Hidden Benefit of Owning Property in Mexico
In the long run, fees are lower in Mexico and you can make significant savings compared to a similar purchase in the U.S.
Acquisition costs and property taxes in Mexico differ from what Americans are accustomed to when purchasing property in the U.S. We believe it’s important to combine the two costs when discussing overall savings when purchasing in Mexico.
When purchasing in Mexico, closing costs are made up of a few main components: transfer tax 2% of purchase price, public notary fee (they handle all of the title work) 1% of the purchase price, setting up the fideicomiso (bank trust), your lawyer fee, and some ancillary fees. This all adds up to about 5-6% of the purchase price when looking at a $200,000.00 USD property.
This is usually more than what most Americans are used to, however, the key component in why ownership of property in Mexico is much more inexpensive, is the collection of annual property taxes. Mexican property taxes are calculated by a complex formula, but what we usually quote is 0.001% annually on the purchase price of the property ($200 per year on a $200,000.00 USD property).
This rate is based on the property owner paying by the due date. However, the government grants a discount to encourage early payments. If you figure both of these components for annual carrying costs and comparing to the United States, the initial upfront cost is a little more. However, within a few short years, after paying the much lower annual property taxes, the homeowner pays much less than the carrying costs of an equivalent American property. We believe, if given a choice between the two systems, most buyers would choose the Mexican system when looking at the long-term savings of home ownership.
Have questions? Call us today; we have over 11 years in the real estate industry. TAO Mexico is best equipped to answer any of your questions and offer you advice. For your free legal consultation, contact our TAO Sales Attorney: Leann Castillo – 984 875 7200 ext 109 (Monday to Friday, 9:30 am to 6:00 pm EST) or contact her by email:
