Mexican income tax on rental income
04-03-2019, 10:34 PM,
#1
Mexican income tax on rental income
I have read that regardless of where a property owner resides, Mexican income tax must be paid on any rental income on a property owned in Mexico. How does one pay it, and how much is it?
04-04-2019, 04:16 AM,
#2
RE: Mexican income tax on rental income
The best thing that you can do is to speak with a local accountant. He/she should advise you that you need to register for tax # (RFC) and once done you'll probably need that or another accountant to manage your monthly filings and payments or collecting* of the following taxes: ISR, IETU, Estatal y IVA on a monthly basis - and of course to avoid costly errors also paying an accountant to handle them. Once you have registered with the tax office it is a little hard to unregister - in my case I chose to 'suspend' operations.)

Of course there is another way to handle this which is how I believe most rental operators do it - they don't - but the time will come when GTO gets around to mandatory registration of all rental properties.

* You don't 'charge' IVA you collect it on behalf of the gov't
04-04-2019, 10:12 AM, (This post was last modified: 04-04-2019, 10:14 AM by doncoulter.)
#3
RE: Mexican income tax on rental income
In addition to the concerns mentioned by mr bill, our local government is starting to look into Airbnb and similar rentals. There was recently a gas explosion in an Airbnb unit here, which caused some injuries, and that appears to be the impetus behind the government's sudden interest in the matter. Currently they're talking about a single annual assessment on all units, a fee of 10,000 pesos on every property regardless of whether it's a studio apartment or a five-bedroom mansion. If that seems crazy, well, that's our local government. It recently sponsored a voluntary orientation for Airbnb-type owners to discuss the proposal, and -- surprise! -- only a handful of people showed up. The good news for owners who hope to avoid such fees is that our government is incredibly slow to accomplish anything. Those who've lived here awhile know what I'm talking about. Bla bla bla for year after year about the lousy bus service, though it finally appears some changes may be under way. There was similar bla bla bla for maybe five years about restaurant tables invading the public walkways; that issue was finally resolved, so things can happen eventually.

My guess is that our friends in the government will get around to assessing an Airbnb fee two or three years from now. And once they accomplish that, they might begin to get serious about seeing to it that Airbnb owners pay their taxes. I've heard that the government in San Miguel has started to do that, so perhaps Guanajuato won't be far behind. But it usually is.
04-04-2019, 11:02 AM,
#4
RE: Mexican income tax on rental income
They've already put in an Airbnb assessment in SMA.
I agree with Don, a one-size-fits-all assessment doesn't make sense. Some people might want to rent their place out for just one or two months a year.
04-04-2019, 07:20 PM,
#5
RE: Mexican income tax on rental income
Yes, I saw the news stories about the 10,000-peso assessment. Do you think this would be in addition to income tax obligations or instead of them?
04-04-2019, 11:01 PM,
#6
RE: Mexican income tax on rental income
I have no idea, Sue100, and neither does anyone else, including our local officials. Take comfort in the fact that things don't change much here, and when they do change, it happens slowly. So relax and have a good time.
04-05-2019, 08:31 AM,
#7
RE: Mexican income tax on rental income
Don has identified one of the best things for me about our living here, ie the glacial speed at which local government works. Change can vary from oh so slow to non-existent. For me that supports an old adage: governing less is best.
04-05-2019, 10:47 AM,
#8
RE: Mexican income tax on rental income
Sue100
Yes, I saw the news stories about the 10,000-peso assessment. Do you think this would be in addition to income tax obligations or instead of them?

My best guess is that it would (eventually) be in addition to taxes rental operators should be paying as the 10,000 peso assessment would have to be paid via official means/forms/bank accounts where an RFC would be needed. And that should get the interest of the SAT. Another interested party to this are all the hotel operators that lose business to AirBnB type rentals.

There is [was?] an interesting way around this - the taxes I mentioned in my earlier reply- referred to Furnished apartment rentals. You could rent unfurnished and then have someone like an Allen Weisselberg-type set up a furniture rental operation for the units.

Bottom line is if one is legit and pays taxes as one should one's bottom line is going red fast making the whole rental idea a questionable enterprise - so as mentioned in other posts here take advantage of the glacial speed of the municpio but don't complain when the tax free/tax avoidance holiday comes to an end.

-what does mr bill know about this anyway? From around 2000 to 2010 he owned/operated or managed 26 units in GTO. Taxes were a constant headache - what was reportable? All the rental or just part of it as the booking service collected the initial payment (even sometimes all of the payment) and that was paid into a non-Mexican bank which then brought up tax issues beyond the Mexican border. From 2010 to 2016 he was able to duck out before new, more rigorous, tax reporting rules came into play.He couldn't just 'go out of business' but SAT allowed him to suspend it. And it remains so today.
04-05-2019, 04:11 PM,
#9
RE: Mexican income tax on rental income
Suspend! I love it.
You are correct about our big hotel owners. They have always been highly persuasive,trying to be kind, and very influential on local governments. One is getting ready to build a multi-structure boutique property that wraps directly below our place opposite Parque Florentino Antillion and when we attempt to see permits and plans? Not a chance. Stonewall.
They would be certain to nail independent owner-rentals every way possible, thus their push for the hefty rental assessment.
They can hardly get any richer? Too familiar, everywhere.


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