Closing Costs in Mexico for Foreign Buyers | Complete Breakdown

What Are Closing Costs in Mexico? A Complete Breakdown for Foreign Buyers

One of the most common surprises foreign buyers encounter in a Mexican real estate transaction is the total cost of closing. The purchase price is only part of what you will pay. Closing costs in Mexico typically add between 5% and 7% on top of the agreed sale price, and in some cases more, depending on the property value, location, and transaction structure.

Understanding what those costs are, who pays them, and how they are calculated is essential before you sign anything.

Acquisition Tax (ISAI)

The Impuesto Sobre Adquisición de Inmuebles is a state-level transfer tax paid by the buyer at closing. In Baja California Sur, the rate is 3% of the higher of the sale price, the assessed fiscal value, or the appraised value. This is typically one of the largest single line items in the buyer's closing costs and must be paid to the notario before the deed is registered.

Notary Fees

The notario is responsible for drafting and certifying the deed, calculating and withholding taxes, and registering the transaction with the Public Registry. Notary fees in Los Cabos generally range from 1% to 1.5% of the property value, though this varies by notario and transaction complexity. These fees are paid by the buyer.

Fideicomiso Setup and Annual Fees

For foreign buyers purchasing within Mexico's restricted zone, a fideicomiso (bank trust) is required to hold title. The setup fee charged by the fiduciary bank typically ranges from $1,500 to $1,700 USD, and the annual maintenance fee ranges from $500 to $600 USD depending on the bank. Both are the buyer's responsibility.

Appraisal (Avalúo)

An official appraisal is required for the transaction to be formalized. The cost varies based on property value. The appraisal is used by the notario to determine the fiscal value of the property for tax calculation purposes.

Public Registry Fees

Recording the deed with the Registro Público de la Propiedad involves a government fee that varies by municipality and property value. In Los Cabos this is generally a few hundred dollars and is paid at closing.

Legal Representation

Working with a closing attorney is a separate cost from notary fees. Attorney fees vary by firm and transaction complexity but are one of the most important investments you can make in a Mexican real estate transaction, given that the notario does not represent your interests.

Seller's Costs: ISR

On the seller's side, the primary closing cost is ISR, the capital gains tax calculated on the difference between the adjusted acquisition cost and the sale price. This can range from a few percent to 35% of the taxable gain depending on the seller's documentation, residency status, and whether the primary residence exemption applies. The notario calculates and withholds this amount at closing.

At Cabo Closing Services, we provide clients with a complete, itemized closing cost estimate as part of our initial consultation, so there are no surprises at the table.

Contact us at caboclosingservices.com or at [email protected]