Acquisition Tax (ISAI)
Acquisition Tax (ISAI) is a mandatory government tax paid by the buyer when real estate ownership is transferred in Mexico.
Who Pays
Buyer
Buyer Pays Fees
When
Closing
(calculated and paid before registration)
Primary Authority
Mexican Notary Public
State / Municipal Tax Authority
(calculated and collected by the notary, remitted to the government)
Summary
Acquisition Tax, commonly referred to as ISAI, is a government-imposed tax payable upon the transfer of real estate ownership in Mexico. It is calculated as a percentage of the property’s assessed or declared value and is collected as part of the closing process. Understanding how ISAI is calculated and applied is essential for accurately evaluating total acquisition costs.
Key Expalnation
ISAI is assessed by state and municipal authorities and is typically calculated by the notary handling the transaction. The applicable rate and valuation method can vary depending on location, property type, and declared value, making early clarification important for budgeting purposes.
Detailed Guidance
The notary calculates ISAI during the final stages of the transaction and includes it in the closing statement. Payment is required before the property can be registered in the buyer’s name at the Public Registry. ISAI applies to both domestic and foreign buyers and is unavoidable in standard property transfers.
Buyers often assume ISAI is included in the purchase price or that it is a fixed nationwide rate. In practice, rates vary by state and are calculated independently of negotiated pricing.
Underestimating ISAI can result in funding shortfalls or closing delays. Buyers should confirm the applicable rate and valuation basis early in the transaction to avoid last-minute adjustments.
Request an estimated ISAI calculation from the notary during due diligence and confirm whether the tax is based on assessed value or purchase price. Conservative budgeting is advised.
Acquisition Tax (ISAI)
Acquisition Tax (ISAI) is a mandatory government tax paid by the buyer when real estate ownership is transferred in Mexico.
Who Pays
Buyer
Buyer Pays Fees
When
Closing
(calculated and paid before registration)
Primary Authority
Mexican Notary Public
State / Municipal Tax Authority
(calculated and collected by the notary, remitted to the government)
Summary
Acquisition Tax, commonly referred to as ISAI, is a government-imposed tax payable upon the transfer of real estate ownership in Mexico. It is calculated as a percentage of the property’s assessed or declared value and is collected as part of the closing process. Understanding how ISAI is calculated and applied is essential for accurately evaluating total acquisition costs.
Key Expalnation
ISAI is assessed by state and municipal authorities and is typically calculated by the notary handling the transaction. The applicable rate and valuation method can vary depending on location, property type, and declared value, making early clarification important for budgeting purposes.
Detailed Guidance
The notary calculates ISAI during the final stages of the transaction and includes it in the closing statement. Payment is required before the property can be registered in the buyer’s name at the Public Registry. ISAI applies to both domestic and foreign buyers and is unavoidable in standard property transfers.
Common Misconceptions
Buyers often assume ISAI is included in the purchase price or that it is a fixed nationwide rate. In practice, rates vary by state and are calculated independently of negotiated pricing.
Underestimating ISAI can result in funding shortfalls or closing delays. Buyers should confirm the applicable rate and valuation basis early in the transaction to avoid last-minute adjustments.
Risk Consideration
Best Practice Advisory Notes
Request an estimated ISAI calculation from the notary during due diligence and confirm whether the tax is based on assessed value or purchase price. Conservative budgeting is advised.