In short
The convention between Canada and Mexico for the avoidance of double taxation on income, signed in Mexico City on 12 September 2006, says in article 6 that rent from Mexican immovable property may be taxed in Mexico, and in article 13 that gains from selling it may be taxed in Mexico too. Unlike the US convention, the text read has no election to be taxed on net rent. Mexico’s own law therefore decides the rate and the base: for a non-resident, 25 % of gross rent without deductions (Income Tax Law art. 158). This page reports the treaty text. It does not say how Canadian tax treats the same income; that is outside the scope of this site.
Article 6: income from immovable property
The article, as published by Global Affairs Canada, says in substance:
- First paragraph. Income derived by a resident of one State from immovable property, “including income from agriculture or forestry”, situated in the other State may be taxed in that other State.
- Second paragraph. “Immovable property” takes the meaning it has for tax purposes in the State where the property is. It includes property accessory to the immovable, agricultural and forestry livestock and equipment, rights to which the general law on landed property applies, usufruct, and payments for working mineral deposits and other natural resources. Ships and aircraft are not immovable property.
- Third paragraph. The first paragraph applies to income from “the direct use, letting, or use in any other form of immovable property” and to income from the alienation of such property.
- Fourth paragraph. The first and third paragraphs also apply to the immovable property income of an enterprise.
The third paragraph differs from the other two conventions in a notable way. Here the article on immovable property itself mentions income from the alienation of the property, in addition to the specific capital-gains article. The reader should keep this in mind when comparing it with the US and UK guides.
Article 13: capital gains
The article says in substance:
- First paragraph. Gains derived by a resident of one State from the alienation of immovable property situated in the other State may be taxed in that other State.
- Fourth paragraph. Gains from alienating shares or other rights in a company, or an interest in a partnership, trust or estate, may be taxed in the State where the immovable property is situated if the value is derived principally from immovable property there. For this paragraph, immovable property does not include property in which the business is carried on, other than rental property.
- Fifth paragraph. Gains from alienating shares in a company resident in the other State may be taxed there if the seller, together with related persons, held at least 25 per cent of the company’s capital at any time in the preceding twelve months.
- Sixth paragraph. Subject to the royalties article, gains from the alienation of any other property are taxable only in the State where the seller is resident.
How this meets Mexican law
The treaty fixes who may tax. It does not set rates in these two articles. The Mexican rates come from the Income Tax Law (Ley del Impuesto sobre la Renta, LISR):
| Event | Mexican rule for a non-resident | Article |
|---|---|---|
| Rent | 25 % of the income obtained, without deduction, withheld by the payer; through a trust, the bank issues the receipt and withholds | LISR art. 158 |
| Sale of the property | 25 % of the total price without deduction, withheld by the buyer if resident in Mexico, or the maximum rate of the annual tariff on the gain, by option, with a representative (not required if the sale is in a public deed) | LISR art. 160, art. 174 |
The detail of the sale is in selling as a non-resident; for rent, see rental income tax for non-residents. The treaty text read contains no provision that lowers either rate, and none that lets a Canadian resident compute the rent on a net basis. Whether any administrative route to a net computation exists was not found in the sources read; ask the Mexican tax authority (SAT) or a Mexican tax accountant.
For a home held through a bank trust, article 6 sends the definition of immovable property to Mexican law, so how Mexican law classes the beneficiary’s rights is a Mexican-law question. See how the trust works. The text of LISR article 158 also covers consideration for granting use and enjoyment rights over Mexican real estate, even when it comes from selling or assigning those rights.
When the convention applies
Article 27 provides that the convention enters into force on the date the two States exchange diplomatic notes saying that the necessary procedures have been completed. The page read does not show the date of that exchange, so the date of entry into force is not stated here. Anyone relying on a particular year should confirm it with Global Affairs Canada or the SAT.
What it costs
No fee is attached to the treaty in the texts read. The cost is the Mexican tax itself, described in the table, plus the fees of the professionals who compute and file it.
Which professional to consult
A Mexican tax accountant (contador público) files the returns and can apply the treaty. A notary (notary) calculates the Mexican tax on a sale at the deed. A real estate lawyer (real estate lawyer) reads the trust or the lease. Check each professional’s registration yourself.
Frequently asked questions
Does the Canada-Mexico treaty cut Mexico’s tax on my rent?
Articles 6 and 13 say Mexico “may” tax. They do not state a lower rate. The rate is in Mexican law.
Can I be taxed on net rent under this treaty?
The text read has no such election. The only one found in the three conventions is in the US treaty.
Which State may tax the sale of my Mexican home?
Mexico may (article 13, first paragraph). What Canada does is not covered here.
Are shares in a company that owns Mexican property covered?
Yes, article 13 covers shares whose value derives principally from Mexican immovable property, with exceptions for property used in the business other than rental property.
Where can I read the text?
At the Global Affairs Canada Treaty Information site, linked in the sources.
More guides on foreign buyers
- Buying Mexican property through a company: what the law says
- Buying outside Mexico's restricted zone: the SRE agreement
- Buying property in Mexico as a foreigner: the rules
- Fideicomiso permit in Mexico: 2026 SRE fees and timing
- Fideicomiso: how Mexico's bank trust for foreigners works
- Mexico-UK tax treaty: rent and gains on Mexican property
- Mexico-US tax treaty: rent and gains on Mexican property
- Mexico's restricted zone: 100 km and 50 km explained
- Rental income tax for non-residents of Mexico
- Renting out a home held in a Mexican fideicomiso
- RNIE: Mexico's foreign investment registry and who files
- Selling Mexican property as a non-resident: the tax