By Joe Taylor | Updated June 2026
If you own a $2M home in San Diego, your annual property tax is roughly $20,000–$25,000. In Austin, $30,000–$40,000. In Naples or Palm Beach, $18,000–$25,000. In Aspen, $10,000–$15,000.
In Cabo San Lucas, that same $2M home pays roughly $1,500–$2,500 per year in property tax. Not per quarter. Not per month. Per year.
This isn't a loophole. It's not a temporary incentive. It's just how the Mexican property tax system works — and it's one of the most underrated economic advantages of owning luxury real estate in Mexico. This post explains exactly how it works, what you'll actually pay, when you pay it, and the small moves that make the number even better.
How Predial is calculated
Predial — Mexico's annual property tax — is calculated as a percentage of a property's cadastral value (valor catastral), not its market value. The cadastral value is the government-assessed value used purely for tax purposes, set by the municipal cadastral office.
The Cabo Predial rate is roughly 0.115% of cadastral value annually.
Here's the part most foreign buyers don't realize: cadastral values in Mexico typically sit well below market values. In Cabo, a property selling for $2M often has a cadastral value of $1.2M to $1.6M. That gap is structural — the cadastral office updates valuations slowly, and even after updates, the assessed value typically lags actual market value by 20%–40%.
The math:
Market value | Typical cadastral value | Annual Predial |
$1,000,000 | $600,000–$800,000 | $700–$920 |
$2,000,000 | $1,200,000–$1,600,000 | $1,380–$1,840 |
$5,000,000 | $3,000,000–$4,000,000 | $3,450–$4,600 |
$10,000,000 | $6,000,000–$8,000,000 | $6,900–$9,200 |
Even on a $10M oceanfront estate, you're paying less than $10,000/year in property tax. The comparable property in California or Florida would pay $80,000 to $150,000.
Why Predial is so low
Two structural reasons.
First, the rate itself is low by US standards. US property tax rates range from roughly 0.3% (Hawaii) to 2.2% (New Jersey, Illinois). Cabo's effective rate of ~0.115% is below the lowest US state and a fraction of the median.
Second, cadastral values are below market. US property tax assessments are required by law to track close to market value in most states — the gap is typically 10% or less. In Mexico, cadastral values are administratively conservative. The gap of 20%–40% below market is normal.
Why doesn't the Mexican government push cadastral values higher and collect more tax? Mexico's tax base structure is fundamentally different from the US. Federal and state taxes (income tax, IVA) carry the heavy fiscal load. Municipal property tax is a relatively small contributor to total government revenue, and the political appetite to raise it on foreign vacation-home owners is limited.
This isn't expected to change meaningfully in the foreseeable future. Cabo's Predial structure has been substantially the same for decades.
When and how you pay Predial
Predial bills are issued annually, with the bill arriving in January for the current year.
Pay it in the first two months of the year and you typically receive a 15%–20% early-payment discount. Pay it later in the year, no discount. Pay it after the year-end deadline, penalties accrue.
The discount is real money. On a $5M oceanfront estate paying ~$4,500/year in Predial, the early-payment discount saves you $675–$900. Smart owners pay Predial in January or February every year and bank the discount.
How to actually pay it
Three main paths:
1. Online through the municipal portal (gobiernoscabos.gob.mx). Most luxury owners pay this way — fast, takes a credit card, generates an immediate receipt.
2. In person at the municipal tax office in San José del Cabo. Faster than online for some owners who prefer paper receipts.
3. Through your property manager. Most professional management companies will pay Predial on your behalf as part of their service and bill you back. This is the easiest path for remote owners.
Your closing documents include your property's cadastral number (clave catastral), which is what you use to pay. Keep that number handy.
The full carrying cost picture
Predial is the smallest line item in your annual ownership costs. Here's the realistic budget for a $2M luxury Cabo home:
Cost | Annual amount |
Predial (property tax) | $1,500–$2,500 |
HOA fees (luxury community) | $9,600–$24,000 |
Electricity (with AC) | $3,600–$8,400 |
Water | $600–$1,800 |
Internet and cable | $960–$1,440 |
Property insurance with hurricane | $1,800–$4,800 |
Pool and landscaping maintenance | $3,600–$7,200 |
Housekeeping (part-time) | $4,800–$9,600 |
Fideicomiso annual fee | $500–$700 |
Total annual carrying cost | $27,000–$60,000 |
Monthly carry | $2,200–$5,000 |
Notice that Predial is roughly 3%–5% of total carrying cost. HOA fees, utilities, insurance, and staff dwarf it. The Predial savings vs. the US are real and material, but the rest of the carrying cost stack is closer to US norms.
How Cabo Predial compares to US property tax
A $2M luxury home in selected markets:
Market | Effective tax rate | Annual property tax |
Cabo San Lucas, MX | ~0.08%–0.13% (effective) | $1,500–$2,500 |
Scottsdale, AZ | ~0.65% | $13,000 |
Naples, FL | ~0.85% | $17,000 |
San Diego, CA | ~1.1% | $22,000 |
Aspen, CO | ~0.55% | $11,000 |
Park City, UT | ~0.55% | $11,000 |
Austin, TX | ~1.85% | $37,000 |
Vancouver, BC | ~0.30% + 0.4% speculation/vacancy tax | $14,000+ |
Over a 10-year hold, the Predial differential vs. a comparable US property is typically $80,000–$300,000 in saved property tax. That's a material number — large enough to materially change the total-return economics of owning Cabo property vs. a US alternative.
What about additional Mexican taxes on the property?
A few related taxes that confuse some buyers but are not Predial:
ISABI (acquisition tax): A one-time transfer tax of 3% of purchase price, paid at closing. Not annual.
Fideicomiso annual fee: $500–$700/year. Not a tax — it's the trustee bank's administrative fee.
ISR on rental income: If you rent the property, you pay Mexican income tax on net rental income. Separate from Predial.
IVA on rental income: 16% value-added tax collected from guests and remitted to SAT on short-term rentals. Not a property tax — it's a transaction tax on rental revenue.
Capital gains tax (ISR) on sale: Applied when you eventually sell, not annually. Separate from Predial.
Only Predial is the annual property tax. Everything else is either a one-time transaction tax or a tax on income generated from the property.
What if cadastral values get reassessed upward?
Cadastral values do get reassessed periodically, typically every 5–10 years in Los Cabos. Recent reassessments have generally raised values 10%–25%, which still leaves them below market value.
Even after a meaningful reassessment, your Cabo Predial would still be a fraction of what you'd pay on the comparable US property. The risk that Cabo Predial becomes "expensive" by US standards in any reasonable time horizon is low.
The Mexican constitution also doesn't allow extreme year-over-year jumps the way some US states do — reassessments are gradual rather than market-following in real time. This is a structural protection that keeps Predial predictable.
The bottom line
Cabo property tax is one of the strongest structural advantages of owning real estate in Mexico vs. the US. The numbers are real:
· ~0.115% effective rate on cadastral value
· Cadastral values typically 20%–40% below market
· Net effective rate of ~0.08%–0.13% of market value
· $1,500–$2,500/year on a typical $2M Cabo home
· 15%–20% early-payment discount if paid in January or February
· $80,000–$300,000 of saved property tax over a 10-year hold vs. comparable US markets
Add this advantage to the rental yield, the appreciation profile, and the lifestyle, and the case for Cabo luxury ownership starts to look very different from the case for a comparable second home in the US.
If you want a property-specific Predial estimate on something you're considering, I can pull the cadastral value and run the number in a few minutes. Just reach out.
Joe Taylor
JoeSellsCabo.com
(916) 756-9145
