Facts to Know About Taxation When Renting Your Condo, House or Villa in Mexico Frank Jackson - EscapeArtist.com
go to original November 30, 2014

While the Mexican Federal Government welcomes foreigners to purchase the “rights of ownership” on properties in Mexico, it also expects the “owners” to abide by the Mexican laws governing these “rights”. The pressure is on to get these “owners” legal and paying taxes as the law requires.

The current situation in Mexico is that many foreign “owners” are not complying with the laws either due to not knowing about them, getting bad advice about them or choosing to ignore them altogether. Regardless of the reason, lack of compliance is risky at best.

Many “owners” who rent their properties personally say they claim the income in their “home” country because that is where they receive the money for the rent. Others claim they are not obligated to pay taxes in Mexico because the property is a second or third residence and the income is under 51% of their total income which means they do not need to declare it in Mexico. Many have been making good money on rentals and keeping the bulk of it after expenses and are used to the huge return on investment. Not being legal and paying taxes is a mistake that “owners” do not want to think about or accept.

The law in Mexico is simple; any income from a rental property located in Mexico is taxable in Mexico... Period!

What does the law say about rental income?

RENTAL AND TAX OBLIGATIONS – If you rent the property you have purchased in Mexico you do have tax obligations in Mexico. Many people believe that if they rent rooms in Mexico but receive the money in the US or Canada that they do not have any tax obligations in Mexico. This is not true. If you rent a property that is located in Mexico, the income generated by this rental is taxable in Mexico.

The Mexican tax authority is getting tougher each year and recently has been reviewing internet web pages to determine what properties are being rented. If you rent your property and do not pay taxes you are running the risk of having the tax authority put a lien on your property or worse.

Read the whole article at The Yucan Times

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