Closing costs and taxes when buying property in Quintana Roo

U.S. closing costs vary by state and usually include lender fees, title insurance, escrow fees, recording fees and, in some states, a transfer tax. In Mexico the list is different, the buyer carries most of it up front, and the seller’s tax arrives at exit.

What the buyer pays at closing

• Property acquisition tax (ISABI). Set by the Quintana Roo municipal acquisition-tax law and applied to the highest of the agreed price, the cadastral value or a recent appraisal.
• Notary fees and registration fees. The Notario Público drafts the deed and files it with the Public Registry of Property.
• Appraisal (avalúo). Required to set the tax base.
• Bank trust costs. The SRE permit, the set-up fee and the first annual trustee fee. After that, the trustee fee recurs every year.

All in, budget several percent of the price on top of it. The exact figure depends on the property and the municipality, so we quote it per transaction.

Why a low price on the deed backfires

You may be told that declaring a lower price on the deed saves tax. It does not.

1. The acquisition tax is calculated on the highest of price, cadastral value or appraisal. A low declared price does not move it.
2. The declared price becomes your recorded cost. When you sell, your taxable gain is measured from that number. Understate it today and you pay more capital-gains tax later.

What the seller pays at resale

Mexico taxes the seller’s gain (ISR), and the notary withholds it at closing.

• The primary-residence exemption rarely applies. It is designed for Mexican tax residents, so most foreign owners of vacation homes do not qualify.
• Keep every invoice (factura) for improvements. They can reduce the taxable gain.
• The U.S. side still exists. U.S. citizens must report a Mexican sale on their U.S. return. FIRPTA is the parallel U.S. rule for foreign sellers of U.S. property, a reminder that both countries withhold from foreign sellers.

How to pay

Mexico’s anti-money-laundering law restricts paying for real estate in cash above a statutory threshold, and the notary must identify the source of funds. Pay by traceable bank transfer, and only to an account that belongs to the party named in the contract.

What to do before you commit

• Get a written closing-cost estimate, including trust fees, before paying a deposit.
• Ask what value the acquisition tax will be calculated on.
• Plan your exit tax at entry, not at resale. Start a folder for facturas on day one.
• Talk to a U.S. tax adviser about your U.S. reporting.

Taxes are one of seven places where the Mexican system differs from the U.S. one. The rest are in buying property in Mexico vs. the United States.

This guide is general information, not legal or tax advice for any specific transaction. U.S. rules vary by state. Consult a U.S. tax adviser on your U.S. reporting obligations.

Sources

• Ley del Impuesto sobre Adquisición de Bienes Inmuebles de los Municipios del Estado de Quintana Roo
• Ley de Inversión Extranjera (bank trust and SRE permit)