Can I deduct losses if I sell Bitcoin at a loss in Mexico?
The tax framework for gains, provisional payments, and the treatment of losses
TL;DR
Mexico does not have a dedicated “crypto” chapter in its Income Tax Law (LISR). As a result, bitcoin transactions are typically analyzed under general tax principles, commonly within the rules for sales of property (enajenación de bienes). In practice:
For certain sales of property other than real estate (“other goods”), a 20% provisional payment/withholding may apply on the gross transaction amount (not on the gain), with a frequently cited threshold around MXN $227,400 per transaction in specific cases—depending on the exact legal scenario and who the buyer is.
For individual taxpayers, selling BTC “at a loss” generally means no taxable gain on that transaction, but there is no broad, explicit rule allowing bitcoin losses to be carried forward for 10 years as if they were a corporate tax loss. Specific loss-offset regimes exist for certain asset types (e.g., real estate and certain securities) with their own mechanics and time windows.
For corporate taxpayers, transaction results flow into the annual taxable outcome. If a tax loss is generated, it can generally be carried forward against future taxable profits for up to 10 years, inflation-adjusted.
Across all cases, the deciding factor is documentation: cost basis, fees, FX/valuation methodology, and transaction traceability.
This is informational content and not individualized tax advice. The outcome can vary based on facts, frequency of activity, and how transactions are executed.
Why it matters
Confusing an economic loss with a tax-deductible loss can lead to overpayment or to planning a strategy that does not apply to your situation.
Crypto examinations commonly focus on traceability: provable cost basis, fees, timestamps, and evidence of execution.
If you provide virtual-asset services habitually and professionally (platform operation, custody/transfer for third parties), additional AML/FT compliance obligations may apply depending on your role and activity.
The baseline: Bitcoin under “sale of property” rules
Because there is no crypto-specific tax regime, the common approach is to apply general rules. Many analyses treat bitcoin as an intangible asset / property whose disposal falls under sale of property for income tax purposes. Two practical consequences follow:
Income tax is determined on the net gain (when there is one), supported by a provable acquisition cost and related fees.
In certain legal scenarios, a provisional payment/withholding mechanism may apply on the gross proceeds.
1) Individuals: what “selling at a loss” typically means
1.1 Compute the result (in MXN)
The core computation should be done in Mexican pesos, using a consistent valuation/FX approach and including fees:
Result (gain/loss) = Sale proceeds – (Acquisition cost + related fees/expenses)
Common inclusions:
Exchange trading fees (buy and sell)
Transfer/withdrawal fees (when attributable)
MXN conversion and support for the valuation/FX approach used on the transaction date
1.2 Can the loss be offset against other gains?
This is where precision matters:
Mexico’s tax law contains specific loss-offset regimes for certain asset types (e.g., real estate and certain securities), each with its own rules and time windows.
For bitcoin, commonly treated as an “other good” (not real estate and not necessarily within the securities-specific rules), there is no broad, explicit mechanism that automatically turns a bitcoin loss into a multi-year, carryforward “tax loss” for individuals.
Practical implication:
A BTC sale at a loss generally means no taxable gain on that sale.
Using that loss to reduce taxes elsewhere or carry it forward is not automatic and should be validated with counsel based on classification and facts.
2) The 20% provisional payment/withholding on gross proceeds
Under the “other goods” framework, a provisional payment/withholding may apply in certain scenarios, calculated as 20% of the gross consideration (not the gain).
Key points:
Withholding may apply even if the trade is loss-making economically, because the base is gross proceeds.
The provisional amount may be creditable or reconcilable in the annual return, depending on the applicable scenario and how it is reported.
A threshold around MXN $227,400 per transaction is widely referenced for specific cases, but applicability depends on the exact legal mechanics (buyer’s status, how the transaction is structured, and the statutory scenario).
3) Corporations: typically a clearer framework
For corporate taxpayers, the analysis is usually more straightforward:
Bitcoin transaction results are included in the annual taxable result (income and authorized deductions, as applicable).
If a tax loss is generated for the year, it may be carried forward against taxable profits for up to 10 years, inflation-adjusted, under the general tax loss rules.
The tax outcome depends on solid cost basis support, a consistent method (e.g., specific identification or another defensible approach), and clear accounting-to-tax reconciliation.
Note: accounting standards (local GAAP/IFRS) may differ from tax rules; for income tax, the tax framework and its documentation govern.
4) Documentation: what makes or breaks defensibility
In crypto, the weakest link is often provable cost basis. At minimum:
For each purchase
Exchange/broker confirmation or statement
Timestamp
Quantity and price
Fees
Evidence of MXN valuation/FX method (consistent approach)
For each sale
Confirmation/statement
Timestamp
Quantity and price
Fees
Settlement evidence (when relevant)
MXN valuation/FX method (same approach used for purchases)
Retention
As a conservative practice, retain documentation and working papers for at least five years from the filing where the tax effect is reflected (longer if facts require it).
5) Tax-loss harvesting: possible, but not “risk-free”
Tax-loss harvesting (selling to realize a loss and potentially re-buying) is widely discussed in crypto. In Mexico:
There is no US-style “wash sale rule” written in the same way.
However, anti-abuse concepts exist, and transactions lacking economic substance or business purpose may be challenged.
Practical guidance: if you rebalance, document non-tax reasons (risk management, custody changes, exposure targets, liquidity needs, internal policy, etc.).
6) Special cases (high sensitivity; get advice)
Exchange insolvency
Claiming a loss generally requires the loss to be definitive and well-documented (formal proceedings, communications, proof of non-recoverability).
Hacks or theft
Not automatically deductible; typically requires fact-specific analysis and extensive documentation (police reports, technical evidence, traceability).
Crypto-to-crypto swaps
Often analyzed as two disposals at fair market value in MXN, potentially creating a gain or loss depending on cost basis and valuation at the time.
FAQ
If I sold BTC at a loss, do I pay income tax?
If there is no gain, typically there is no income tax on gain for that transaction. However, a provisional payment/withholding on gross proceeds may apply in specific scenarios.
Can I use BTC losses to reduce salary or professional income taxes?
Not automatically. The outcome depends on classification, the legal bucket, and facts.
If I’m a business, can I carry losses forward?
If you generate a corporate tax loss for the year, it can generally be carried forward for up to 10 years under the general tax loss rules.
Do I need to report if there is no gain?
It depends on your facts and obligations. In practice, maintaining robust records is recommended even when the net result is zero or negative.
Conclusion
In Mexico, selling bitcoin at a loss does not automatically mean you can “deduct” or “carry forward” that loss like a corporate tax loss. For individuals, a loss-making sale most often translates into no taxable gain on that transaction, without a broad, explicit multi-year carryforward mechanism for bitcoin losses. For corporations, transaction results feed into the annual taxable outcome and may generate a tax loss that can be carried forward for up to 10 years.
In all cases, the decisive factor is documentation: acquisition cost, fees, valuation/FX methodology, and traceability.
This document is for informational and educational purposes only and does not constitute tax or legal advice. Consult qualified professionals for your specific facts and circumstances.