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Property taxes in Cabo San Lucas are significantly lower than most international destinations, making it an attractive investment location. The municipal property tax (predial) is only 0.1% of assessed value annually, while acquisition taxes add 3% to purchase costs.
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Property owners in Cabo San Lucas pay a 0.1% annual property tax (predial) plus municipal service fees of MXN 2,000-5,000 yearly.
Property purchases trigger a 3% acquisition tax, while sales incur federal capital gains tax of approximately 25-35% depending on the calculation method used.
| Tax Type | Rate/Amount | Who Pays |
|---|---|---|
| Annual Property Tax (Predial) | 0.1% of assessed value | Property owner |
| Municipal Service Fees | MXN 2,000-5,000/year | Property owner |
| Acquisition Tax (ISABI) | 3% of transaction value | Buyer |
| State Lodging Tax (ISH) | 3% of gross rental income | Property owner (if renting) |
| Capital Gains Tax | 25% gross or ~35% on gain | Seller |
| Early Payment Discount | Up to 20% (January payment) | Property owner |
What types of properties are covered and which currency should I use for tax calculations?
Property taxes in Cabo San Lucas apply to all residential and commercial real estate categories including single-family homes, condominiums, vacant land, and commercial properties.
The Mexican government requires all property tax payments in Mexican Pesos (MXN), as this is the official currency for municipal transactions. For reference purposes, we'll show amounts in both MXN and USD using the exchange rate of 1 MXN = $0.0537 USD as of September 2025.
Investment properties, vacation homes, and primary residences all fall under the same tax structure, though primary residences may qualify for certain exemptions discussed later in this guide.
Commercial properties including retail spaces, office buildings, and mixed-use developments are subject to the same 0.1% predial rate, though service fees may be higher depending on the property's size and location.
What are the official property taxes I need to pay in Cabo San Lucas for 2025?
Cabo San Lucas property owners face five main tax categories administered by different government levels.
The municipality charges the annual predial (property tax) at 0.1% of assessed value, plus municipal service fees averaging MXN 2,000-5,000 yearly. Property buyers pay a 3% acquisition tax (ISABI) to the municipality at closing.
The state of Baja California Sur collects a 3% lodging tax (ISH) on gross rental income for properties used as short-term rentals. The federal government imposes capital gains tax of approximately 25% of gross sale price or 35% of net gain when you sell.
These taxes are collected by the municipal treasury (TesorerĂa), state tax office, and federal tax administration (SAT) respectively, with specific filing requirements and deadlines for each.
How exactly is the annual property tax calculated and what are the rates for 2025?
The predial tax calculation in Cabo San Lucas uses a straightforward formula: assessed value multiplied by 0.1%.
The taxable base is the assessed value (valor catastral) determined by the municipal land registry, not the market value or purchase price. This assessed value typically runs 60-80% of actual market value in most Cabo San Lucas neighborhoods.
There are no published minimum amounts, maximum caps, or graduated rate bands for 2025. All residential and commercial properties use the same 0.1% rate regardless of value or property type.
Luxury properties or those in premium developments don't face higher rates, though they may be subject to more frequent reassessments to ensure the assessed value reflects current market conditions.
What would I actually pay in property tax on specific property values?
| Assessed Value | Annual Predial (MXN) | Annual Predial (USD) |
|---|---|---|
| MXN 2,000,000 | MXN 2,000 | $107.40 |
| MXN 3,000,000 | MXN 3,000 | $161.10 |
| MXN 5,000,000 | MXN 5,000 | $268.50 |
| MXN 8,000,000 | MXN 8,000 | $429.60 |
| MXN 12,000,000 | MXN 12,000 | $644.40 |
| MXN 15,000,000 | MXN 15,000 | $805.50 |
These calculations demonstrate how affordable property taxes remain in Cabo San Lucas compared to major US cities where effective rates often exceed 1-2% annually.
What other municipal charges appear on my property tax bill?
Municipal service fees cover trash collection, street lighting, and water/sewer infrastructure maintenance, typically ranging from MXN 2,000-5,000 annually for standard residential properties.
Luxury properties or those in tourist zones may face higher service fees up to MXN 10,000+ per year due to increased municipal services and infrastructure demands. These fees appear as separate line items on your annual tax bill.
Bank trust (fideicomiso) fees, electric utility bills (CFE), water bills, and homeowners association (HOA) dues are not municipal taxes and should be excluded from property tax calculations. These are separate obligations paid directly to service providers.
Property insurance, security services, and maintenance fees are also private expenses that don't appear on municipal tax bills.
It's something we develop in our Mexico property pack.
When are my 2025 property taxes due and what early payment discounts are available?
Property tax payments for 2025 are due by March 31st, with the municipal treasury accepting annual, bi-annual, or monthly payment schedules.
Early payment discounts provide significant savings: 20% discount for January payments, 15% for February, 10% for March, and 5% for April payments. These discounts apply to both the predial tax and municipal service fees.
You can pay in person at the municipal TesorerĂa office, online through the municipal website, or at authorized banks throughout Los Cabos. Most property owners choose the January payment to maximize their discount.
After April 30th, late payment penalties begin accumulating, making early payment financially advantageous beyond just the discount percentage.
What happens if I pay my property taxes late and how much will it cost me?
Late property tax payments trigger immediate penalties of up to 10% plus monthly interest charges of approximately 1.5% on the outstanding balance.
For a property with MXN 2,000 annual tax paid 3 months late, total cost becomes approximately MXN 2,300. A MXN 5,000 tax paid 6 months late totals around MXN 5,750. A MXN 12,000 tax paid 12 months late reaches approximately MXN 13,800.
These penalties compound monthly, making prompt payment essential for property owners. Extended delinquency can result in tax liens against the property, potentially complicating future sale transactions.
The municipal treasury may work with property owners on payment plans for substantial delinquencies, but interest charges continue accruing during extended payment arrangements.
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How is my property's assessed value determined and can I appeal it?
The municipal land registry (Catastro) determines assessed values based on recent comparable sales, property improvements, location factors, and current market data within your neighborhood.
Assessments typically update annually or after major property improvements, title transfers, or significant market changes. The assessed value usually represents 60-80% of current market value in most Cabo San Lucas areas.
Property owners can appeal assessments by filing in person at the municipal office within 30 days of receiving their assessment notice. Appeals require supporting documentation such as recent appraisals, comparable sales data, or evidence of property condition issues.
The appeal process typically takes several weeks to months, with decisions made by municipal review boards. Most successful appeals involve properties with obvious assessment errors or those affected by market downturns.
Appeal filing is generally free, though you may need to hire a local property tax specialist or lawyer for complex cases involving substantial value disputes.
What exemptions and reductions can lower my property tax bill?
Primary residence exemptions provide up to 50% reduction on predial taxes for qualified Mexican residents and certain categories of property owners.
Seniors over 60 with valid INAPAM cards receive up to 50% predial reduction when the property serves as their primary residence. Persons with disabilities can qualify for similar reductions with proper medical certification and residency documentation.
Low-value properties may qualify for exemptions or reduced rates depending on local policy and assessed value thresholds, though specific amounts vary by municipal discretion.
Required documentation includes proof of residence, INAPAM senior citizen card, official disability certificates, and completed exemption applications filed during the January-March application period.
Foreign property owners generally don't qualify for primary residence exemptions unless they hold permanent Mexican residency status and can demonstrate the property as their principal domicile.
What additional taxes apply if I rent out my Cabo San Lucas property?
Rental properties trigger the state lodging tax (ISH) of 3% on gross rental income, filed monthly or quarterly depending on rental frequency and income levels.
For a property generating MXN 50,000 monthly rental income, the ISH tax amounts to MXN 1,500 per month or $80.55 USD at current exchange rates. This tax applies to both short-term vacation rentals and long-term leases.
Property owners must register with the state tax office and file monthly or quarterly returns depending on their rental income volume. Short-term vacation rentals through platforms like Airbnb require monthly filing and payment.
Federal income tax on rental income follows standard Mexican tax rates for residents or non-resident withholding rates, separate from the state lodging tax obligation.
It's something we develop in our Mexico property pack.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Mexico versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What one-time taxes do I pay when buying property in Cabo San Lucas?
Property buyers pay a 3% acquisition tax (ISABI) to the municipality at closing, calculated on the transaction's declared value or assessed value, whichever is higher.
For a MXN 10,000,000 property purchase, the ISABI tax totals MXN 300,000 or $16,110 USD. This tax is paid by the buyer and due at the time of closing through the notary public handling the transaction.
Additional closing costs include notary fees (0.5-1% of purchase price), property registration fees, and bank trust setup costs for foreign buyers, but these aren't municipal taxes.
The ISABI tax cannot be financed and must be paid in cash at closing, so buyers should budget this amount separately from their down payment and other closing costs.
How much capital gains tax will I pay when selling my Cabo San Lucas property?
Mexican capital gains tax offers two calculation methods: 25% of the gross sale price with no deductions, or approximately 30-35% of the net gain after allowable deductions including purchase price, improvements, and transaction costs.
For a MXN 3,000,000 capital gain, the tax burden ranges from approximately MXN 900,000 to MXN 1,050,000 ($48,330 to $56,385 USD) depending on which calculation method provides better results.
Principal residence exemptions apply only to Mexican tax residents who can prove the property served as their primary home, with exemptions typically capped around MXN 700,000 of gain.
Non-Mexican residents and owners of secondary/investment properties pay the full capital gains tax without exemptions. The tax is collected at closing through the notary public handling the sale transaction.
It's something we develop in our Mexico property pack.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Cabo San Lucas property taxes remain among the most affordable in North America, with annual rates of just 0.1% making real estate investment particularly attractive.
Early payment discounts of up to 20% in January provide substantial savings, while late payments carry significant penalties that can increase costs by over 15% annually.
Sources
- Wise Currency Converter - MXN to USD Exchange Rates
- Mint Cabo Homes - Annual Property Tax Guide
- The Flat - Property Tax Payment Mexico
- Cabo Real Estate Services - Property Tax Overview
- YouTube - Mexico Property Tax Explained
- Cabo Beach Realty - Mexico Closing Costs
- Mexperience - Property Sale Taxes Mexico
- CB Riveras - Baja California Sur Property Taxation
- The LatinVestor - Complete Mexico Property Tax List
- The LatinVestor - Cabo San Lucas Property Buying Guide