Closing Costs in Mexico: What to Expect
Congratulations! You found your dream home in Mexico, and you are ready to put in an offer. But, your lawyer just gave you the breakdown of the estimated closing costs, and you are feeling a bit shocked! Why are the closing costs much higher than you are used to in the United States and Canada?
Closing Costs: What to Expect?
You should expect to pay the following fees when closing on a property in Mexico:
In Mexico, any legal acquisition of property must be administered through a Notary. A Notary (Notario Publico) in Mexico is an experienced lawyer, selected and appointed by the Mexican Government. All real estate purchases must be registered with a Notary, and they are legally responsible to ensure the property’s title is clear and properly recorded with the public registry. The fees paid to the Notary are based on the purchase price of the property.
Bank Trust Fees (Fideicomiso)
Bank trust fees can vary by financial institution and depend on whether you are doing a transfer of trust or opening a new trust. The fees quoted will also include the first year’s trust payment.
Legal fees paid to Mexlaw will include the closing services provided by our experienced team of Real Estate Attorneys. For a complete list of our services, please visit our Real Estate Legal Services section.
Taxes & Duties
The taxes and duties paid at the time of closing include:
o Registration of the title deed at public registry
o Transfer Tax
o Government Closing Documents & Appraisal – these are required by law and based on the purchase price of the property.
Taxes & Duties: Why so High?
Many buyers are surprised to see that the taxes they pay at the time of closing are much higher than they are used to paying in the United States and Canada. The reason is the Mexican Government collects a large percentage of the property taxes at the time of closing.
While this may seem like a lot to pay, you will be pleasantly surprised when it is time to pay your annual property tax, known as the predial. Annual property taxes are very low in Mexico as the tax is calculated at a fraction of what your property is actually worth. Additionally, many municipalities offer significant discounts (up to 25%) if you pay early. Annual property taxes are due in January so discounts will be offered starting in December.
For additional information about closing costs, property taxes, and Mexican real estate services, please do not hesitate to reach out to our team of professionals at Mexlaw. We would be happy to provide you with a free Estimated Closing Cost for your property.