How to sell your property in Mexico as a foreigner

Selling a property in Mexico as a foreigner is an orderly process, but it has its own rules, and it’s worth knowing them before you set a price. This guide explains, in general terms, what to expect.

The steps of a sale

1. The offer. The buyer makes an offer, and you agree on the price, payment terms and dates.
2. The promissory agreement. You sign a contract that sets the terms of the sale and, usually, a deposit. It protects both sides while the closing is prepared.
3. Preparation at the notary’s office. The notario gathers and reviews the documents, requests the required certificates and calculates the taxes.
4. The deed. The deed is signed before the notario, the price is paid and the sale is recorded in the Public Property Registry.

The notario’s role

In Mexico, a notario público is a licensed attorney appointed by the state. It isn’t the equivalent of a notary public in the U.S. or most of Canada: the notario reviews the legality of the transaction, verifies the identity and authority of the parties, calculates and withholds taxes, and certifies the deed. That makes the notario central to any sale.

The tax on your gain

What most foreign owners call capital gains is, in Mexico, income tax on the sale of real estate. In general terms, it starts from the difference between the sale price and your purchase cost, adjusted for inflation; the part of that cost that corresponds to the building is also reduced over the years. From that difference you subtract documented improvements, closing costs and the other deductions the law allows.

The notario calculates the tax and withholds it when the deed is signed. The rules depend on your situation; for example, the calculation isn’t the same if you’re a tax resident of Mexico or of another country. If you’re a Mexican tax resident and the property is your primary home, the law provides an exemption, with limits and requirements the notario will verify. That’s why it makes sense to run the numbers before you accept an offer, not after.

Keep your receipts

Improvements and expenses can only be deducted if they’re documented. If you remodeled, added on or made major improvements, keep the invoices and paperwork that prove it. In Mexico, that usually means official electronic invoices. A well-organized file kept from the day you buy can make a real difference when you sell.

If your property is held in a bank trust

If you bought in the restricted zone, your property is most likely held in a fideicomiso (Mexican bank trust). When you sell, you instruct the trustee bank to transfer the property, or your rights in the trust, to the buyer. If the buyer is also a foreigner, they can take over those rights through a trust. These steps with the bank, known as trust bank acts, have their own requirements, so it’s best to start them early.

Selling from abroad with a power of attorney

You don’t have to be in Mexico to sell. You can grant a power of attorney (POA) so someone you trust can sign on your behalf. If you sign it outside Mexico, it’s usually granted at a Mexican consulate, or before a local notary with an apostille, and then formalized here. The POA needs exactly the right powers for the sale; a poorly drafted one can stall the closing.

Before you list your home

• Gather your deed or your bank trust documents.
• Make sure your predial (property tax) and utilities are paid up.
• Organize your improvement receipts.
• Ask for a preliminary tax estimate.
• If you won’t be in Mexico, get your power of attorney ready ahead of time.

How we can help

At Loyal Services, we coordinate the entire sale from Nuevo Vallarta. Our real estate team handles the promissory agreement, the bank trust steps and the closing with the notario. Our tax team estimates the tax before you accept an offer and reviews it with the notario. Our legal team prepares your power of attorney if you can’t be here in person.