Selling In Los Barriles: Capital Gains Basics

Thinking about selling your home in Los Barriles and not sure how capital gains tax works in Mexico? You are not alone. Whether you live here full-time or you are an international owner, a smooth sale starts with clear tax basics. In this guide, you will learn how Mexico taxes gains, when the primary residence exemption can help, what the notary does at closing, and the other local costs to expect in Baja California Sur. Let’s dive in.

Capital gains in Mexico: the basics

Mexico taxes gains on the sale of real estate located in Mexico under the federal Income Tax Law (ISR). The law treats the sale as Mexican-sourced income. The rules and closing mechanics depend on whether you are a Mexican tax resident or a non-resident. You will handle most of this with the notary in La Paz municipality at closing. See the Income Tax Law overview.

Two taxation tracks

• Mexican residents. Your gain is the sales price minus your adjusted cost basis and authorized deductions. You may qualify for the primary residence exemption if you meet the requirements. Review Title IV rules and exemptions.
• Non-residents. The law generally requires a withholding at closing, often calculated on the gross amount. Some sellers can switch to a gain-based calculation if they follow specific procedures with a Mexican representative. The notary will explain which track applies in your case. See ISR provisions on non-resident sales.

The primary residence exemption

What it covers

Mexico allows an exemption for the sale of your primary residence (casa habitación) if you meet strict conditions. The exemption is capped by a limit expressed in UDIs, and any amount above that cap can be taxable. The sale must be formalized before a notary who will check your documents. Review the exemption in the law text.

Who can use it

You typically must be a Mexican tax resident and prove the property is your primary residence. Foreign owners may use the exemption only if they meet residency and documentation rules set out in the regulations. The notary will verify your status with SAT records and your paperwork.

How often you can claim it

You can generally claim the exemption only once in a set period, commonly enforced as not having used it in the previous 3 years. The notary will ask you to sign an under-oath statement confirming this. Always confirm timing and current rules before listing.

Documents the notary may request

• Government ID and RFC, if applicable
• Utility bills, predial or voter ID with the property address
• Your purchase deed and invoices for improvements to support basis
• A sworn statement about exemption use and primary residence

Withholding at closing in Los Barriles

The notary’s role

In Mexico, the notary (fedatario) is central to closing. The notary typically calculates any provisional income tax due at signing, issues the official tax receipt, and submits payment to the authorities within legal deadlines. Expect the notary to request proof for any exemption or deduction. See practical notes on fedatario procedures.

Withholding for non-residents

If you are a non-resident, the buyer or notary often must withhold tax at closing under the statute. In some cases, you can choose a gain-based calculation instead of a gross-proceeds withholding by appointing a qualified Mexican representative and following the legal steps. Ask the notary about your options early. Review the ISR withholding framework.

Timing you should expect

When withholding applies, it is usually handled at closing. If you must self-pay, the law sets short filing windows, often within 15 days of the sale. Your notary will confirm the exact deadline in your file. Learn more about filing mechanics.

Other Baja California Sur closing costs

State acquisition tax (ISAI)

ISAI is a state transfer tax that buyers typically pay at closing in Baja California Sur. The commonly cited local practice is about 2 percent of the higher of the transaction value, appraisal, or cadastral value, but the exact rate and calculation come from the notary. Always confirm your specific estimate before you sign. Understand ISAI basics.

VAT (IVA) on property sales

Most resales of finished homes intended for habitation are exempt from VAT. New developer sales, commercial components, or certain construction services can trigger IVA. Confirm your facts with the notary and your accountant for your Los Barriles property. See the IVA exemption reference.

Notary and registry fees

You will see line items for notary fees, registration in the Public Registry, and administrative certificates. The notary will provide a detailed cost sheet and will issue official receipts when taxes are paid. Who pays which items can be negotiated in the purchase contract. Read about typical notary documentation.

Your pre-sale checklist

• Gather your purchase deed, prior instruments, and improvement invoices to support your cost basis.
• Decide if the property qualifies as your primary residence and assemble proof of use and address.
• Ask the notary for early estimates: provisional ISR, ISAI, notary fees, and any IVA questions.
• If you are a foreign seller, discuss whether you can opt for a gain-based calculation and what paperwork is needed.
• Coordinate with a Mexican tax adviser. If you are a U.S. person, also coordinate with a U.S. cross-border tax advisor.

If you are a U.S. taxpayer

Reporting and the home-sale exclusion

U.S. persons report worldwide income. You may qualify for the U.S. principal residence exclusion if you meet the ownership and use tests. Review examples and rules in IRS Publication 523.

Foreign tax credit

If you pay Mexican income tax on the sale, you can usually claim a foreign tax credit on Form 1116. Keep your Mexican tax receipts and the notary’s official constancias for your return. Start with the Form 1116 instructions and Publication 514.

Local guidance for a smooth Los Barriles sale

Selling in Los Barriles means working with a La Paz-area notary and aligning your marketing, pricing, and documents ahead of time. A clear plan helps you use any exemptions you qualify for and avoid surprise withholdings at the closing table. If you want white-glove, bilingual support and cross-border fluency, connect with Kitsya & Bruno Bourlon to map your sale from pricing to closing.

FAQs

What taxes apply when I sell a home in Los Barriles?

• The federal income tax (ISR) on gains may apply, and buyers typically pay the state ISAI tax; the notary calculates and remits provisional ISR when required. Learn more about ISR and ISAI basics.

How does Mexico’s primary residence exemption work?

• If the property is your primary residence and the price falls within the UDI-based cap, you may exempt the gain, subject to documentation and frequency rules. Review the exemption.

Can a foreign seller claim the exemption?

• Possibly, if you can prove residency and meet documentation rules that the notary will verify with SAT; confirm your status early. See exemption context.

Will the buyer or notary withhold tax at closing?

• Often yes for non-resident sellers, and the notary typically calculates and files the provisional payment at signing. See withholding framework.

Do I owe VAT when selling my Baja Sur home?

• Most resales of homes for habitation are exempt from IVA, but new developer sales or commercial elements can be taxable; confirm with the notary. Review IVA guidance.

How will the U.S. tax my sale if I am a U.S. person?

• You report the sale on your U.S. return, may qualify for the home-sale exclusion, and can often claim a foreign tax credit for Mexican tax paid. Start with Publication 523 and Form 1116 instructions.