Enajenación de Bienes: ISR, IVA y Trámite Notarial

In Mexican tax law, the enajenación de bienes is the legal transfer of ownership over an asset from one party to another, and it covers far more than a straightforward sale. Under Article 14 of the Federal Tax Code, exchanges, donations, capital contributions to a company, and certain trust transfers all count as alienation and can trigger tax consequences.¹ The income tax bill depends on whether an exemption applies, and if not, on the gain rather than the full sale price. For a primary residence, the sale can be exempt up to 700,000 UDIs — roughly 6.19 million pesos at mid-2026 values — provided the seller meets the conditions and reports the sale on their annual return.²

What Counts as Alienation Under Mexican Law

Article 14 of the Federal Tax Code (CFF) treats any shift in property rights as alienation, regardless of the label the parties use.¹ Calling a transaction a donation instead of a sale doesn’t take it outside the framework.

Any transfer of ownership, including sales where the seller reserves some control over the asset (dominio reservado).
Exchanges (permuta), which are taxed the same way as cash sales.
Donations, because the donor’s ownership rights shift to the recipient.
Capital contributions of property to a company in exchange for shares or an ownership interest.
Trust transfers (fideicomiso), when the settlor names a different beneficiary and gives up the right to recover the property, or when the settlor loses that recovery right after initially reserving it.

The article also covers court-ordered transfers, assignment of rights, and certain transactions with participation certificates. The point is that any movement of ownership gets documented and taxed on its substance, not its name.

When Income Tax Applies and When It Doesn’t

Article 93 of the Income Tax Law (LISR) lists the transfers that don’t generate an income tax obligation.² The most-used exemptions come with conditions that regularly trip sellers up.

Primary Residence

The sale of a primary residence is exempt from income tax if the price does not exceed 700,000 UDIs. At the mid-2026 UDI value of roughly 8.844 pesos, that works out to about 6.19 million pesos, adjusted daily with the values published by Banco de México.³ Two conditions apply:

You must not have claimed the same exemption on another primary residence in the three years immediately before this sale.²
You must declare under oath before the notary that the property was your primary residence and that you did not use the exemption within that period. The notary is required to verify against SAT’s online system whether you claimed it in the preceding five years.

When the price is above 700,000 UDIs, only the excess is taxable. The exemption doesn’t disappear on the whole sale.

Inheritances and Family Donations

Assets received by inheritance or bequest are fully exempt, with no value cap. Donations between spouses, and donations in the direct ascending or descending line (parents to children and children to parents), are also fully exempt regardless of amount.² Donations between siblings, friends, or unrelated parties fall outside this blanket protection and can be taxable.

You Still Have to File

Article 93 conditions the primary residence exemption, the inheritance exemption, and certain other exclusions on reporting the income on the annual tax return required by Article 150 of the LISR.² The sale can be tax-free and still cost you the exemption if you never declare it. Skipping the filing risks having the exemption denied after the fact.

How the Taxable Gain Is Calculated

When no exemption applies, tax is calculated on the gain, not on the sale price. Article 120 of the LISR splits that gain in two.⁴

The accumulated portion is the total gain divided by the number of years the property was held, capped at 20. That annual slice is added to your other income for the year and taxed at the regular rates under Article 152.
The non-accumulated portion is the remaining gain, taxed at a special rate. You can choose between two methods for calculating that rate — one based on the effective tax rate from the year of sale, the other on a five-year average — and the notary usually runs both to see which produces a lower tax.⁴

This mechanism matters. If you owned the property for 15 years, only a fifteenth of the gain sits on top of your regular income; the rest is taxed at a rate that is usually lower than your marginal bracket. For long-held property, the effective tax on the full gain can drop well below what a single-year treatment would produce.

Deductions That Lower the Gain

Article 121 of the LISR lets individuals subtract several costs from the sale price before the gain is calculated. Missing these is one of the most expensive mistakes sellers make.

The inflation-adjusted acquisition cost, updated with the National Consumer Price Index (INPC) from the month of purchase to the month before the sale. For real estate, this adjusted cost must be at least 10% of the final sale price, a floor that helps sellers who bought decades ago.
Construction improvements, additions, and expansions, also inflation-adjusted. Routine maintenance doesn’t qualify.
Notary fees, taxes, and duties on both the original acquisition deed and the current sale deed, plus real estate appraisal fees.
Commissions paid to brokers or intermediaries by the seller, whether at purchase or at sale.

Notary fees, taxes, duties, and commissions are also inflation-adjusted through the month before the sale. Without invoices, none of these deductions can be claimed, so it pays to keep receipts for every improvement and commission over the years the property is held.

IVA: When It Applies

Income tax isn’t the whole picture. Value-added tax (IVA) can apply to a property sale, but Article 9, fraction II of the IVA Law exempts construction attached to land that is used or intended as housing. Houses, apartments, retirement homes, and orphanages qualify; hotels do not.

The construction portion of commercial, industrial, or mixed-use property is subject to the standard 16% IVA. Land itself is always exempt regardless of use — the tax reaches only the built structures. For a mixed-use property, IVA is calculated in proportion to the non-residential square meters over the total built area.

The Notary’s Role and Provisional Withholding

In Mexico, the notary public does more than witness the deed. The notary is personally responsible for calculating, withholding, and remitting the provisional income tax on the seller’s behalf. The same obligation falls on public brokers (corredores públicos) and judges with notarial functions when the transaction is formalized in a public deed.

The provisional ISR must be paid within 15 days after the deed is signed. Separately, Article 127 of the LISR requires a payment equal to 5% of the gain to the state where the property is located, credited against the federal provisional payment so the seller is not paying twice. When the state 5% exceeds the federal provisional tax calculated under Article 126, only the state payment is made.⁵

The notary also gives the seller a detailed breakdown of the calculation, which must include the historical and inflation-adjusted costs of the land and construction and the acquisition dates by day, month, and year.⁵ Keep this document. The provisional payment is a credit against whatever the annual return produces, and the breakdown is what makes the reconciliation work.

Documents to Bring and Costs at Closing

Preparing paperwork before the notary visit prevents delays and preserves deductions. Expect to produce:

The current escritura pública proving ownership. For real estate above certain value thresholds in the Federal Civil Code, a notarized deed is required and a private contract is not enough.⁶
RFC and CURP for both seller and buyer.
Current property tax (predial) receipts. Most notaries will not proceed if back taxes are owed.
A certificado de libertad de gravámenes from the Public Registry of Property, confirming there are no mortgages or liens.
Invoices for improvements, needed to claim the Article 121 deductions.

For the primary residence exemption, bring utility bills in your name at the property’s address to support the claim, though the main verification runs through the notary’s SAT database consultation.

At closing, the buyer pays the Impuesto Sobre Adquisición de Inmuebles (ISAI), a local acquisition tax that varies by state, generally between 2% and about 5.7% of the assessed or transaction value. It’s paid directly to the state or municipal treasury as a prerequisite to finalizing the deed. Once signatures are collected, taxes are settled, and the provisional ISR is withheld, the notary submits the executed deed to the Registro Público de la Propiedad. Registration is what makes the transfer enforceable against third parties; until the deed is registered, the change of ownership may not hold up against outside claims.

1
Justia México. Código Fiscal de la Federación – Título Primero – Capítulo I – Section: Artículo 14
2
Servicio de Administración Tributaria. Ley del Impuesto sobre la Renta – Artículo 93
3
Banco de México. Unidades de Inversión (UDIs) – Valor Diario
4
Servicio de Administración Tributaria. Ley del Impuesto sobre la Renta – Artículo 120
5
Servicio de Administración Tributaria. Conoce el Régimen de Enajenación de Bienes – Régimen General
6
Justia México. Código Civil Federal – Libro Cuarto – Parte Segunda – Título Segundo – Capítulo VIII