How to Sell Property Abroad as a US Owner: Taxes, Process and Timelines in Costa Rica, Mexico, Panama, Nicaragua and El Salvador

Selling a beach house or a surf lot in Latin America is a different job from buying one. When you bought, most of the risk sat with you as the buyer: title, permits, the maritime zone. When you sell, the risk turns into tax and paperwork. The country where the property sits wants its share of the gain, often collected at the closing table before the money reaches you. The IRS wants the gain reported too, in US dollars, on your next return. And the logistics of signing deeds, clearing local tax certificates and moving a six- or seven-figure sum across borders take longer than most owners expect.

This guide is for US owners (with a short section for Canadians) who hold homes, condos or land in Costa Rica, Mexico, Panama, Nicaragua or El Salvador and are thinking about selling. It sets out the local capital gains and withholding rules, transfer taxes and who normally pays them, typical timelines and the documents you will need, all in one comparison table. It then covers the US side: why the Section 121 home-sale exclusion rarely covers a vacation home abroad, how the foreign tax credit stops you paying full tax twice, the currency math, FBAR and Form 8938, depreciation recapture if you rented the place, and state tax.

Quick answer: Yes, foreign owners pay tax when they sell in all five countries. Costa Rica charges 15% of the gain (or an optional 2.25% of the price for property bought before July 1, 2019), and buyers must withhold 2.5% of the price from non-resident sellers. Mexico's notary withholds 25% of the gross price from non-residents unless they appoint a Mexican representative and pay 35% of the actual gain. Panama collects 3% of the price (or 10% of the gain). Nicaragua applies a final 1% to 7% withholding based on value. El Salvador taxes the net gain at 10% if you held the property more than 12 months. On top of that, the IRS taxes the gain. The Section 121 exclusion only helps if the home was your main home for 2 of the last 5 years, but the foreign tax credit (Form 1116) usually lets you offset the foreign tax against the US tax on the same gain.

Not legal or tax advice. This article is general information only, current as of October 2026. Tax rates, forms and procedures in all five countries have changed several times in recent years, and sources sometimes disagree. Before you sign a listing agreement or a sale contract, hire an independent local attorney and notary in the country where the property sits, and a US CPA who handles foreign property. Confirm every figure here with them.

Table of contents

1. The two tax systems every US seller deals with
2. Five countries compared
3. Selling property in Costa Rica as a foreigner
4. Selling property in Mexico: the notary, the fideicomiso and the 25% rule
5. Selling property in Panama
6. Selling land in Nicaragua
7. Selling property in El Salvador
8. The US side: Section 121, foreign tax credits and reporting
9. How to avoid (legally reduce) capital gains tax on foreign property
10. A worked example from start to finish
11. Canadian owners: the short version
12. Selling when you are not in the country
13. Selling through a company: proceed with care
14. Bringing the money home
15. Seller's document checklist
16. Frequently asked questions
17. The bottom line
18. Sources

The two tax systems every US seller deals with

A US citizen or green-card holder is taxed by the IRS on worldwide income. Selling a house in Tamarindo or a lot near Popoyo is a US taxable event, reported on Form 8949 and Schedule D, even though no Form 1099-S will arrive in the mail. At the same time, each of the five countries in this guide taxes gains on real estate located inside its borders, whatever the seller's nationality or residence.

So every sale goes through two calculations:

1. The local calculation, done in the local rules and often in the local currency, collected by the buyer, the notary or the tax office at or soon after closing.
2. The US calculation, done in US dollars under US rules. The foreign tax you paid usually becomes a credit against the US tax on the same gain, so you generally end up paying roughly the higher of the two, not both in full.

The order matters. You pay the local tax first, often before you see the proceeds. Then you settle up with the IRS when you file. Plan your cash flow for both, and keep every receipt from the day you bought, because both systems let you add documented costs to your basis, and both punish missing paperwork.

Five countries compared

The table below summarizes the rules that most affect a typical individual US owner selling a home or lot they did not hold as a business. "Non-resident" means a seller who is not a tax resident of that country. Figures are as of October 2026; timelines are typical ranges reported by local practitioners, not legal deadlines.

	Costa Rica	Mexico	Panama	Nicaragua	El Salvador
Capital gains tax on the seller	15% of net gain, or a one-time 2.25% of the sale price on the first sale of property acquired before July 1, 2019	Non-resident: 25% of the gross price, no deductions; or 35% of the net gain with a Mexican legal representative	10% of the gain, or 3% of the higher of price or cadastral value	Final withholding of 1% to 7% of the higher of deed price or cadastral value, by value band	10% of net gain if held more than 12 months; held 12 months or less, the gain is taxed as ordinary income
Withholding at closing	Buyer withholds 2.5% of the full price from non-resident sellers (on account)	Notary calculates, withholds and pays the ISR	3% advance paid through the tax office before the deed registers	The 1% to 7% withholding is paid before registration	No property-specific non-resident withholding confirmed; seller reports the gain
Transfer tax and who usually pays	1.5% transfer tax plus registry fees and stamps; customarily split 50/50, negotiable	Acquisition tax (ISAI), set by state, roughly 2% to 5%; paid by the buyer	2% of the higher of price or cadastral value; seller by law	Covered by the 1% to 7% withholding; legally the seller's, often negotiated	3% of the value above US$28,571.43; paid by the buyer
Seller's other typical costs	Broker commission, own attorney, capital gains filing	Broker commission plus 16% IVA, fideicomiso cancellation or assignment fees, appraisal, no-debt certificates	Broker commission, property-tax clearance, legal fees	Broker commission, municipal and tax clearances, legal fees	Broker commission, municipal clearance, legal fees
Primary-home relief	Exemption for the seller's habitual home (residence must be proven)	Exemption up to 700,000 UDIs for Mexican tax residents with proof, once every three years	No general primary-home exemption confirmed	None confirmed	None confirmed
Typical time from signed offer to registered deed	About 1 to 3 months	About 1 to 3 months; longer with a fideicomiso	About 1 to 3 months	About 1 to 3 months; title review can extend it	About 1 to 2 months
Can you sign by power of attorney?	Yes	Yes	Yes	Yes	Yes

All five countries belong to the Hague Apostille Convention, so a power of attorney signed in the US can be apostilled by your state's Secretary of State rather than legalized at a consulate. More on that below.

Selling property in Costa Rica as a foreigner

Costa Rica added a capital gains chapter to its income tax law (Law 7092) through the 2018 fiscal reform, Law 9635, which took effect on July 1, 2019. The rules that matter to a foreign seller are short but have real money in them.

The rate. Gains on Costa Rican property are taxed at 15% of the net gain: sale price minus your acquisition cost, documented improvements and transaction costs. That is set out in Article 31 ter of the income tax law, according to AG Legal and El Financiero.

The 2.25% option. If you acquired the property before July 1, 2019, you may choose, on the first sale after that date only, to pay 2.25% of the sale price instead of 15% of the gain. For long-held beach property with a large gain, this is usually the cheaper route. It is not automatic: AG Legal advises that the election be documented before closing. Sources cite it under Article 31 ter or 31 quater, and a Consortium Legal regional comparison describes the same rule. Some English-language guides give the cutoff as 2020; the law's own start date is July 1, 2019, and that is the date the Costa Rican sources use.

The 2.5% non-resident withholding. When the seller is not domiciled in Costa Rica, the buyer must withhold 2.5% of the full agreed price, regardless of the gain, and pay it to Hacienda. The current procedure is Resolution MH-DGT-RES-0051-2025, in force since October 6, 2025, which requires the buyer to file Form 129 through the new TRIBU-CR platform within the first 15 calendar days of the month after the sale. The same resolution repealed the short-lived MH-DGT-RES-0039-2025, which had also imposed a 2% withholding on resident sellers (KPMG; CostaRicaLaw.com). The legal basis is Article 28 ter of the income tax law.

Can you get the 2.5% back? The withholding is a payment on account of your capital gains tax, not a final tax. In principle, if your actual liability (15% of the gain, or 2.25% of the price) is lower, you can file and claim the excess; if it is higher, you pay the difference. In practice, refund procedures for non-residents are still settling into TRIBU-CR, and published guidance on exactly how a non-resident claims the excess is thin. Ask your Costa Rican accountant how they will file your capital gains return, and budget as if the refund will be slow.

Habitual home exemption. The sale of a seller's vivienda habitual (habitual home) is exempt, but you must be able to show it really was your home. A vacation house you visit for a few weeks a year will not qualify.

Closing costs and who pays them. Costa Rica's transfer tax is 1.5% of the higher of the price or the registered fiscal value, plus registry fees and stamps, and the notary's fee set by the official schedule. Custom is for buyer and seller to split transfer costs 50/50, but it is negotiable and should be written into the offer. Our Costa Rica buying guide breaks down the buyer-side costs.

Concession land. If your property sits in the Maritime Terrestrial Zone under a municipal concession (Law 6043), the transfer needs the municipality's approval, and the buyer must qualify to hold the concession. A foreigner generally cannot hold a majority stake in a concession without five years of residency, which narrows your buyer pool and lengthens the timeline.

Worked example (illustrative). You are a non-resident and bought a titled house in 2016 for $300,000. You sell in 2026 for $650,000.

• The buyer withholds 2.5% of $650,000 = $16,250.
• Under the 2.25% option, your tax is 2.25% × $650,000 = $14,625, so the withholding exceeds your tax by $1,625, which you would seek to recover.
• Under the 15% rule, the tax on a $350,000 gain would be $52,500, before deducting improvements and costs. The election is clearly worth making.
• Had you bought the same house in 2021 for $400,000, the 2.25% option would not be available. Tax would be 15% × $250,000 = $37,500, less the $16,250 already withheld, leaving $21,250 to pay.
• The 1.5% transfer tax on $650,000 is $9,750; split 50/50, your share is $4,875.

Selling property in Mexico: the notary, the fideicomiso and the 25% rule

What is a fideicomiso? Most American-owned beach property in Mexico sits inside the "restricted zone" (within 50 km of the coast), where foreigners hold residential property through a fideicomiso, a bank trust. The bank holds legal title and you, the beneficiary, hold the rights to use, rent, sell and leave the property to heirs. Our guide to whether Americans can buy property in Mexico explains the structure in full.

Can you sell a fideicomiso property? Yes. There are two common routes: the bank transfers title out of your trust to the buyer's new trust (or directly to a Mexican buyer), or you assign your beneficiary rights in the existing trust to the buyer. Either way the bank must approve, and the trust has to be current on its annual fees. Budget for the bank's cancellation or assignment fee, which Mexperience suggests is often around US$1,000 to US$1,500 (Mexperience). A fideicomiso does not shelter the gain from Mexican tax.

Fideicomiso in the USA. For US tax purposes, the IRS concluded in Revenue Ruling 2013-14 that a typical Mexican land trust, in which the bank only holds title, is not a trust. That means owners generally do not file Forms 3520 or 3520-A for it, and you report the sale as if you owned the property directly. The ruling is narrow, so confirm with your CPA that your trust fits it.

Capital gains tax for foreigners. Article 160 of Mexico's income tax law (LISR) sets the default for non-resident sellers: 25% of the total sale price, with no deductions. A non-resident can instead pay the top individual rate, 35%, on the net gain, but only if they appoint a legal representative in Mexico who meets the legal requirements and the sale is formalized in a public deed. The gain is then computed under the rules for individuals, which adjust your cost for inflation and depreciate the building portion (LISR Art. 160).

The notary withholds. The notario público calculates the tax, records it in the deed and pays it to the SAT. The notary is personally liable for the amount, which is why notaries are conservative: without a qualifying representative and full documentation, expect the 25% default.

The primary-residence exemption is for residents. Mexican tax residents selling their casa habitación can exempt gains up to 700,000 UDIs (an inflation-indexed unit), no more than once every three years, with an RFC and proof of residence (Mexperience). Under the SAT's 2025 miscellaneous rules (rule 3.11.3), a foreign seller must declare Mexican tax residency in the deed and present a tax-residency certificate or tax identification card. If the seller is not a Mexican tax resident, the exemption does not apply and the notary applies Article 160 (IDC Online). Most part-time American owners will not qualify.

The gain is measured in pesos. Mexico computes your gain in pesos using the exchange rate at closing. If the peso weakened while you owned the house, a sale that looks flat in dollars can still show a peso gain. The IRS, meanwhile, measures the gain in dollars. The two numbers can be very different.

Facturas matter. Improvements are only deductible with official electronic invoices (facturas, CFDI). Cash payments to a builder with no invoice generally cannot be deducted, which is one more reason the 25% gross option ends up applying to many owners.

Worked example (illustrative). A non-resident sells a Mexican beach house for MXN 12,000,000.

• Default rule: 25% × 12,000,000 = MXN 3,000,000, withheld by the notary.
• With a qualifying legal representative, suppose the inflation-adjusted, depreciated cost plus invoiced improvements and selling costs is MXN 8,500,000. The gain is MXN 3,500,000, and 35% of it is MXN 1,225,000.
• The cost of a representative and a tidy file of facturas can be small next to that gap. If your gain is a large share of the price, the 25% gross rule may be cheaper; run both.

Seller costs in Mexico usually include the broker's commission plus 16% IVA, the fideicomiso fee, an appraisal (avalúo) and certificates showing no debts for property tax (predial) and water. The buyer normally pays the acquisition tax (ISAI), which states set at roughly 2% to 5%. Selling land in Mexico follows the same rules, but check whether the lot is or was ejido land; if title never converted properly, no notary will close.

Selling property in Panama

Panama is the simplest of the five on paper, and the dollar economy removes the currency layer. Our Panama surf real estate guide covers buying; here is the seller's side.

Transfer tax. 2% of the higher of the sale price or the registered cadastral value, paid by the seller under Law 106 of 1974, though who bears it can be negotiated (Kraemer & Kraemer).

Capital gains. The seller chooses between 10% of the gain (sale value minus purchase value) and 3% of the higher of the sale price or the cadastral value. In practice the 3% is paid in advance, and a seller whose 10%-of-gain figure is lower can file to recover the excess. Panama amended Article 701 of the Fiscal Code in 2021 (Law 208), and Panamanian commentators describe that change differently, so have your lawyer confirm how the advance applies to your sale.

Clearances. Before the deed can register, you need a property tax clearance (paz y salvo), which the DGI's eTax system issues once all back property tax and fines are paid. It is valid only until the end of the current quarter, so time it with the closing date. Then you file and pay the transfer tax and capital gains forms on eTax and present the receipts to the Public Registry.

Worked example (illustrative). You bought a condo for $250,000 and sell for $400,000; the cadastral value is $300,000.

• Transfer tax: 2% × $400,000 = $8,000.
• 3% option: 3% × $400,000 = $12,000. 10% option: 10% × $150,000 = $15,000. The 3% is cheaper.
• If you had bought for $380,000, the 10% option would be $2,000 against a $12,000 advance, and filing for the excess would be worth the effort.

Sell my house in Panama City or a beach town? The tax rules are the same everywhere in the country. Rights-of-possession (ROP) land is different: it has no registered title, so it sells by assignment of rights, to a smaller pool of buyers, usually at a discount to titled land. If you own ROP land and plan to sell, ask a lawyer whether titling first is realistic.

Selling land in Nicaragua

Nicaragua's capital gains rules sit in the Tax Concertation Law (Law 822), as reformed by Law 987 of 2019. Capital gains in general are taxed at 15%, but for property that must be registered, such as land and houses, a final withholding applies instead, on a sliding scale by value. The base is the higher of the deed price or the cadastral value. The tax office (DGI) reissued the table in March 2026 (RegFollower; Bloomberg Tax):

Value (US$)	Rate
Up to 50,000	1%
50,000.01 to 100,000	2%
100,000.01 to 200,000	3%
200,000.01 to 300,000	4%
300,000.01 to 400,000	5%
400,000.01 to 500,000	6%
Above 500,000	7%

The registry will not record the transfer without proof that the withholding was paid. Legally it is a tax on the seller's gain, but Nicaraguan contracts often assign it to the buyer, so it is a negotiating point. Some older sources still quote a flat 10% withholding for non-resident sellers; the 2026 DGI table is the current reference. Note that this is a tax on value, not gain, so you owe it even if you sell at a loss. On a $350,000 sale, the 5% band means $17,500.

Before listing, gather your full chain of title back through the 1980s confiscation era, a current cadastral certificate and municipal tax clearance, because a buyer's lawyer will ask for all of them. Our Nicaragua beachfront guide explains the title history. Nicaragua's political situation also affects demand: fewer buyers and stricter bank compliance on wires can lengthen the time to sell.

Selling property in El Salvador

El Salvador's income tax law taxes capital gains on real estate at 10% of the net gain (sale price minus basic cost, value-preserving improvements and transaction costs) when the property was held more than 12 months, under Article 42 of the income tax law. Sell within 12 months and the gain is added to ordinary income (Consortium Legal). The calculation is attached to the annual income tax return.

El Salvador capital gains tax on real estate in 2025 and 2026. We found no change to the real estate rate in 2025 or 2026. A 2025 reform to Article 158 of the Tax Code removed income tax withholding on returns from Salvadoran securities held by foreign investors, but it does not cover property (El Mundo). We also could not confirm a specific buyer-withholding rule for non-resident property sellers, so ask your Salvadoran notary how your gain will be declared and paid.

The real estate transfer tax is 3% of the value above US$28,571.43 and is normally paid by the buyer within 60 days. Deeds close before a notary and are recorded at the CNR registry. El Salvador uses the US dollar, so there is no currency layer. Our El Salvador beach real estate guide covers the buy side and the rural-land reciprocity rule, which can affect who can buy your land.

The US side: Section 121, foreign tax credits and reporting

Does Section 121 apply to my beach house abroad?

The Section 121 exclusion lets you exclude up to $250,000 of gain ($500,000 for married couples filing jointly) when you sell your main home. Nothing in the rule requires the home to be in the United States, so a house in Nosara or Sayulita can qualify. The tests are what trip people up (IRS Publication 523):

• Ownership: you owned the home at least 24 months in the 5 years before the sale.
• Use: you lived in it as your main home at least 24 months (730 days) in those 5 years. The days do not have to be continuous.
• Once every two years: you generally cannot have excluded gain on another home in the previous two years.
• Nonqualified use: periods after 2008 when the home was a vacation home or rental before it became your main home generally reduce the exclusion pro rata.
• Depreciation: any depreciation you claimed for rental use after May 6, 1997 cannot be excluded.

For most owners, the beach house was a second home, and Section 121 does not apply at all. It does help expats who moved abroad full time and lived in the house as their main home for at least two of the last five years. Even then, the local tax may still apply: Costa Rica's habitual-home exemption and Mexico's resident exemption each have their own proof rules, which are separate from the IRS tests.

The foreign tax credit (Form 1116)

Because the property is located abroad, the gain is foreign-source income, and the foreign income tax you paid on it can generally be claimed as a credit on Form 1116 (IRS, About Form 1116). The credit is limited to the US tax on that foreign income, so:

• If the local tax is lower than the US tax on the gain, you pay the difference to the IRS.
• If the local tax is higher (Mexico's 25% of gross often is), the excess credit can generally be carried back one year or forward ten years, but it will only be useful if you have other foreign-source income in the same category.

Three cautions. Transfer taxes, notary fees and Nicaragua's value-based withholding may not all count as creditable income taxes; your CPA will decide what goes on Form 1116 and what is a selling cost. A withholding you expect to get refunded (such as part of Costa Rica's 2.5%) is not creditable until the final local tax is known. And the 3.8% Net Investment Income Tax generally cannot be reduced by foreign tax credits.

Currency: report in dollars, at the right dates

The IRS wants your basis and your sale price in US dollars. The usual approach is to convert the purchase price and each improvement at the exchange rate on the day you paid it, and the sale price at the rate on the day of sale (IRS international tax FAQ). In Panama and El Salvador, which use the dollar, this is trivial. In Mexico, Costa Rica (where many deals are in dollars but some costs are in colones) and Nicaragua, it can move your gain a lot. If you had a mortgage in a foreign currency, paying it off can create a separate currency gain or loss; ask your CPA.

Depreciation recapture if you rented it

If you rented the property and claimed depreciation, as you were required to, the depreciation reduces your basis and the gain attributable to it is taxed as "unrecaptured Section 1250 gain" at up to 25%. Residential rental property outside the US placed in service after 2017 is generally depreciated over 30 years under the alternative depreciation system. If you rented the place and never claimed depreciation, talk to your CPA before you sell, because the IRS treats depreciation "allowed or allowable."

FBAR and Form 8938

Real estate you own directly is not reported on the FBAR or Form 8938. The bank account the sale proceeds land in is. If your foreign accounts together exceed $10,000 at any time in the year, you must file FinCEN Form 114 (FBAR), due April 15 with an automatic extension to October 15. Form 8938 applies to US residents with specified foreign financial assets above $50,000 at year-end or $75,000 at any time ($100,000 / $150,000 for joint filers) (IRS comparison of Form 8938 and FBAR). If you hold the property through a foreign company, the company itself is reportable on Form 8938 and its value includes the property.

State tax

Your state may tax the gain too, and many states do not give a credit for taxes paid to a foreign country. California's credit, for example, covers income taxes paid to other states, not foreign countries (FTB Legal Ruling 2017-01). If you live in a high-tax state, the state bill can be the part of the sale that no credit covers.

How to avoid (legally reduce) capital gains tax on foreign property

There is no structure that makes a profitable sale tax-free. There are several legitimate ways to pay less:

1. Make the right local election. In Costa Rica, elect the 2.25% option if you bought before July 1, 2019 and the gain is large. In Panama, compare 3% of price with 10% of gain. In Mexico, compare 25% of gross with 35% of the net gain through a representative.
2. Build your basis file now. Purchase deed, closing statement, every invoice for improvements, permits and professional fees. In Mexico, only facturas count. On the US side, keep proof of payment dates for the currency conversion.
3. Claim the foreign tax credit properly. Form 1116 is where double taxation is avoided. Make sure the local tax receipts are in your name and show the amount.
4. Check Section 121 timing. If you are an expat living in the home full time and are close to the two-year mark, waiting can be worth a lot. Do the nonqualified-use math first.
5. Harvest losses. Capital losses elsewhere in your portfolio can offset the US gain.
6. Watch the year. Selling in a year with lower other income can keep part of the gain in the 15% federal bracket rather than 20%, and may reduce Net Investment Income Tax exposure.

What does not work: under-declaring the price in the deed. All five countries tax on the higher of the deed price or the registered value, buyers and their banks increasingly insist on true prices, and a low deed price raises the next buyer's tax and your US reporting risk.

A worked example from start to finish

Illustrative only, using round numbers and simplified assumptions. Your figures will differ.

A married US couple, not Costa Rican residents, bought a house in Guanacaste in 2016 for $300,000 and used it as a vacation home with no rentals. They sell in 2026 for $650,000, paying a $32,500 commission and $5,000 in legal and closing costs.

Costa Rica:

• Buyer withholds 2.5%: $16,250.
• They elect the 2.25% option: tax $14,625. They file to recover the $1,625 excess.
• Their half of the 1.5% transfer tax: $4,875.

United States:

• Amount realized: $650,000 − $32,500 − $5,000 = $612,500. Adjusted basis: $300,000 plus, say, $4,875 of capitalized closing costs. Gain: about $307,600.
• Section 121: not available (vacation home).
• Assume the gain falls in the 20% long-term rate bracket: about $61,500 of federal tax before credits.
• Foreign tax credit for the $14,625 Costa Rican income tax: federal tax falls to about $46,900.
• Net Investment Income Tax at 3.8%, if their income is above the threshold: about $11,700, with no foreign tax credit.
• State tax, if any, on top.

The point of the example is the shape, not the numbers: the local tax is paid first, it mostly turns into a US credit, and the US bill is still the bigger one for a long-held vacation home with a large gain.

Canadian owners: the short version

Canadian residents are taxed on worldwide gains too. Half of a capital gain is included in income; the proposed increase to two-thirds was cancelled in March 2025. A foreign home can be designated as your principal residence for years you ordinarily inhabited it, but a family can designate only one property per year, so using it on the beach house may cost you on your Canadian home. A foreign tax credit is available for the local tax. Form T1135 does not cover property used primarily for personal use, such as a vacation home you do not rent out, but it does cover rental property and foreign bank accounts above the $100,000 cost threshold (CRA, T1135 Q&A).

Selling when you are not in the country

Most foreign owners don't fly down to sign. Selling from abroad is a lot like selling a house from out of state, with two extra layers: the document has to be valid in a foreign legal system, and someone local has to act for you.

• Use a special power of attorney (poder especial) limited to the sale of a named property, at a minimum price, to a named buyer if possible, with authority to sign the deed, receive funds into a named account and pay taxes. Avoid broad general powers.
• Have a local attorney draft it in Spanish, or bilingual, so the notary will accept it.
• Sign before a US notary and apostille it with your state's Secretary of State. All five countries accept apostilles. Some notaries prefer you sign before their country's consulate; ask first.
• Allow time. Apostilles, courier time and translation can add two to four weeks. In Nicaragua and Costa Rica, the power may need to be recorded or protocolized locally before use.
• Use escrow. Have the buyer pay into a licensed escrow or the notary's trust account, with written instructions on taxes and disbursement, rather than to your attorney-in-fact's personal account.

Selling through a company: proceed with care

Many owners hold property through a local corporation, often a Costa Rican S.A. or S.R.L., or a Panamanian company. Selling the shares instead of the property can look simpler, but it is not a tax-free shortcut. Costa Rica's capital gains rules cover shares and ownership interests, and changes of control of companies that own real estate can trigger transfer tax. Mexico taxes non-residents on sales of shares in companies whose value comes mainly from Mexican property. Buyers also inherit the company's history: debts, tax filings, labor claims. Many buyers' lawyers will refuse a share deal, or require indemnities and a holdback. On the US side, a foreign company may bring Form 5471 or 8858 filings, and its sale is taxed differently from a direct property sale. If your property is in a company, get local and US advice before you list.

Bringing the money home

How do people who sell homes abroad move the money? Usually by international wire from the escrow or notary account to their US bank, in US dollars. A few practical points:

• Panama and El Salvador are dollar economies, so there is no conversion. Costa Rica deals are usually priced and paid in dollars. Mexico can close in pesos or dollars; agree the currency in the contract, and if you receive pesos, compare your bank's rate with a specialist currency broker.
• Expect compliance questions. Banks on both ends will ask for the deed, the closing statement and proof of tax payment. Have them ready in PDF.
• No US tax on the transfer itself. Moving your own money home is not income. The gain is reported on your return, and any foreign account that held the proceeds counts toward FBAR and Form 8938.
• Large wires take time. Allow a few business days, and longer from Nicaragua, where correspondent banks apply extra checks.

Seller's document checklist

Start gathering these before you list. Most delays come from a missing certificate, not the buyer.

• Recorded title deed and a current registry report showing no liens
• Your purchase closing statement and proof of the price paid (for basis in both countries)
• Invoices for improvements (CFDI facturas in Mexico), building permits and occupancy or completion documents
• Survey plan (plano catastrado in Costa Rica) matching the registry
• Property tax clearance (Panama's paz y salvo, Mexico's predial certificate, municipal clearances in Costa Rica, Nicaragua and El Salvador)
• Water, power and HOA no-debt letters
• For Mexico: fideicomiso contract, trust fee receipts, RFC if you have one, and a Mexican legal representative if you will use the net-gain option
• For concession land in Costa Rica: the concession contract and the municipality's approval process
• For a company: corporate books, share register, tax filings and good-standing certificates
• Passport copies and, if you are not attending, the apostilled power of attorney
• A local bank account or escrow instructions for proceeds

For more on the documents buyers will ask for, see our due-diligence guide for surf property.

Frequently asked questions

Do foreigners pay capital gains tax when selling property in Costa Rica?

Yes. The rate is 15% of the net gain, or, on the first sale of property acquired before July 1, 2019, an optional 2.25% of the sale price. Non-resident sellers also have 2.5% of the price withheld by the buyer as a prepayment.

What is Costa Rica's 2.5% withholding, and can I get it back?

It is a prepayment of a non-resident seller's capital gains tax, withheld by the buyer and reported on Form 129 through TRIBU-CR under Resolution MH-DGT-RES-0051-2025. If your final tax is lower, the excess should be recoverable by filing, but the procedure for non-residents is still new, so ask your accountant to handle it.

Do foreigners pay capital gains tax when selling property in Mexico?

Yes. A non-resident pays 25% of the gross price with no deductions, or 35% of the net gain if they appoint a qualifying legal representative in Mexico. The notary calculates and withholds the tax. The primary-residence exemption is only for Mexican tax residents who can prove it.

Does Section 121 apply to my beach house abroad?

Only if it was your main home for at least two of the five years before the sale, and you owned it for two years. The location does not matter. A vacation home does not qualify, and vacation or rental years after 2008 can reduce the exclusion even if it later became your main home.

Can I sell a property held in a fideicomiso?

Yes. The bank either transfers title to the buyer (often into a new trust) or you assign your beneficiary rights to the buyer. The bank must approve and charges a fee, and the Mexican capital gains tax applies as usual.

Who pays closing costs in Costa Rica?

By custom, buyer and seller split the 1.5% transfer tax, registry fees and notary fees 50/50, but it is negotiable. The seller pays the broker's commission and any capital gains tax.

How long does it take to sell property abroad?

Marketing time varies by market and price. Once you have a signed offer, closing and registration typically take one to three months in all five countries. Fideicomiso approvals, concession transfers, title problems and powers of attorney from abroad are the usual causes of delay.

Can I sell without being in the country?

Yes. Sign a special power of attorney before a US notary, have it apostilled, and send it to your local attorney. Use escrow for the funds.

How do I bring the money home?

By international wire, usually in US dollars, from escrow or the notary's account to your US bank. Keep the deed, closing statement and tax receipts ready for the bank's questions, and remember FBAR if the money sat in a foreign account.

The bottom line

Selling a surf home abroad is a two-country tax event. The local rules decide how much is taken at closing, and they reward sellers who make the right election, keep invoices and hire a local accountant early. The US rules decide the final bill: Section 121 rarely helps with a vacation home, but the foreign tax credit stops most double taxation, and the currency, depreciation, FBAR and state-tax details are where mistakes happen. Line up the local attorney, the notary and a CPA who knows foreign property before you sign a listing agreement, not after you accept an offer.

If you own a surf home, lodge or land and are ready to sell, you or your agent can list your property on International Surf Properties, where buyers search specifically for homes near the waves. Plans are monthly or yearly subscriptions covering For Sale and Vacation Rental listings; see pricing for details. Real estate agents can learn more on our list with us page. Our companion guides cover how to sell a surf resort or boutique hotel and how to sell beachfront property to international buyers.

Sources

• AG Legal, "Capital Gains Tax in Costa Rica: What Foreign Investors Need to Know Before Selling": https://aglegal.com/capital-gains-costa-rica/
• El Financiero (Costa Rica), "Ganancias de capital para no residentes" (Spanish, July 2021): https://www.elfinancierocr.com/blogs/tributario-cr/ganancias-de-capital-para-no-residentes/HHTSEPOXS5FVBBUHOIF4PVYZ2E/story/
• Consortium Legal, "Tratamiento a las ganancias de capital en Centroamérica" (Spanish, June 2023): https://consortiumlegal.com/2023/06/14/tratamiento-a-las-ganancias-de-capital-en-centroamerica/
• KPMG, "Costa Rica: TRIBU-CR, excise, capital gains, transfer pricing" (December 2025): https://kpmg.com/us/en/taxnewsflash/news/2025/12/costa-rica-tribu-cr-excise-capital-gains-transfer-pricing.html
• CostaRicaLaw.com, "New Costa Rica Tax Resolution on Capital Gains Withholding for Non-Residents": https://costaricalaw.com/costa-rica-legal-topics/taxes-in-costa-rica/new-costa-rica-tax-resolution-on-capital-gains-withholding-for-non-residents-what-buyers-must-know/
• EY, "Costa Rica: Ministerio de Hacienda aplicará retención sobre ganancias de capital en bienes inmuebles" (Spanish, 2025): https://www.ey.com/es_ce/technical/tax/tax-alerts/costa-rica-ministerio-de-hacienda-aplicara-retencion-sobre-ganancias-de-capital-en-bienes-inmuebles-transmitidos-por-domiciliados
• Ley sobre la Zona Marítimo Terrestre, Law 6043 (Spanish): https://www.snitcr.go.cr/pdfs/leyes/Ley-6043.pdf
• Ley del Impuesto sobre la Renta (Mexico), Article 160 (Spanish): https://leyes-mx.com/ley_del_impuesto_sobre_la_renta/160.htm
• IDC Online, "Residencia fiscal en México en venta de casa por extranjeros" (Spanish, November 2025): https://idconline.mx/fiscal-contable/2025/11/24/residencia-fiscal-en-mexico-en-venta-de-casa-por-extranjeros
• Mexperience, "The Costs and Taxes of Selling Property in Mexico": https://www.mexperience.com/the-costs-and-taxes-of-selling-property-in-mexico/
• Aprio, "IRS Rules that Mexican Land Trusts are Not Foreign Trusts for Tax Purposes" (Rev. Rul. 2013-14): https://aprio.com/?p=12450
• Kraemer & Kraemer, "Panama taxes when selling real estate": https://kraemerlaw.com/en/panama-taxes/taxes-on-real-estate-sales-in-panama/
• Law 106 of 1974 (Panama), transfer tax (Spanish): https://docs.panama.justia.com/federales/leyes/106-de-1974-feb-3-1975.pdf
• RegFollower, "Nicaragua: DGI updates tax withholding rates for property transfers" (March 2026): https://regfollower.com/nicaragua-dgi-updates-tax-withholding-rates-for-property-transfers/
• Bloomberg Tax, "Nicaragua Tax Agency Posts Withholding Tax Rates for Movable, Immovable Property Transfers" (2026): https://news.bloombergtax.com/daily-tax-report-international/nicaragua-tax-agency-posts-withholding-tax-rates-for-movable-immovable-property-transfers
• El Mundo (El Salvador), "Vigente eliminación del impuesto sobre los rendimientos en mercado bursátil salvadoreño para inversionistas en el extranjero" (Spanish): https://diario.elmundo.sv/politica/vigente-eliminacion-del-impuesto-sobre-los-rendimientos-en-mercado-bursatil-salvadoreno-para-inversionistas-en-el-extranjero
• IRS, Publication 523, "Selling Your Home": https://www.irs.gov/publications/p523
• IRS, "About Form 1116, Foreign Tax Credit": https://www.irs.gov/forms-pubs/about-form-1116
• IRS, "Comparison of Form 8938 and FBAR Requirements": https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements
• IRS, "Frequently asked questions about international individual tax matters": https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-about-international-individual-tax-matters
• California Franchise Tax Board, Legal Ruling 2017-01, credit for taxes paid to other states: https://www.ftb.ca.gov/tax-pros/law/legal-rulings/2017-01.pdf
• Canada Revenue Agency, "Questions and answers about Form T1135": https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/foreign-reporting/questions-answers-about-form-t1135.html
• Stephenson Harwood, "Cancellation of Canadian capital gains inclusion rate increase" (2025): https://www.stephensonharwood.com/insights/cancellation-of-canadian-capital-gains-inclusion-rate-increase/

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About the author

Jim Habig is the founder of International Surf Properties, a marketplace for surf-front and beachfront real estate around the world. A lifelong waterman and real estate professional, Jim started ISP to connect surfers and ocean lovers with homes and land near the waves they love, and to help them buy and sell with clear, practical information. ISP is a listings marketplace, not a law firm or tax adviser; always work with independent local legal and tax professionals on any sale.