The Ultimate Guide to Cabo Property Taxes (2026 Update)

Owning a piece of paradise in Baja California Sur is a dream for many Americans and Canadians — but navigating the financial logistics of foreign real estate can feel overwhelming. The good news? One of the single biggest financial advantages of buying a home in Los Cabos is the remarkably low cost of Cabo property taxes. Whether you are budgeting for a vacation condo or a luxury beachfront villa, understanding Mexico property taxes is crucial for calculating your true, long-term homeownership costs.

What Is the Annual Property Tax in Mexico? (The Predial)

In Mexico, the annual property tax is known as the predial. If you are accustomed to the heavy property tax bills in the US or Canada — where effective rates routinely exceed 1% to 2% of market value — you will be genuinely surprised by the Los Cabos property tax rate.

The predial in Los Cabos is calculated based on the assessed (cadastral) value of the property, which is typically lower than its current market value. For 2026, the annual rate typically ranges between 0.15% and 0.3% of the assessed value. To put that in practical terms: on a $500,000 USD property, your annual Cabo property tax could be as low as $750 to $1,500 USD per year.

Early Payment Discounts — A Smart Way to Save

The municipality of Los Cabos rewards property owners who pay promptly. For 2026, the early payment discount schedule is:

• January or February: 20% discount on your total predial bill
• March: 10% discount on your total predial bill
• April onwards: Full rate applies — no discount

Setting a calendar reminder to pay in January is one of the simplest ways to reduce your annual Cabo homeownership costs.

The ISABI: Property Acquisition Tax in Baja California Sur

Beyond the annual predial, buyers must budget for a one-time tax paid at closing: the Impuesto Sobre Adquisición de Bienes Inmuebles, or ISABI (also commonly referred to as ISAI). This is the Mexican equivalent of a real estate transfer tax.

As of January 1, 2026, the state of Baja California Sur harmonized the ISABI transfer tax to a flat 3% statewide. This means buyers in Los Cabos, La Paz, and throughout Baja California Sur now pay the same rate regardless of municipality. The tax is calculated on the higher of the purchase price or the assessed value, and it is handled and paid through your Notario Público (Notary Public) at closing.

• Rate: 3% (flat, statewide as of January 1, 2026)
• Paid once, at closing — not an ongoing annual cost
• Calculated on the higher of the purchase price or assessed value
• Processed by the Notario Público on your behalf

Fideicomiso Tax Implications for Foreign Buyers

Because Los Cabos sits within 50 kilometers of the coastline, foreign nationals (including Americans and Canadians) are required under Mexican law to purchase coastal real estate through a Fideicomiso — a bank trust in which a Mexican bank holds the legal title on your behalf.

The Fideicomiso is not a tax in itself, but it carries essential holding costs that every foreign buyer must factor into their annual Cabo homeownership budget:

• Initial setup fee: typically $1,000–$2,000 USD, paid once at closing
• Annual bank administration fee: approximately $500–$1,000 USD per year
• Trust duration: issued for 50 years, renewable indefinitely
• Full ownership rights: you retain all rights to use, rent, improve, and sell the property

When budgeting for the true cost of living in Cabo San Lucas as a foreign homeowner, the Fideicomiso annual fee is a predictable, manageable line item — and far outweighed by the benefits of legally and securely owning prime coastal real estate.

How to Pay Your Cabo Property Taxes (Predial)

Paying the predial in Los Cabos has become significantly more accessible in recent years. Foreign homeowners have three primary options:

Option 1: Pay Predial Online

The municipality of Los Cabos offers an online treasury portal where property owners can look up their account, view their balance, and pay their predial online using a credit card or bank transfer. This is the most convenient option for expats living outside of Mexico.

Option 2: Pay In Person

If you are in Los Cabos, you can pay your predial in person at the Palacio Municipal (municipal treasury offices) in either San José del Cabo or Cabo San Lucas. Bring your property account number (número de cuenta predial) and a valid ID.

Option 3: Use a Local Property Manager

Many foreign homeowners entrust the annual tax payment, Fideicomiso renewal, and utility management to a local property management company. This is the hands-off approach — ideal for absentee owners who want total peace of mind. The Cabo Compass can connect you with vetted, trusted local vendors and property managers.

Your 2026 Annual Holding Cost Summary

To make budgeting straightforward, here is a quick breakdown of the recurring annual costs for a foreign-owned coastal property in Los Cabos:

• Annual Predial (property tax): 0.15%–0.3% of assessed value — often $750–$2,500 USD/yr for most properties
• Fideicomiso bank administration fee: $500–$1,000 USD/yr
• HOA fees (if applicable): vary by development — from $200 to $2,000+ USD/month
• One-time at closing — ISABI transfer tax: 3% of purchase price

Compare this to the average effective property tax rate in Texas (1.6%), New York (1.4%), or Ontario, Canada (0.7%–1.0%) and the financial case for Cabo real estate becomes even clearer.

Ready to Find Your Cabo Dream Home?

Understanding Cabo property taxes is the first step toward confident homeownership in Baja California Sur. The annual predial is genuinely one of the lowest in North America, the ISABI at 3% is a one-time known cost, and the Fideicomiso is a straightforward and well-established legal structure that has protected foreign buyers for decades.

If you have questions about the true cost of owning property in Los Cabos — from closing costs to HOA fees to property management — The Cabo Compass is here to guide you every step of the way. Contact us today for a free, no-obligation consultation and let us help you make your most informed real estate decision.