Deductible Closing Costs
Deductible closing costs are expenses paid when purchasing or improving a property in Mexico that, when properly invoiced with a CFDI, can be deducted from the capital gain when calculating ISR (income tax) at resale under Article 121 of the ISR Law.
By Daniel Ortega · Last reviewed 9 November 2026
How it works
When a property owner in Mexico sells real estate, ISR Law Article 121 permits deductions in four categories: the inflation-adjusted purchase price; investments in construction, improvements and expansions; notary fees, taxes, duties and appraisal costs for both acquisition and sale; and brokerage commissions paid at purchase or sale. Each deduction must be supported by an official CFDI invoice issued to the seller with their RFC. Costs are updated for inflation using the INPC index from the date paid to the date of sale. Foreign sellers who kept receipts for fideicomiso setup, notary closing, ISAI transfer tax, registry fees, appraisals and agent commissions can deduct those sums from the sale price to reduce taxable gain. Conservation expenses such as painting or routine repairs do not qualify. The deductions apply only to capital gains tax, calculated separately from the primary-residence exemption under ISR Article 93 which exempts up to 700,000 UDIs of sale price for owner-occupied homes.