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How Do Multiple Currencies Work in Mexico Real Estate?

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How do multiple currencies work in Mexico real estate? The U.S. dollar and other foreign currencies are most often converted into pesos when conducting business in this country. If you are buying or selling property here, there are a few things you should know about how multiple currencies are used in real estate transactions.

First, even though real estate properties are often paid in U.S. dollars, the sale price and future calculations for the property will always be recorded in pesos. The exchange rate, and the source establishing the rate, are decided and used to record the purchase price in pesos in your escritura on the day you purchase the property.

Knowing that the peso will prevail in legal transactions should help you realize that your property taxes and acquisition tax (when you purchase) and ISR, or capital gains tax (when you sell), will be based on the peso value of your property when you purchased it.

When you sell, your sales price will be recorded in the peso value of the day, and any gain or loss will be figured from this sales price in pesos. None of the tax gain or loss will be computed in U.S. dollars.

If you bought the real estate when the peso exchange rate to the dollar was 10 and you sell when it is 13, you will have a gain or profit on paper. This is what your capital gains tax will be based upon.

The New Mexican Peso (N$ or MXN), which was established in 1993, is the formal legal currency of the country. Acquisition tax and other closing costs for the buyer are charged in pesos. The notary fee, tax appraisal, foreign permit and bank trust set-up and one year in advance are all in pesos. Even if the annual administration fee is in U.S. dollars, your payment may be made in equivalent pesos.

When purchasing, you will receive an estimated closing cost statement from the notary to pay the deposit to start the closing process. Your balance due will be the balance recomputed at the accepted peso rate the day before closing if you make your closing cost payment in U.S. dollars. On the day of closing, the purchase price typically would be in U.S. dollars and closing costs in pesos.

If you want to pay the closing costs in pesos that you buy yourself and wire to the notary, you can do this. Or you may wire U.S. dollars and the conversion will be at the rate the wiring bank uses. In the last case, the receiving bank will make a conversion into pesos, and you cannot negotiate that rate. You should be able to negotiate the rate at your home bank or financial institution, so you may want to consider that option.

Condominium expenses are paid in pesos, even if the owners establish a budget in a foreign currency. Beware of this in HOA meetings. You cannot be forced to make condo dues payments in U.S. dollars. You can convert your money into pesos when the rate is in your favor and wire the funds or write a peso check if you have a Mexican bank account.

Services such as cable television and all utilities are in pesos, so it makes sense to think about a plan to use the best exchange rates for your foreign dollars.

Here are a few other important points to remember:

  • You will need to appreciate and understand that Mexico doesn’t have to follow your rules or expectations.
  • You will want to ensure that you lose the smallest amount or make the most you can on a currency conversion.
  • Putting some effort and time into how you change currencies will make a difference.

This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his/her own due diligence and review.


  1. I’m currently renting before looking for a home to buy in Merida, so this is very helpful, thanks! I’m trying to understand how capital gains work here. How much (%) is capital gains tax in Mexico on the sale of a home? And it’s based on the difference between the purchase price (in pesos) and the sale price (in pesos)? Are there legitimate deductions, like in the U.S., where you can deduct the cost of renovations during your period of ownership from the amount subject to capital gains tax? Thank you!


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