• Home
• Political Structure
• Economic Structure
• Market Geography
• Steps To Buying Real Estate In Mexico
• Step 1: Finding the Right Property
• Step 2: Making an Offer
• Step 3: Due Diligence and Obtaining Proper Documentation
• Step 4: Payment
• Step 5: Closing
• Closing Costs
• Tax Issues
• Contact a Mexico Realtor

Closing Costs for Mexico Property

Buyers Costs

You can expect Mexico property closing costs for a real estate purchase in Mexico to average around six to eight percent of the cost of the property.  The following are common closing costs a buyer is expected to pay:

• Escrow Service: $750
• Title Search: $500-$1500
• Registry: .05%-.06%
• Notario: 1%-1.5%
• Trust fees: 
• $500 to establish
• $400-$500 or .05%-1% annual maintenance fee subject to reappraisal
• Acquisition tax: 2% of appraised value
• National Foreign Investment Registry (RNIE): $500
• Foreign Relations Permit: $1,500
• Title Insurance:  $5.00 per $1,000 value
• Supervision of closing by settlement company or attorney: $2,000-$5,000
• Agent’s Commission: Negotiable and subject to IVA tax
• IVA tax: Value added tax applicable to professional services
• Baja Peninsula, Cancún, and Rivera Maya: 10%
• Elsewhere: 15%
• Appraisal: Based on the value of the property ($150 – several thousand dollars)
• Federal Maritime Terrestrial Zone (ZoFeMaT) Annual Fee: right-to-use concession fee applying to waterfront properties
• Unimproved: $10
• Improved: $25

Sellers Costs (Capital Gains Tax)

A seller’s main expenditure is the Capital Gains Tax.  At the time of closing, two formulas are applied to the gain and the seller pays the lower of the two amounts:

• After application of deductions and adjustments to the cost basis, 30% of the net gain.
• With no deductions, 25% of the gross gain on the sale

Basis adjustment can be made for items such as transaction expenses and capital improvements.  An annual one to two percent inflation adjustment allowed as an addition to basis.

Homestead Exemption
Residents, whether nationals or foreigners, who have lived in a home in Mexico as a primary residence for two years are given a homestead exemption and do not have to pay any capital gains tax.  To qualify you must:

• Live in Mexico full-time (more than 183 days annually)
• Have a resident visa
• Have owned and lived in the home as a primary residence for more than two years
• Not have a primary residence in another country

Declared Value vs. Purchase Price
Both the capital gains tax and the annual Mexico real estate taxes are calculated using the declared value, not purchase price.  Thus, these values must match on the escritura.  A low declared value should not be recorded to keep your annual taxes and acquisition taxes low.  It will produce a low basis for capital gains tax and you will essentially have accepted the seller’s capital gains tax liability as well as your own.  Annual and acquisition taxes are low, while capital gains taxes can be as high as thirty percent.