Mexico Property Taxes for Foreign Buyers (2026): ISR, Predial, Rental Tax

By Thomas Von Willich  |  Editorial Lead, Riviera Maya Real Estate Insider  |  April 2026

Independent market intelligence for foreign property investors in Mexico. No properties to sell. No agents to recommend. Just accurate information.

📖 This article is part of our Complete Guide to Buying Property in Mexico as a Foreigner.

Taxes are the most misunderstood part of foreign property ownership in Mexico. The single biggest surprise: when you sell, you pay 25% capital gains tax (ISR) on the gross sale value — not the profit. On a $300,000 sale, that's $75,000 withheld by the notary at closing. There is no primary residence exemption for non-residents.

This guide covers every tax that affects foreign buyers: capital gains (ISR) on sale, annual property tax (predial), rental income tax, and the RFC (tax ID) you need to file correctly. All figures verified against SAT (Mexico's IRS) and state government sources for 2026.

1. Capital Gains Tax (ISR) on Sale — The Big One

When you sell a Mexican property as a non-resident, the buyer's notary is legally required to withhold 25% of the gross sale value and remit it to SAT. This applies regardless of how much profit you made — or even if you sold at a loss. The calculation is not based on your original purchase price, improvements, or inflation. It is simply 25% of the total sale price shown on the deed.

Example: The Real Cost of Selling

The table shows the brutal reality: even if you sell at a loss (last row), you still pay $75,000. The only way to reduce ISR is to become a Mexican tax resident, which requires living in Mexico for more than 183 days per year and filing local tax returns. For most foreign investors, the 25% gross withholding is unavoidable.

2. Annual Property Tax (Predial) — Small but Important

Predial is the Mexican equivalent of property tax. It is levied annually by the municipality where the property is located. In Quintana Roo, the rate is approximately 0.1% of the cadastral value (valor catastral), which is typically much lower than the market value. On a property with a cadastral value of $100,000, you would pay about $100 per year.

Key facts about predial:

• Payment deadline: January each year. Most municipalities offer up to 25% discount for early payment in January.
• Late payment: Monthly surcharges of 1–2% apply. Unpaid predial becomes a lien on the property.
• At closing: The buyer reimburses the seller for the prorated portion of the current year's predial. This is a reimbursement, not a closing cost.
• Cadastral value updates: Municipalities periodically reassess values. A reassessment may increase your predial, but you can appeal.

Predial is not a significant expense, but paying late can trigger penalties. Set a calendar reminder for January each year.

3. Rental Income Tax (ISR) — With or Without RFC

If you rent your property (long-term or short-term vacation rental like Airbnb), you must pay Mexican income tax (ISR) on the rental income. The rules differ dramatically depending on whether you have an RFC (Registro Federal de Contribuyentes), the Mexican tax ID.

Without an RFC (Default for most foreign owners)

If you do not obtain an RFC, any person or company that pays you rent (including platforms like Airbnb or a property manager) is required to withhold 25% of the gross rental income and remit it to SAT. You receive the net amount. You do not need to file a tax return, but you cannot deduct any expenses (management fees, utilities, maintenance, depreciation).

With an RFC (Recommended for active renters)

If you obtain an RFC (easy to do through a tax advisor or SAT office), you can:

• Issue invoices (CFDI) for your rental income.
• Deduct legitimate expenses: property management, utilities, cleaning, repairs, HOA fees, insurance, depreciation.
• File an annual tax return and pay ISR only on net income (income minus expenses).
• Typically reduce your effective tax rate from 25% of gross to 10–15% of net.

The RFC process for foreigners is straightforward: you need a temporary or permanent residency card (or a valid tourist entry with an address in Mexico). A local tax accountant can handle the registration for $200–400.

4. Acquisition Tax (ISAI) — Not Annual, But Often Confused

ISAI (Impuesto Sobre Adquisición de Inmuebles) is the state acquisition tax paid by the buyer at closing, not an annual tax. In Quintana Roo, it is 2–3% of the purchase price. Foreign buyers often confuse ISAI with predial or capital gains. Remember: ISAI is a one-time closing cost. Predial is annual. ISR on sale is paid by the seller at closing.

5 Common Misconceptions About Mexico Property Taxes

"Sellers pay capital gains tax only on the profit"

No. For non-residents, the tax is 25% of the gross sale value, not the net gain. On a $300,000 sale, that's $75,000, regardless of what the seller originally paid or any improvements made.

"Predial is a closing cost"

No. Predial is an annual tax. At closing, the buyer reimburses the seller for the prorated portion of the current year, but that's a reimbursement, not a closing cost. The buyer then pays predial directly in subsequent years.

"Foreign buyers don't need to file Mexican taxes"

False. If you earn rental income or sell a property, you must file a Mexican tax return (ISR). Even if no tax is due, filing may be required to report the transaction. Failure to file can result in penalties and complications for future transactions.

"Rental income from Airbnb is tax-free in Mexico"

False. Rental income is subject to ISR. Without an RFC, the payer (e.g., Airbnb or management company) may withhold 25% of gross income. With an RFC, you can deduct expenses and pay on net income. Either way, tax is due.

"Property taxes are the same across Mexico"

No. Predial rates vary by municipality (typically 0.05–0.2% of cadastral value). Quintana Roo is around 0.1%, but Cancun may differ from Tulum. ISAI rates also vary by state (2–4% typically).

Frequently Asked Questions