Demystifying Mexican Property Taxes

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One of the most common questions we get from our clients who want to purchase a property in Mexico is about property taxes.

Which taxes do buyers have to pay and how much are they? As a buyer and owner of a property in Mexico, you must pay certain taxes annually to the Tax Administration Service, better known as SAT.

Buyer’s Taxes

Property Acquisition Tax (ISAI)

When buying a home in Mexico, you must pay the Property Acquisition Tax (ISAI). These tax rates differ in each Mexican state. They can range from 2% to 5% of the value of the property.

Annual Property Tax (Predial)

Annual property taxes are also a requirement, known as Predial. This tax is quite low, and it must be paid every year prior to March 31. The amount of the Predial is calculated based on the size and location of the property.

Tip: If you plan to pay the property tax between January and February, the government will give you a percentage discount. The discount depends on the state of the country in which your property is located. It can vary between 6 and 10%.

Income Taxes for Rentals (ISR)

Lastly, if you plan to rent your property for profit, as a vacation rental for example, you’ll need to pay the Income Tax (ISR). This tax is taken directly from the earnings you’ll make.

Seller’s Taxes

At the time of purchase, the seller will be paying the ISR, since the seller is the one receiving the profits from a commercial transaction with a property. You will not need to pay this tax until the point at which you choose to sell or rent your property.

At TAO Mexico, we have both legal and accounting advisors to assist our clients. If you plan to buy a property in Mexico with us, you’ll have a team of professionals on your side to guide you along the home buying process.

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Buy your property in Mexico

Real estate is one of the best investments you can make. Owning a home or second home in Mexico is a low-risk way to invest and has numerous advantages. If the home is in a prime location, the value will continue to increase overtime.

At TAO Mexico, we specialize in real estate in Mexico. We have both luxury and exclusive properties in the primary tourist destinations in the country.

Contact us today and let us know what you’re looking for. Our real estate consultants will be happy to assist you, answer your questions and show you the properties that suit your budget, needs and wishes.