Selling a Fideicomiso Property: Why You Need an RFC First

When a foreign owner sells a home in Mexico, the notary must either apply the primary-residence exemption or withhold Mexican income tax (ISR) from the price. Holding the property in a fideicomiso does not change that. What decides it is paperwork you need long before closing: an RFC, proof of Mexican tax residency, and household bills in your name.

The exemption for your own home

Article 93, section XIX, paragraph a) of Mexico's Income Tax Law exempts an individual's gain on the sale of their casa habitación, up to a sale price of 700,000 UDIS per seller. The UDI is an inflation-indexed unit, so the notary works out the peso ceiling on closing day; any excess is taxed proportionally. The seller must not have used the exemption on another home in the previous three years, and the sale must be formalized before a notario público.

What a foreign seller must have in place

Mexican tax residency. Nationality is irrelevant, but a seller who is a non-resident for tax purposes cannot use the exemption.
An RFC (Mexican taxpayer ID). The deed must record it together with your sworn statement of tax residency and a supporting document such as a tax residency certificate or tax ID card.
Proof the property is your home under article 155 of the Income Tax Regulations: utility bills or bank statements at the property's address, in the name of the seller, the seller's spouse, or direct ascendants or descendants.
The electricity bill in your name with your RFC. Notaries commonly ask for the CFE bill as an official tax receipt (CFDI). If the account is still under the developer or a previous owner, change it well before you list.

What is withheld without the exemption

Non-residents for tax purposes: 25% of the total sale price, with no deductions (article 160). With a qualifying representative in Mexico and a sale recorded in a public deed, the seller may instead pay 35% of the gain.
Mexican tax residents who do not qualify: tax on the gain at progressive rates of up to 35%.

The low-purchase-price trap

The taxable gain is the sale price minus your documented acquisition cost — the value recorded in your fideicomiso or deed, adjusted for inflation. If the trust was recorded at a very low value, or you took over a trust or lot with little or no price stated, nearly the entire sale price becomes gain; the law only guarantees a deemed cost of 10% of the sale price. Construction and improvements are deductible only with official invoices (CFDI) issued to your RFC, which is one more reason to obtain the RFC when you buy rather than when you sell.

Checklist before you list

Confirm your tax residency position with counsel — it has consequences beyond this sale, and you may still owe tax in your home country.
Obtain your RFC and keep your tax status certificate current.
Put the CFE account in your name, with your RFC, at the property's address.
Gather the fideicomiso deed and every invoice for construction and improvements.
Have the ISR calculated with and without the exemption before agreeing on a price.

Who can help

For questions about your trust when you are planning a sale, contact Mexico Trust Services. For legal representation in the sale and the tax preparation described here, our affiliated law firm Galarza Legal and its Rosarito office, Rosarito Legal, publish the full step-by-step guide. This page is general information, not tax advice; SAT rules are reissued every year.

Frequently Asked Questions

Does holding my home in a fideicomiso change the tax on a sale?

No. The beneficiary of the trust is treated as the seller, so the same exemption and the same withholding rules apply as for a directly titled property.

Can I get an RFC the week of closing?

Rarely in time to help. Registration requires an appointment with the SAT, a valid immigration document and proof of address, and the notary will also want utility bills in your name that predate the sale.

I am not a Mexican tax resident. What will be withheld?

Generally 25% of the total sale price with no deductions. If you appoint a representative in Mexico who meets the legal requirements and the sale is recorded in a public deed, you may choose to pay 35% of the gain instead.

My trust shows a much lower price than I actually paid. What happens?

The recorded value is your documented cost, so the gain is measured from it. With a very low recorded cost almost the whole sale price is taxable; the law only guarantees a deemed cost of 10% of the sale price. Invoiced improvements and closing costs can reduce the gain.