Selling a house in Mexico from the US — the tax nobody warns you about
Here's the trap: once you live in the US you're a non-resident for Mexican tax, so the casa-habitación exemption may not apply — you're taxed 25% of the sale price or 35% of the gain. We'll show your real Mexican ISR, a US capital-gains estimate, and how the foreign tax credit keeps you from paying twice.
The Mexican sale
Your US side (estimate)
Mexico — your two options
Email me the breakdown + the documents the notario will ask for
Worked examples
Guadalajara family home sold from Dallas, married filers
Your Mexican ISR as a non-resident: MX$1,242,500
As a US resident you're a residente en el extranjero: the cheaper of 25% of the price or 35% of the gain — here, the 35%-of-gain option.
⚠ The exemption you're losing: if you still lived in Mexico, the casa-habitación exemption would drop this to about MX$46,366 — being a non-resident costs you roughly MX$1,196,134 more.
Mexico — your two options
- Option A — 25% of the sale price (Art. 160): MX$1,700,000 (no deductions, notario withholds)
- Option B — 35% of the net gain (Art. 161): MX$1,242,500 (needs a Mexican legal representative)
- Your cheaper option: 35% of gain → MX$1,242,500
- Your estimated gain: MX$3,550,000 (use INPC-indexed cost for accuracy)
Small Puebla house under the exemption cap, single filer
Your Mexican ISR as a non-resident: MX$364,000
As a US resident you're a residente en el extranjero: the cheaper of 25% of the price or 35% of the gain — here, the 35%-of-gain option.
⚠ The exemption you're losing: if you still lived in Mexico, the casa-habitación exemption would drop this to about MX$0 — being a non-resident costs you roughly MX$364,000 more.
Mexico — your two options
- Option A — 25% of the sale price (Art. 160): MX$1,350,000 (no deductions, notario withholds)
- Option B — 35% of the net gain (Art. 161): MX$364,000 (needs a Mexican legal representative)
- Your cheaper option: 35% of gain → MX$364,000
- Your estimated gain: MX$1,040,000 (use INPC-indexed cost for accuracy)
Playa del Carmen rental condo, large gain, was rented out
Your Mexican ISR as a non-resident: MX$3,290,000
As a US resident you're a residente en el extranjero: the cheaper of 25% of the price or 35% of the gain — here, the 35%-of-gain option.
Mexico — your two options
- Option A — 25% of the sale price (Art. 160): MX$3,625,000 (no deductions, notario withholds)
- Option B — 35% of the net gain (Art. 161): MX$3,290,000 (needs a Mexican legal representative)
- Your cheaper option: 35% of gain → MX$3,290,000
- Your estimated gain: MX$9,400,000 (use INPC-indexed cost for accuracy)
Examples are recomputed whenever the underlying rates or data change; the date above is the last recompute.
Methodology & data sources
Mexico: under the LISR, a seller whose fiscal residence is abroad (a residente en el extranjero, Título V) pays ISR at 25% of the gross sale price (Art. 160) or 35% of the net gain via a Mexican legal representative (Art. 161) — and the casa-habitación exemption (700,000 UDIS on the sale price, Art. 93-XIX) generally applies only to a Mexican-resident seller. Residency is determined by fiscal domicile, not citizenship. The UDI value is published daily by Banxico (we use ≈ MX$, {{udidate}} — confirm today's value). The gain is sale price minus INPC-indexed acquisition cost and deductible improvements/costs (CFDI required); the notario público computes and withholds. United States: a US person owes tax on the worldwide capital gain; we estimate the 2026 long-term rate (0/15/20%) on the USD gain you provide, apply the Section 121 exclusion only if it was your US primary home, flag the 3.8% NIIT, and note the Foreign Tax Credit (Form 1116) — the Mexican ISR you pay usually offsets most or all of the US tax. We deliberately do not auto-convert currency or model inherited-property basis, rentals or expatriation — those change the answer materially and belong with a cross-border CPA. Our Freshness Keeper tracks the LISR articles, the Banxico UDI and the US brackets.
Sources: LISR Art. 93-XIX (exemption) · ISR non-resident (Arts. 160/161) · Banxico — UDIS · IRS Pub 523 (§121) · IRS Topic 559 (NIIT/FTC)
Frequently asked questions
Do I still get the casa-habitación exemption if I live in the US?
Usually no — as a non-resident you're taxed 25% of the price or 35% of the gain, and the exemption belongs to the resident regime.
Do I pay tax twice?
Rarely the full amount. The Mexican ISR is credited against your US tax (Form 1116); Mexico's rate is often higher, so it usually absorbs the US bill.
Does the US $250k/$500k exclusion apply?
Only if the Mexican house was your US-tax primary residence (2 of 5 years). Not for a second home, rental or inherited house.
I inherited the house — is this tool enough?
No. Inherited property gets a stepped-up basis at the date of death and needs currency work — see a cross-border CPA. The tool flags this.
Which option is cheaper, 25% or 35%?
It depends on your gain versus your price. A big gain relative to price favors the 25%-of-price option; a small gain favors 35%-of-gain. The tool picks the lower one.