Mexico’s ISAI property acquisition tax (Impuesto Sobre Adquisición de Inmuebles) is a one-time municipal tax the buyer pays at closing on any real estate purchase in the country. Rates run from about 2% to 6.5% depending on the state and municipality, and the tax is calculated on the highest of three values: your negotiated sale price, the property’s cadastral value, or a fresh commercial appraisal. Some regions call it the Impuesto sobre Traslado de Dominio, but the function is identical. No deed gets recorded until the tax is paid.
How the Tax Base Is Calculated
The amount you owe is not simply a percentage of what you agreed to pay. Municipalities apply the rate to whichever of three figures is largest:
- The sale price you and the seller negotiated.
- The valor catastral, a fiscal figure the local tax authority maintains using standardized per-square-meter tables that account for land area, construction, location, and permitted uses.
- A current commercial appraisal (avalúo comercial) from a licensed private appraiser, based on market demand, physical condition, and comparable sales.
These three numbers rarely match. The cadastral value tends to be the lowest, sometimes by a wide margin, because it does not track live market conditions. Since ISAI always sits on the highest of the three, negotiating a lower purchase price will not reduce your tax bill if the appraisal comes in above it.
How Much You Will Pay
ISAI is a local tax, not a federal one. Each state and municipality sets its own rate through its fiscal code, so the percentage depends entirely on where the property sits. Most municipalities land in the 2% to 5% range, and a few states have pushed rates as high as roughly 6.5%.
A few concrete examples: Cancún charges a base rate of 2% plus a 10% surcharge calculated on the ISAI amount itself, producing an effective rate around 2.2%. Mexico City uses a progressive bracket system in which the rate climbs as property value rises, so you never pay the top rate on the full value but the effective rate creeps up on higher-priced homes. Jalisco and Nuevo León each have their own rate structures. On a high-value property the difference between jurisdictions can be substantial, so confirm the exact rate with your notary or the municipal treasury before you finalize your budget.
Who Pays and When
The buyer is legally responsible for ISAI, but you will not be handing money to a government cashier. In Mexico, the Notario Público is required to withhold the tax and remit it to the treasury before the deed is finalized.1Secretaría de Administración y Finanzas de la Ciudad de México. Impuesto sobre Adquisición de Inmuebles 2024 The notary bears personal legal responsibility for collecting and delivering the tax, which is a different arrangement from countries where a closing agent merely facilitates payment.
At the signing of the public deed (escritura), you hand the tax amount to the notary along with the rest of your closing funds. The notary files the declaration and submits payment to the treasury within the local deadline. The treasury issues a comprobante de pago, and that receipt gets attached to your deed for recording in the Registro Público de la Propiedad. Without it, registration will not proceed. Keep a copy for your files.
Documents You Will Need
The paperwork itself is straightforward, but municipalities reject filings with any mismatch. Have the following ready before closing:
- A current commercial appraisal from a licensed appraiser. Stale valuations get rejected.
- The current property tax receipt (predial) showing annual property taxes paid through the current period. Any outstanding predial has to be cleared before closing.
- An RFC (Registro Federal de Contribuyentes), Mexico’s federal tax identification number, for both buyer and seller. Foreign buyers register with the SAT to obtain one, and appointment availability can be tight, so start early.
- Official identification. A valid passport for foreign buyers, or an official Mexican ID for nationals.
- The clave catastral, the alphanumeric code identifying the parcel in the municipal registry.
The declaration itself is filed on a standardized form from the municipal Tesorería. The notary handles the form in practice, but verify that every field matches your supporting documents. A wrong RFC or an incorrect cadastral code will get the filing kicked back.
Late Payment Penalties
For 2026, the federal surcharge rate on overdue tax obligations is 2.07% per month, up from 1.47% the previous year. That surcharge compounds monthly, and penalties get assessed against the property’s record, which can complicate future sales or refinancing. Late ISAI payments are uncommon in practice because the notary is on the hook for timely remittance, but if a filing is delayed for any reason, the penalties fall on the buyer’s side.
Foreign Buyers and the Restricted Zone
ISAI applies to foreign nationals the same way it applies to Mexican citizens. The rate, the calculation, and the payment process do not change based on nationality. What changes is how you hold title.
Article 27 of the Mexican Constitution creates a restricted zone within 50 kilometers of the coastline and 100 kilometers of any international border. Foreign individuals and foreign-owned companies cannot directly own residential property inside that zone.2Consulado De México. Acquisition of Properties in Mexico Instead, you purchase through a fideicomiso, a bank trust in which a Mexican bank holds legal title as trustee and names you as sole beneficiary. You retain full control to occupy, rent, renovate, sell, or bequeath the property. The trust runs 50 years and is renewable.
A fideicomiso carries its own costs at closing: a permit from the Secretaría de Relaciones Exteriores, a bank acceptance fee, and an annual administration fee of a few hundred dollars. These are separate line items and do not change how ISAI is calculated. Outside the restricted zone, foreign buyers can hold title directly in their own name.
The Underpricing Risk
A buyer trap worth knowing about: if you purchase a property for significantly less than market value, you can face a separate federal tax bill. Mexico’s tax authority can conduct its own commercial appraisal after the sale closes. If that appraisal comes in more than 10% above the price you paid, you may owe a 20% tax on the difference. This is an income tax obligation (ISR), completely separate from ISAI.
The scenario comes up most often with distressed sales, family transfers, or discounted deals with a motivated seller. The best protection is a solid commercial appraisal from a reputable licensed appraiser whose methodology supports your purchase price.
Exemptions and Reduced Rates
Some municipalities offer ISAI reductions for specific transactions. The most common applies to vivienda de interés social (social interest housing), where the property falls below a municipal value threshold. Eligibility rules and the size of the reduction vary by municipality, and there is no national exemption that applies everywhere. If a reduction exists and you qualify, it needs to be established before closing, not after. Ask your notary early whether the municipality where you are buying offers any ISAI relief and what documentation proves eligibility.
Where ISAI Fits in Total Closing Costs
ISAI is usually the single largest line item at closing, but not the only one. Total closing costs in Mexico generally run 4% to 12% of the property value, with ISAI accounting for roughly half of that range in many transactions. Other significant costs include:
- Notary fees for managing the transaction, performing due diligence, and handling tax filings. These vary by notary and property value.
- Public Registry recording fees, generally 0.5% to 1% of the property value.
- The commercial appraisal required for the ISAI calculation.
- For foreign buyers in the restricted zone, the fideicomiso setup costs described above.
A common mistake among first-time buyers in Mexico is budgeting only for the purchase price and the ISAI rate, then getting surprised by notary and registration costs at signing. Ask your notary for a detailed cost estimate before you sign the purchase agreement, with every line item broken out, so you know exactly what to bring to the closing table.
If you plan to sell later as a nonresident, the sale side carries its own tax obligations, calculated either at 25% of the gross sale price or 35% of net profit when the sale goes through a public deed with a Mexican representative.3Servicio de Administración Tributaria. Fiscal Obligations for Foreigners – Sale of Real Estate Income That is a separate tax from ISAI, but the rates are steep enough to factor into your total investment picture before you buy.