Closing Costs in Mexico
Although the steps of looking for and deciding on a property are very similar here in Mexico to those in the United States and Canada, the steps to close your property and the related costs are quite different. It is essential to consider these closing costs in Mexico in your initial budget as they may help determine which property is right for you.
What should I budget?
Depending on your purchase price, we generally recommend that you budget 5-8% above your purchase price for closing costs in Mexico. Keep in mind that this estimate varies with the price of your home. They can be as little as 3% and as high as 20%. Why is there such a large margin? Some closing costs involved in the transfer of property include a percentage of the purchase price. For example, the transfer tax in Playa del Carmen is 2% regardless of the property’s cost. That is slightly higher in Cancun, Puerto Morelos, and Tulum, which charge 3.1%.
Other closing costs are a flat fee and the same for all purchases, regardless of the property’s value. For example, municipal filing fees, permits, and costs to create a bank trust are flat fees and are not calculated based on the property’s price. Flat rate charges can drastically affect the closing costs percentage if the property you are purchasing is inexpensive. If you purchase a property for USD 50,000, the USD 2500 fee to create a bank trust will account for 5% of the cost. If your property is USD 500,000, the same USD 2500 fee will account for only .5% of the property’s price.
What do Closing Costs in Mexico Include?
These costs should include all the following:
- Acquisition taxes – this is a tax separate from your annual property taxes.
- Permit with the Minister of Foreign Affairs
- Establishing a bank trust (fideicomiso) or Mexican corporation should include the first annual fee.
- Registration of the title deed.
- Attorney fees
- Notary fees
- Prorated Property taxes
Why are Closing Costs in Mexico so high?
In the United States and Canada, government revenue from property is generated primarily from property taxes. In Mexico, the exchange or transfer of property generates that revenue. Therefore, the closing costs in the US and Canada are significantly lower than in Mexico, while Mexico’s property taxes are minimal compared to its Northern counterparts. Over the property’s life, the savings in property taxes will significantly outweigh the higher closing costs in Mexico.
Ask for an estimate!
Your Mexico real estate professional will be able to provide you with an estimate of closing costs. Be sure to consider the closing costs in Mexico as part of your budget to ensure that you get a property that you can afford. Once you have found the perfect home, this should be the easy part!
For more information, contact Top Mexico Real Estate and let one of their professional agents arrange for a personal tour with the safest measures. Remember, at Top Mexico Real Estate … we make it happen!