When you purchase your property in Mexico, you will need to account for a range of fees and taxes in addition to the agreed purchase price.
These vary depending on the type of property and what state it’s situated in, and the Notary Public processing the legal transfer will advise you on which costs and taxes are applicable as part of your transaction.
Closing costs you need to budget for when you buy a house in Mexico
Here is a list of the principal closing costs you’ll need to take into account. There might be other fees, but these are the main ones most buyers face when they purchase a residential home in Mexico.
Property acquisition tax
This tax is paid on the sale value of the property and is equivalent to about 2-4% depending on the Mexican state in which you buy. This tax is paid whether the property is sold, transferred, donated, placed into trust, split-off, or merged.
Sales tax (IVA) on residential property
Mexico’s sales tax us known as IVA that stands for Impuesto al Valor Añadido (Value Added Tax). No IVA is payable on residential property. Commercial property transactions are liable to IVA at the current rate in addition to the acquisitions tax.
Property appraisal tax
The tax authority might choose to perform a commercial appraisal (audit) of the property after you purchase it. If the appraisal value is greater than 10% of the price you paid for it, you will be asked to pay 20% tax on the difference between the two amounts.
Federal Register registration fee
When purchasing a home, the buyer pays a fee (based on the value of the transaction) to have the public records updated and the legal Title Deed (re)issued. The rates vary depending on what Mexican state you buy in, and you should budget for about 2-4% of the sales value.
If you purchase property on agrarian terms you don’t need to pay this, but you might have to pay a similar fee to the local comuneros as part of the paperwork involved in that transaction.
Fees for Public Notary services
Buyers are required to pay fees to the Notary Public for services provided to transact the legal matters related to the sale. Notary fees are based on the transaction value and vary by state.
The buyer gets to choose which Notary Public to use, so it makes sense to check several Notaries locally for their current rates —and if you are working with a realty agent ask for their recommendation too. Typically, Notary Public fees work out to between 4%-7% of the sales value.
Fees for the property trust, fideicomiso, if relevant
If you purchase property within the 50km/100km ‘restricted’ zones (near coasts and land borders), you will need to pay a local bank to set up and manage a property trust for you.
Set-up fees are typically around US$1,000 equivalent in Mexican pesos, with annual service charges between US$1,000-$2,000 equivalent. The annual service fee will cover certain legal obligations (e.g., the filing of necessary documents annually) by the bank on your behalf.
Some people choose to place their property into a trust even if it’s not situated in the restricted zone as part of their estate planning preparations; you should seek professional financial planning advice about this.
Other attorney fees
If you hire a lawyer in addition to the Notary Public (the legal process must be filed through a Notary Public), you will also need to pay they lawyer additional fees for services they undertake on your behalf. These should be negotiated in advance.
Buyers may need to hire a lawyer in addition to the Notary Public if there are complications with the purchase and they need specialist advice on the matter.
Land and/or building surveys:
Unlike some states in the US, sellers are not legally liable for any deficiencies that might be found on a property after its sale. For this reason, it’s prudent to hire a professional land and building surveyor to assess the property before you sign a contract.
The costs are entirely on the buyer and will depend on type, extent, and complexity of surveys undertaken. Ask your realty agent, architect, or building project manager for advice and details about this. Local architect firms may offer survey work.
Foreign national permit
If you are not a Mexican national (natural or naturalized) and depending on which Mexican state the property or land is situated in, the transaction might require a special permit that grants a foreign national the right to hold title deed of property in their name.
Check with your Notary Public, who advise you if this is necessary in your case and will usually manage the filing on your behalf if it is. If you need this permit, its cost will add at least few hundred dollars to your closing costs, comprised of the official permit fee plus any administrative fee you pay for preparing and filing the paperwork for the permit.
Gated community and condo service fees
If you are buying a house in a gated community, or a condominium, be sure to check on the annual service fees, and have these put in writing.
Service fees can range from a few hundred to a few thousand dollars a year, depending on location, number of houses or apartments in the enclosure, and the scope of the amenities present.
Property title insurance
When you buy property in Mexico, you might consider purchasing title insurance. You must purchase this at the point of purchase, before you close on the property. Rates are based on the sale value of the property. Learn more on this article.
Costs and taxes when selling a Mexican Property
When you eventually sell a residential property in Mexico you will need to budget for a range of additional fees and taxes as part of the sales transaction. You can learn about these on this sister article: Costs and Taxes of Selling a Property in Mexico.
Further insight about property costs in Mexico
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