Most foreign owners discover Mexican rental taxation in one of two ways: a platform starts withholding money from their payouts, or a tenant's accountant asks for an invoice they cannot issue. Neither is a good moment to learn the rules. The rules themselves are not complicated, but they change with three facts: whether the owner is a Mexican tax resident, whether the property is leased for the long term or offered for short stays, and whether the owner has a tax identification number, the RFC. This article takes those three facts in turn, citing the Income Tax Law (LISR) and the Value Added Tax Law (LIVA) as they stand.
One misconception to clear first. Holding the property through a bank trust, the fideicomiso used in the restricted zone, does not move the tax to the bank. The beneficiary of the trust is the taxpayer for the rent exactly as a direct owner would be. The trustee bank neither withholds nor files.
The RFC comes first
Anyone who earns rent from Mexican property must be registered with the tax authority under article 27 of the Federal Tax Code, which means obtaining an RFC and, in practice, an electronic signature to file returns and issue invoices. The platforms ask for the RFC because the law rewards them for having it: with an RFC on file, the platform withholds 4 percent of the host's income as a provisional income tax payment under article 113-A of the LISR; without one, article 113-C orders a 20 percent withholding. The same split governs VAT, as explained below. An owner who treats the RFC as optional is paying for the omission every month.
Long-term leases: Chapter III of the LISR
Rent from a lease is taxed under the chapter on income from granting the temporary use of real estate (articles 114 to 118). The owner may deduct the actual expenses listed in article 115 (property tax, maintenance that is not improvement, real interest on loans used to buy or improve the property, salaries and fees, insurance, and investments in construction), or may elect a blind deduction of 35 percent of the rent with no receipts, plus the property tax, which is the choice almost every individual owner makes. The net amount is added to the owner's other income and taxed under the progressive tariff, with provisional payments monthly or, when the rent does not exceed ten monthly minimum wages, quarterly (article 116).
When the tenant is a company, it withholds 10 percent of the rent as a provisional payment and gives the owner a withholding certificate; the owner credits it in their own return. Residential leases of unfurnished property are exempt from VAT under article 20, section II, of the LIVA; commercial leases carry 16 percent, which the landlord charges on the invoice.
A worked example: an apartment in Guadalajara leased to an individual for 25,000 pesos a month, 300,000 a year, with the 35 percent blind deduction and 8,000 pesos of property tax, has a taxable income of 187,000 pesos. Run through the 2026 annual tariff on its own, that is roughly 18,100 pesos of income tax for the year, before the owner's other income and personal deductions are taken into account.
Short stays through a platform: Section III of Chapter II
Lodging offered through a platform is treated by the law as a business activity carried out through technology platforms, not as a lease. Three consequences follow. First, income tax is collected by withholding: the platform keeps 4 percent of what the host receives, before VAT, as a provisional payment (article 113-A, section II), and the host either files monthly returns crediting that amount or, if total income does not exceed 300,000 pesos a year, elects under article 113-B to treat the withholding as the final tax and skip the returns, giving up deductions in exchange. Second, VAT applies at 16 percent, because the exemption for housing in article 20 of the LIVA does not cover furnished property or lodging; the platform collects the tax from the guest and, under article 18-J, withholds half of it (8 percent of the rent) from a host with an RFC, leaving the host to pay the other half on a monthly return, or withholds all of it from a host without one. Third, the host must still issue invoices for the stays and keep accounts, unless the final-tax election applies.
A second worked example: a Puerto Vallarta condominium that earns 600,000 pesos a year through a platform. The platform withholds 24,000 pesos of income tax, collects 96,000 pesos of VAT from guests and withholds 48,000 of it; the host pays the remaining 48,000 through monthly returns. The host's income tax is then settled either as final (if the 300,000 threshold were not exceeded, which here it is) or in monthly and annual returns where the 24,000 is a credit. On top of that sits the state lodging tax, which Jalisco and most states levy at a few percent of the price and which the platforms also collect.
Non-resident owners
An owner who is not a Mexican tax resident is taxed under article 158 of the LISR: 25 percent of the gross rent, with no deductions, withheld by the person who pays when that person is a Mexican resident, and paid by the owner through a return when the payer is also abroad. There is no blind deduction and no progressive tariff. This is the regime that makes a non-resident's rental economics so different from a resident's, and it is the reason many long-term foreign owners eventually establish tax residence in Mexico or hold rental property through a Mexican company, each of which has its own obligations and should be decided with advice, not by default.
What the condominium and the municipality say
Tax is one layer. Many condominium regimes in Puerto Vallarta, Chapala and Los Cabos restrict or prohibit short-stay rentals in their bylaws, and several municipalities have begun to require registration or licenses for short-stay units. Neither affects the tax, but both affect whether the activity is lawful at all, and a platform withholding tax from an illegal rental does not make it legal.
What to do
Obtain the RFC and electronic signature before the first booking or lease. Decide the regime: for a lease, the 35 percent blind deduction with quarterly payments is usually right for an individual; for platform stays, run the 300,000 peso threshold to see whether the final-tax election is available. Give the platform the RFC so the withholding drops from 20 percent to 4 percent. Keep the property tax receipts and, if deducting real expenses, invoices for everything. And if you are a non-resident, model the 25 percent gross tax against the cost of becoming resident or incorporating before you buy a property to rent, not after. We review rental structures for owners in Jalisco and Baja California Sur and prepare the RFC, invoicing and return calendar; book a consultation and the first conversation is on us.
Sources: Ley del Impuesto sobre la Renta, arts. 113-A, 113-B, 113-C, 114 to 118 and 158; Ley del Impuesto al Valor Agregado, arts. 1, 18-B, 18-J and 20; Código Fiscal de la Federación, arts. 9 and 27. Income tax in the examples is approximated with the 2026 annualized tariff published in Anexo 8 of the Resolución Miscelánea Fiscal; the owner's actual liability depends on all of their income and deductions for the year. State lodging taxes are set by each state's finance law.
This article provides legal information, not legal or tax advice; no attorney-client relationship is created by reading it. © 2026 Terra Firma Attorneys at Law · terrafirma.law