On December 27, 2024, the state government for Baja California Sur published a decree increasing taxes related to real estate transactions. Below is a summary of the highlights of the decree.
Increase of Property Acquisition Tax (ISABI) and its impact on real estate transactions.
The decree by which several provisions of the Municipal Finance Law for the Municipality of Los Cabos, Baja California Sur were amended, added, and repealed (the “Decree”) was published in the Official Gazette of the State of Baja California Sur on December 27, 2024.
What Does the Decree Provide?
- The decree amends and adds several articles of the tax law for the municipality of Los Cabos, Baja California Sur, and amends article 35 of such law, raising the rate applicable to the tax on acquisition of real estate from 2% to 3%.
- Transfers of property through donations or inheritance among direct family members will also be subject to an increase, with the tax rate rising from 1% to 1.5%.
Impact on Real Estate Transactions:
The immediate effect for the buyer will be the increase in closing costs for the acquisition of any property located in the Municipality of Los Cabos. Likewise, it must be remembered that as of January 1, 2025, the buyer will have to pay a commercial appraisal for tax purposes that is exponentially more expensive than the cadastral appraisal.
- Effective date: This new standard becomes effective January 1, 2025;
- Decree is only applicable to the Municipality of Los Cabos, BCS;
- During 2025, the revenues obtained from this additional percentage point of the Property Acquisition Tax may be used to cover labor liabilities of the Municipal Government;
- We note that this acquisition tax will remain tax-deductible for buyers should they later sell their property.
