Baja California Sur continues to attract international buyers and real estate investors drawn by its lifestyle, natural beauty, and strong long-term appreciation potential. As with any investment market, understanding local regulations and taxes is essential. One recent change worth noting is the increase in the Property Acquisition Tax (ISABI)from **2% to 3%, effective January 1, 2025.
While this adjustment slightly increases closing costs, it is important to understand how it fits into the broader context of investing in real estate in BCS.
What Is the Property Acquisition Tax (ISABI)
The Property Acquisition Tax is a one-time tax paid by the buyer at closing, calculated as a percentage of the property’s assessed value. The new statewide rate of 3% applies to all property purchases in Baja California Sur, including residential, commercial, and land acquisitions.
For foreign buyers, this tax functions similarly to transfer or stamp taxes in other international markets and is typically paid alongside notary fees, appraisals, and registration costs.
How Does the Increase Affect Buyers?
The shift from 2% to 3% represents a 50% increase in the tax itself, though in real terms it usually translates to a modest adjustment in overall closing costs.
Example:
On a property priced at $500,000 USD, the acquisition tax increases from $10,000 USD to $15,000 USD an additional $5,000 USD at closing.
For most international buyers and investors, this cost remains relatively small when viewed against:
* long-term appreciation,
* rental income potential,
* lifestyle value,
* and market stability in key areas such as Todos Santos, Pescadero, and Los Cabos.
Will This Impact Foreign Buyer Demand?
In practice, this tax increase alone is unlikely to deter foreign buyers or investors. Purchase decisions are far more influenced by:
* location and ocean proximity,
* quality of construction,
* rental demand and yield,
* legal security through fideicomiso or Mexican corporations,
* long-term growth prospects.
Most foreign investors already anticipate closing costs of 5%–7%when purchasing in Mexico, making this adjustment a manageable and predictable factor rather than a deal-breaker.
Impact on Investors and Rental Properties
For investors focused on vacation rentals or resale, the higher acquisition tax slightly increases the initial capital outlay. However:
* It does "not affect ongoing annual property taxes" which remain low in Mexico,
* It can often be offset through rental income within a short period,
* Appreciation trends in BCS continue to outperform many mature coastal markets.
Savvy investors tend to factor this cost into pricing strategies rather than reconsider the market altogether.
Why Baja California Sur Remains Competitive
Even with the updated tax rate, Baja California Sur remains highly competitive compared to other international coastal markets. Many destinations in the U.S., Europe, and the Caribbean impose:
* higher transfer taxes,
* annual wealth or property taxes,
* or significantly higher ownership costs.
If additional tax revenue is reinvested into infrastructure, services, and community development, this change may ultimately contribute to stronger property values over time.
Final Thoughts
The increase in the Property Acquisition Tax from 2% to 3% represents a minor adjustment, not a market shift. For foreign buyers and investors, it is simply another line item to consider — one that does not diminish the overall attractiveness of owning property in Baja California Sur.
With its combination of lifestyle appeal, favorable long-term investment fundamentals, and relatively low ongoing ownership costs, BCS continues to stand out as a compelling destination for international real estate buyers.
