes, foreigners can benefit from the income tax exemption under certain conditions. To qualify, a foreigner must meet the same requirements as a Mexican resident:<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li>The property must have been used as a residential home.<\/li>\n<li>Not having sold another property in Mexico in the last three years.<\/li>\n<li>Submit the necessary documents proving residency at the property (such as utility bills in your name or bank statements).<\/li>\n<li>The value of the property must not exceed the limit of <strong>700,000 UDIs<\/strong> (approximately 4.5 million pesos).<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<blockquote><p><em><strong>Important:<\/strong> Although the law allows foreigners to exempt themselves from income tax, it is essential that the transaction be conducted before a Mexican notary public, who will verify that all requirements are met.<\/em><\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_Taxes_for_Non-Residents\"><\/span>2. Taxes for Non-Residents<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>If the foreigner does not meet the requirements for income tax exemption, a different tax scheme known as <strong>the Nonresident Income Tax (IRNR)<\/strong> will apply. This tax has specific characteristics:<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>35% rate on profit obtained:<\/strong><br \/>\nThe calculation is made on the difference between the selling price and the proven acquisition cost.<\/li>\n<li><strong>Retention of 25% of the total sale value:<\/strong><br \/>\nIf the foreigner cannot prove the acquisition costs, the notary will apply a 25% withholding tax on the total sale price, instead of the profit obtained.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<blockquote><p><em><strong>Note:<\/strong> The withholding is made at the time of the public deed and is the responsibility of the notary.<\/em><\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_How_to_Reduce_Taxes_as_a_Foreigner\"><\/span>3. How to Reduce Taxes as a Foreigner<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>Although income tax cannot be exempted, there are strategies that foreigners can use to reduce the amount of tax:<\/p>\n<ul>\n<li><strong>Prove deductible expenses:<\/strong><br \/>\nSubmit invoices supporting property improvements, notary fees, real estate commissions, and other related costs.<\/li>\n<li><strong>Collaborate with a specialized accountant:<\/strong><br \/>\nA tax expert can help you prepare the required documentation and ensure you take advantage of all available deductions.<\/li>\n<li><strong>Review international tax agreements:<\/strong><br \/>\nMexico has tax treaties with several countries to avoid double taxation. If you are a resident of a tax treaty country, you may benefit from additional tax reductions. Consult an expert for more details.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_Recommendations_for_Foreigners\"><\/span>4. Recommendations for Foreigners<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Consult with a notary public from the beginning:<\/strong><br \/>\nThe notary will not only oversee the transaction, but will also calculate the corresponding taxes and verify your eligibility for tax exemption.<\/li>\n<li><strong>Keep your documents in order:<\/strong><br \/>\nIt&#8217;s crucial to have deeds, invoices, and any other necessary supporting documentation to demonstrate costs and comply with legal requirements.<\/li>\n<li><strong>Consider changing your tax status:<\/strong><br \/>\nIn some cases, foreigners residing temporarily or permanently in Mexico may benefit from the same provisions as Mexican residents.<\/li>\n<\/ul>\n<h4><\/h4>\n<p>Although the process of exempting or reducing income tax may be more complex for foreigners, it is possible to save significantly if you comply with the legal requirements or implement the appropriate strategies. Working with experienced professionals, such as notaries and specialized accountants, is key to optimizing your finances and avoiding tax problems when selling your property in Mexico.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions_FAQs\"><\/span>Frequently Asked Questions (FAQs)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"1_How_can_I_exempt_income_tax_if_the_property_is_shared_with_my_partner\"><\/span>1. How can I exempt income tax if the property is shared with my partner?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>If the property is owned by both owners, each owner can claim the income tax exemption. This means that both owners are entitled to exemption from the tax as long as they meet the legal requirements, such as not having sold another property in the last three years and proving that the property was their home. It is essential that each owner submit their respective documentation, such as identification, proof of address, and other necessary documents.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_Is_it_possible_to_exempt_income_tax_on_the_sale_of_land\"><\/span>2. Is it possible to exempt income tax on the sale of land?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>No, the income tax exemption applies only to properties used as <strong>residential homes<\/strong> , according to Mexican law. Non-residential land does not qualify for this benefit, as it lacks the required residential use. However, if the land includes a habitable building, that portion of the property may qualify for the exemption, provided you meet the necessary requirements.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_What_happens_if_the_documents_are_not_in_my_name\"><\/span>3. What happens if the documents are not in my name?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>To qualify for income tax exemption, the documents proving that the property was your home must be in your name or in the names of immediate family members (such as spouse, children, or parents). If you don&#8217;t have the documents in your name, the notary may not be able to apply the exemption. Therefore, it&#8217;s important to ensure that your utility bills, account statements, or any other receipts are registered with the property&#8217;s address and in your name from the moment you moved in.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_What_taxes_must_the_buyer_pay\"><\/span>4. What taxes must the buyer pay?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>The buyer must cover the following costs associated with the transaction:<\/p>\n<p>&nbsp;<\/p>\n<ol>\n<li><strong>Real Estate Acquisition Tax (ISAI):<\/strong> This tax varies between 2% and 4.5% of the property&#8217;s value, depending on the state where the property is located.<\/li>\n<li><strong>Notary fees:<\/strong> These include notary fees, registration fees, and certification fees, among others.<\/li>\n<li><strong>Property Appraisal:<\/strong> If necessary, the buyer will also be responsible for covering the cost of the appraisal.<\/li>\n<li><strong>Value Added Tax (VAT):<\/strong> If the buyer purchases a commercial or new property, this tax will be applied to the value of the construction.<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<p>It is important for the buyer to request a detailed breakdown of all costs from the notary to avoid surprises during the purchase and sale process.<\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p>Exempting from paying income tax when selling your home not only represents a significant tax savings, but also a smart way to protect your assets. To achieve this, it&#8217;s essential to know the rules, gather the necessary documents, and communicate effectively with the notary. Planning ahead and ensuring you comply with all legal requirements can make the difference between paying unnecessary taxes or maximizing the net profit from your sale.<\/p>\n<p>&nbsp;<\/p>\n<p>Furthermore, taking advantage of this tax benefit will not only positively impact your finances in the short term, but will also allow you to optimize your real estate investments in the future. Whether you&#8217;re selling for the first time or planning to do so again in the future, being informed and organized is key to making strategic decisions and protecting your long-term financial well-being.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p><strong>What did you think of the information?<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p>We&#8217;d love to hear your feedback. If you have any comments, concerns, or questions, please leave them in the comments section below. We&#8217;re here to help and guide you.<\/p>\n<p>&nbsp;<\/p>\n<p>If you found this article helpful, please feel free to share it on your favorite social media platforms or send it to your family and friends via email or WhatsApp! Thank you so much for your support, and remember, we are <a href=\"https:\/\/plalla.com\/en\/\" target=\"_blank\" rel=\"noopener\"><strong>Plalla Real Estate<\/strong><\/a> . \ud83d\ude42<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Did you know that selling a property in Mexico could help you avoid paying Income Tax (ISR) ? For many homeowners, income tax can be a major concern, as it can significantly reduce the profit obtained from the sale of their home. However, the good news is that there are legal mechanisms to exempt you [&hellip;]<\/p>\n","protected":false},"author":11,"featured_media":76322,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[444],"tags":[787,448,445,446],"class_list":["post-95628","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate","tag-mortgage-credit","tag-plalla-real-estate-en","tag-real-estate","tag-real-estate-investments"],"_links":{"self":[{"href":"https:\/\/plalla.com\/en\/wp-json\/wp\/v2\/posts\/95628","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/plalla.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/plalla.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/plalla.com\/en\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/plalla.com\/en\/wp-json\/wp\/v2\/comments?post=95628"}],"version-history":[{"count":4,"href":"https:\/\/plalla.com\/en\/wp-json\/wp\/v2\/posts\/95628\/revisions"}],"predecessor-version":[{"id":109833,"href":"https:\/\/plalla.com\/en\/wp-json\/wp\/v2\/posts\/95628\/revisions\/109833"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/plalla.com\/en\/wp-json\/wp\/v2\/media\/76322"}],"wp:attachment":[{"href":"https:\/\/plalla.com\/en\/wp-json\/wp\/v2\/media?parent=95628"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/plalla.com\/en\/wp-json\/wp\/v2\/categories?post=95628"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/plalla.com\/en\/wp-json\/wp\/v2\/tags?post=95628"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}