Mexico Property Taxes and Buying Costs: What a Foreign Owner Actually Pays (2026)

Mexico taxes non-resident landlords at a flat 25% of gross rent with nothing deductible at all, and round-trip buying costs run near 10.3% of the price.

The most expensive line in a Mexican purchase is rarely the price. It is one sentence in Article 158 of the income tax law, which taxes a non-resident landlord at 25% of gross rent and allows no deduction at all. Anyone modelling a dollar yield in Tulum or Puerto Vallarta should start the arithmetic there rather than at the asking price. The rest of the cost stack is more forgiving, and worth separating out properly.

How much does it cost to complete a purchase in Mexico?

The Glopra snapshot of 23 July 2026, methodology v3, puts the round-trip transaction cost at 10.3% of the purchase price. The bulk of that is the state acquisition tax, ISAI or impuesto de adquisición, which runs roughly 2% to 5% depending on the state where the deed is signed. Notary fees, public registry recording and the compulsory appraisal absorb most of the remainder.

Scale it against the same snapshot, which prices the capital average in Mexico City at 2,959 USD per square metre. A 90 m² apartment at that level implies around 27,400 USD of transaction cost sitting on top of the purchase price, payable in cash at closing and not financeable.

Why does a non-resident landlord pay 25% of gross rent?

Article 158, third paragraph of the Ley del Impuesto sobre la Renta sets the rate at 25% on the income received, "sin deducción alguna" — with no deduction of any kind. The payer withholds it, and under Article 153 the withholding is a pago definitivo, a final payment rather than an advance against some later return. There is no band, no allowance and no sensitivity to the size of the rent: a 400 USD monthly let and a 4,000 USD monthly let face identical treatment.

A correction is needed here, because the internet repeats the error constantly. The 35% net-basis option that gets cited sits in Article 159 and governs tiempo compartido, timeshare arrangements, not Article 158 residential letting. A genuine net-basis election does exist under Article 6(5) of the United States–Mexico tax treaty, but it is open only to persons resident in the United States. A German, French or Chinese owner cannot elect into it. Set that 25% against the 5.79% gross yield in the Glopra snapshot and the net figure shifts before a single peso of running cost is counted.

Can foreigners buy on the coast, or is the restricted zone closed?

It is not closed. Within 50 km of the coastline and 100 km of a land border a foreign national cannot hold direct title, but can hold the property through a fideicomiso, a bank trust. The bank holds legal title; the buyer holds the beneficial rights, which cover selling, letting, renovating and passing the property to heirs. The trust runs for a renewable 50-year term, costs a set-up fee at signing and carries a bank fee every year afterwards.

Tulum, Playa del Carmen, Puerto Vallarta and Los Cabos all sit inside that zone, so this is the normal path for foreign demand in Mexico rather than an exception. Budget the fideicomiso as a recurring cost line, not as a legal obstacle.

Does furnished or short-term letting change the tax bill?

Yes, and this is where budgets break. Unfurnished residential letting is exempt from IVA under Article 20(II) of the Ley del Impuesto al Valor Agregado. Furnished letting is not exempt, and neither is holiday letting; both attract 16% IVA, and most states add a lodging tax on top. A furnished short-let unit therefore carries the 25% income tax on gross, plus 16% IVA, plus the state levy, all charged against the same rent.

Are Mexican prices running ahead of local incomes?

The Glopra snapshot records a price-to-income ratio of 13.3 and a bubble score of 64 out of 100, in the elevated band. Dollar prices are up 16.2% over the last twelve months and 74.7% over five years. That is a foreign-capital story more than a local-wage one, and it means the yield is being asked to carry an entry price that has already travelled a long way.

Before making an offer, ask the notario for the ISAI rate in that specific municipality and the bank's published fideicomiso fee schedule in writing. Those two numbers move the 10.3% more than anything else in the file.

This article is general information, not legal or tax advice; confirm your own position with a Mexican notario or tax adviser before signing.

Sources

Ley del Impuesto sobre la Renta, Articles 153, 158 and 159

diputados.gob.mx

Ley del Impuesto al Valor Agregado, Article 20(II)

Servicio de Administración Tributaria

sat.gob.mx

United States–Mexico income tax convention, Article 6(5)

Glopra snapshot 2026-07-23, methodology v3

glopra.com

Market data: Mexico · Mexico City · Tulum