Mexico Property Closing Costs & Taxes
Acquisition Tax of around 2% of the property value, depending on the state in which the property is purchased, is payable by the buyer, whenever a property is purchased, placed into trust, or otherwise transferred.
A fee of 1.3% of the property value, is paid by the buyer to register the property.
Many sales are conducted through the real estate agent and public notary, however the buyer may choose to hire a lawyer and should negotiate and agree these additional legal costs in advance of using the services.
Public Notary Fees
The fees for services provided by the Notary Public cost about 1.5% of the property sales value, plus the cost of the official appraisal.
The Mexican authorities may choose to perform a commercial appraisal on a property after it has been purchased. If the appraisal value is more than 10% higher than the price paid for the property, the owner will be asked to pay 20% tax on the difference between the two amounts, payable within 15 days of the date of the appraisal report.
The cost of a land or building survey will depend upon the type of building, complexity and extent of the survey.
The annual service fees for anyone buying an apartment, condo or home in a development range from US$100 a year to US$1000+ a year, depending on location and amenities offered.
Value Added Tax - VAT
Residential properties are free of value added tax, however commercial property transactions are liable to VAT at the current rate in addition to the Acquisitions Tax.
Costs and Taxes - Seller
The seller will need to pay for any professional services agreed with a lawyer an deal estate agent. Additionally, if the seller has not owned and used the property as their main residence for at least 2 years before selling the property, the seller will also be required to pay income tax on the property, at either 20% of the gross value of the property sale, or alternatively 40% of the net profit obtained from selling the property. Commercial property is taxed at above rates, regardless of how long the property has been owned.
Time to Complete Sale
The time to complete a property sale can vary from a few weeks, to several months, and usually takes around 3 months from the time the initial sale agreement is drawn up to closing.
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