Selling DVC from Mexico: A Complete Guide for Mexican Sellers
Mexican citizens and residents who own DVC timeshare contracts face the same FIRPTA withholding as any other non-US seller: 15% of the sale price is held back at closing and sent to the IRS. But there are cross-border details specific to Mexican sellers that are worth understanding before you sell.
The US-Mexico Tax Treaty
The United States and Mexico have a tax treaty that has been in force since 1992. Like most US tax treaties, it preserves both countries' right to tax gains from real property located within their borders. The treaty does not exempt Mexican sellers from FIRPTA. It does prevent true double taxation by allowing Mexico to give you a credit for US taxes paid.
Mexican Tax Obligations
Mexico taxes its residents on worldwide income, which includes gains from selling US real property. You need to report the DVC sale to the Servicio de Administración Tributaria (SAT) on your Mexican annual tax return. The gain should be reported in Mexican pesos, converted at the exchange rate on each transaction date as published by Banco de México.
Mexico allows a credit for foreign taxes paid, which means the US tax you paid on the DVC sale reduces your Mexican tax on the same gain. Work with a Mexican tax professional who handles cross-border transactions to ensure the credit is claimed correctly.
Getting an ITIN as a Mexican Citizen
Mexican passports and national identification cards (INE/IFE) are both accepted by the IRS for ITIN applications. A passport alone satisfies both identity requirements. If you use a Certifying Acceptance Agent (CAA) with offices in Mexico, you can complete the identity verification without mailing documents to the US.
The Refund Process
File Form 1040-NR after December 31 of the year your DVC sale closed. Report the sale, calculate your actual US tax on the gain (15% of your profit for long-term holdings), and claim a refund of the excess withholding. Most Mexican DVC sellers receive a refund of 70% to 90% of the amount withheld.
See our tax estimator to calculate your expected refund before you file.
