Property Taxes

Property Acquisition Tax

When planning for your new home in Los Cabos it is important to understand and budget for the Real Property Transfer Tax. The Real Property Acquisition Tax is 3% of the property’s purchase price.  As an example, if you purchase a home for $500,000, your Real Property Transfer Tax will be $15,000. This now makes your actual cost for the home $515,000.

There are benefits to paying the Real Property Acquisition Tax.  Payment of it allows you to acquire annual tax credits from the Mexican government.  These credits are then added to the property’s cost basis when it comes time for you to sell your property.  Applying tax credits such as this ultimately reduce any Capital Gains Tax you may incur when you plan to sell your property.  

Annual Property Taxes

Like property in the US or Canada, annual municipal property taxes are a fact of life. The same is true here in Mexico.  Annual Property Taxes are levied by municipalities annually at varying rates depending on the location of the property.  This is normally 0.5 to 2.5 percent of the value appraised by the tax office.  For example the Annual Property Taxes for a home purchased for $500k is in the order of $400 USD per year.  Annual Property Taxes must be up to date in order to sell the property and transfer title to a new owner.

For more details on Annual Property Taxes in Los Cabos read our Blog: Los Cabos Annual Property Taxes.