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Mexican taxes for Americans in San Miguel: Social Security, IRAs and selling your casa

Updated 2026-11-06 · 8 min read

Drawing for Mexican taxes for Americans in San Miguel: the word TAXES, a calculator, an envelope and a small adobe house.
Taxes in San Miguel: one calculator, two countries, one house to sell someday.

Two countries, one set of retirement checks. Under the US–Mexico tax treaty, your Social Security is taxed only by the US, but Mexico gets a say on most other retirement income once you're a Mexican tax resident.

The short version

  • Living in San Miguel probably makes you a Mexican tax resident. Mexico's rule turns on whether you've set up your home there [3].
  • US Social Security is taxable only in the US under Article 19 of the treaty, and that rule survives the treaty's saving clause [2].
  • Private pensions, 401(k)s and IRAs are a two-country problem. The treaty gives Mexico the right to tax them as your residence country, and the US still taxes you as a citizen [2].
  • Selling your San Miguel home can be tax-free in Mexico up to 700,000 UDIs, about MXN 6.2 million (about USD 330,000) in 2026, once every three years, if you can prove it was your home [4][5].
  • Uncle Sam still wants his return. You file Form 1040 every year, by June 15 with the automatic extension for people abroad, plus an FBAR if your foreign accounts top $10,000 [6][9].

Are you a Mexican tax resident?

Mexico's Federal Tax Code (Código Fiscal de la Federación, Article 9) says you're a tax resident if you've established your home (casa habitación) in Mexico [3]. If you also keep a home in the US, you're still a Mexican resident if your "center of vital interests" is in Mexico, for example if more than half your income comes from Mexican sources or your main professional activity is centered there [3].

For a typical San Miguel retiree, that plays out like this:

  • Sold the house in Austin and live here full time? You're very likely a Mexican tax resident.
  • Snowbird with a home in each country? It depends on the details, and the treaty's tie-breaker rules may decide. Those look at your permanent home first, then where your personal and economic ties are closer, then where you usually live, then citizenship [2].
  • Remote worker renting a casa for a year? Renting can count as having a home. Don't assume a lease keeps you out of the Mexican system.

A resident card from INM and tax residency are separate questions. You can be a tax resident without a card, and a card doesn't automatically make you one. The heads-up: Mexican tax residents are taxed on worldwide income, not just Mexican income.

How the treaty splits your retirement income

The US and Mexico signed their income tax treaty in 1992, with a protocol in 2003 [1]. Like every US treaty, it has a saving clause: the US can tax its citizens "as if the Convention were not in effect" [2]. A few benefits are carved out, and Social Security is one of them [2].

Income Who can tax it under the treaty What usually happens in practice
US Social Security Only the US, as the paying country [2] Taxed on your US return as usual; Mexico shouldn't tax it
US federal or military pension Generally the US, under the treaty's public-pension and government-service rules [2] Taxed in the US; check the details for your plan
Private pension, 401(k), IRA withdrawals Your country of residence, Mexico [2] Mexico can tax them; the US still taxes you as a citizen
Remote-work salary from a US employer Mexico, if you work there as a resident Taxed in both; credits or the foreign earned income exclusion reduce US tax
Gain on a Mexican home Mexico, where the property is [2] Mexico may exempt it; the US taxes it with its own exclusion

Social Security

Article 19(1)(b) says social security benefits paid by one country to a resident of the other are taxable only in the paying country [2]. Because it's carved out of the saving clause, it protects you as a US citizen too [2]. So your Social Security is taxed on your 1040 exactly as it would be back home in the States, and Mexico should leave it alone.

401(k)s, IRAs and private pensions

Article 19(1)(a) gives your country of residence the right to tax private pensions, and 19(2) does the same for annuities [2]. If you're a Mexican tax resident, that's Mexico. The saving clause means the US keeps taxing you anyway [2].

You avoid paying twice mainly through the foreign tax credit on Form 1116. It gets technical, because IRA withdrawals are US-source income, and the credit rules for that interact with the treaty's double-tax relief article. Mexican law also offers an exemption for pension income up to a cap. Whether it applies to US accounts is a question for a tax preparer. A US expat tax preparer (and a Mexican contador) can check your situation before you take a big withdrawal or a Roth conversion.

No Social Security totalization agreement

The US has no totalization agreement in force with Mexico [8]. For most retirees that doesn't matter, because you've already earned your benefits. It does matter for remote workers who are self-employed. You'll still owe US self-employment tax, with no agreement to sort out which country's system you pay into. Our guide to self-employment tax abroad covers that.

Your Mexican side: RFC, returns and records

If you're a tax resident with income Mexico can tax, the system expects you to have an RFC (your Mexican taxpayer number) and to file an annual return with the SAT. In practice, many retirees first meet the SAT when they open a bank account, buy a property or sell one.

Practical steps:

  1. Get your RFC once you have your resident card. You'll want it anyway for a home sale.
  2. Keep your address on record with the SAT and keep utility bills in your name. They become your proof of residence later [4][5].
  3. Find a local contador who works with foreigners, especially if you have IRA withdrawals, a pension or rental income.
  4. Keep your US and Mexican paperwork matched. Mexican tax you pay is what you'll claim as a credit on your US return.

We cover RFCs in more depth in CURP and RFC: Mexico's ID and tax numbers.

Selling your San Miguel home

This is where good records pay off big time.

The Mexican exemption

Mexico's income tax law (LISR, Article 93, section XIX) exempts the sale of your casa habitación when the price doesn't exceed 700,000 UDIs and the sale goes through a notario [4][11]. In 2026 that's about MXN 6.19 million [5], or about USD 330,000. USD conversions use the Banco de México FIX rate of 18.7147 pesos per dollar (November 5, 2026) [10]. Only the part above the cap can be taxed [5]. You can use the exemption once every three years [5][11].

To claim it, the deed has to include your sworn statement that you're a Mexican tax resident, that you have a tax or notification address that isn't the house you're selling, and your RFC or CURP [4]. The notario wants a certificate of tax residence or your tax ID document [4]. Notarios also look for proof that you lived there, such as utility bills, bank statements and tax documents showing the address [5]. Without that, the notario calculates and withholds tax on the gain.

The US side

Uncle Sam taxes the sale too. The home-sale exclusion lets you exclude up to $250,000 of gain, or $500,000 for a married couple filing jointly, if you owned the home and used it as your main home for at least 24 months of the 5 years before the sale [7]. It isn't limited to homes in the US.

Two things trip up San Miguel sellers:

  • Your gain is figured in dollars. Convert your purchase price at the rate when you bought and the sale price at the rate when you sold. A peso swing can create a dollar gain, or a loss, that looks nothing like the peso numbers.
  • A peso mortgage can create a currency gain when you pay it off. See currency gains on a foreign mortgage.

Any Mexican tax paid on the sale can usually be claimed as a foreign tax credit on your US return.

The US return still comes first

Moving to San Miguel doesn't change your US filing duty. As a citizen you're taxed on worldwide income, and you get an automatic two-month extension to June 15 when you live abroad, though interest runs from April 15 on any tax due [6]. If your Mexican bank accounts together exceed $10,000 at any point in the year, you file an FBAR with FinCEN [9]. Larger balances can also trigger Form 8938.

For more on the US side, see filing a US tax return from abroad. And if you want to compare notes with other retirees on finding a contador, try our community group for Americans in Mexico. For the big-city version of this topic, see Mexican taxes for Americans in Mexico City.

Sources

  1. IRS: Mexico tax treaty documents
  2. IRS: Convention between the United States and Mexico for the avoidance of double taxation (1992), archived copy
  3. Cámara de Diputados: Código Fiscal de la Federación (last reformed April 2026)
  4. IDC Online: Venta de casa habitación de extranjeros en México
  5. El Imparcial: SAT explica cuándo debes pagar ISR por vender una casa (May 2026)
  6. IRS: U.S. citizens and resident aliens abroad
  7. IRS Publication 523 (2025), Selling your home
  8. SSA: U.S. international Social Security agreements
  9. FinCEN: Report foreign bank and financial accounts
  10. Banco de México: FIX exchange rate
  11. SAT: Ley del Impuesto sobre la Renta, Article 93 (section XIX, home-sale exemption)

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