Owner's Guide to Renting Property Legally
There is an imminent effort by the Mexican government to get people to Pay taxes in general, and the tourism industry is one of the top earners, it always has been.
First they went for the digital platforms, we have a blog post about that https://www.mexprofessionals.com/post/why-airbnb-became-so-expensive-in-méxico-and-tips-to-rent-safely-avoiding-internet-scams
The Mexican government looks at renting your property out, as a way of earning income, therefore they want to collect taxes on that operation.
What taxes are due?
At the Federal Level, every sale of service or good generates a 16% tax, its the VALUE ADDED TAX also known as IVA.
Then there is the ISR, or tax on profit (income). It varies, however a good average is about 30%.
At the local level there may be a 3% lodging tax for short-term rentals.
How does an owner pay these taxes?
The tax system in México is all digital and complex to navigate. The use of a CPA is highly recommended.
You first must obtain an RFC or tax ID.
Taxes are to be filed monthly and yearly.
Every time you receive money a FACTURA must be issued.
Your tax ID must be provided to the establishments where you purchase things you need to deduct, and a factura must be requested from them.
At the end of the Month, income vs. expenses is calculated and a statement is automatically issued if any IVA or ISR is due. They can be paid directly from your bank account web portal or at the bank in person.
What about Companies and Real Estate Agencies that Rent the property out for you?
As the laws are changing not everyone is adapting as fast as they should.
A clear example of who does things correctly is Airbnb, if you want to rent your property out they request a tax ID, they deduct taxes for you, and so on.
Technically any agency should be requesting a factura from you, otherwise they cannot deduct the money they collect from the tenant and give to you.
If they don't have a factura from you and issue one for the money received, this operation could be considered money laundering or tax evasion under the current laws. That's why it's very important not to use companies who don't request that from you. They're working at risk and you would be too as an owner.
Burmeister Consulting can help:
-Obtain the RFC
-Do monthly and yearly filings
-Apply Copyrighted ©️ fiscal strategies to lower the tax obligations.