There are two main methods, and the seller must choose one (whichever is more favorable):Option 1: 25% of the Gross Sale PriceThis is simple:No deductions, no calculationsPay 25% flat on the total sale valueCommon for foreigners without an RFC or residency✅ Pros: Straightforward❌ Cons: No credit for improvements, taxes, or purchase priceOption 2: 35% on Net Gain (after deductions)If you have the right documentation, you can deduct:Original purchase price (from notarized deed)Notary and closing feesOfficial improvements (with SAT-registered invoices)Acquisition taxCapital improvements (not repairs)Inflation adjustment (based on years of ownership)✅ Pros: You can drastically reduce your taxable amount❌ Cons: You must have RFC, residency, and detailed receipts💡 Pro tip: This is where your notary and accountant work together to calculate the best scenario.🧠 Legal Ways to Reduce Capital Gains Tax1. 🏡 Primary Residence ExemptionIf the property is your principal residence and you have Mexican residency + RFC + utility bills in your name, you may be exempt on gains up to ~700,000 USD (subject to exchange rate and rules).Only one exemption per person every 3 years.2. 🔄 Reinvesting in Mexican PropertyThere’s a limited provision for deferring capital gains tax if the proceeds are reinvested in another property in Mexico, but it requires professional tax guidance.3. 🧾 Documenting ImprovementsIf you remodel, expand, or modernize the property, you can deduct those expenses — but only if the invoices are:In your nameInclude your RFCIssued by a registered contractor or architectPaid through traceable methods (bank transfer, no cash)📊 Example:Let’s say you bought a condo in Playa del Carmen in 2020 for $200,000 USD.

Adding to this, I worked at a large commercial contractor for 3 years so I may be able to help with the subcontractor invoice question!

Invoice the guest for any overages monthly.

Also, review utility bills, insurance policies, maintenance invoices, and property tax records to cross-check reported expenses.

The kid wasn't even smart enough to create fake service invoices, Landlords who join a local REIA talk to each other.

Hi Chris,Tracking utility charges for multiple properties can be challenging, especially when using a single company credit card...if they are not reconciling with monthly invoices/statements.

And obviously the invoices showing you replaced it? 

Enter a maintenance request, assign a vendor, attach a fake invoice.

Are all my invoices uploaded to my owner portal?

Typically GCs have their own template/invoice already, and if you are getting hard/private money they typically have a required template.