Disclaimer: This article is for general informational purposes only. We recommend that you evaluate your particular case with a trusted Mexican accountant, as tax laws and processes may vary.
If you are renting your property or earning income in Mexico, it’s important to understand your tax obligations. Mexico requires foreigners earning Mexican-source income to register with the Tax Authority (SAT) and pay applicable taxes. Here’s a simple overview of what you need to know.
How We Set Your Nightly Rates
At Beach Please, we use Smart Dynamic Pricing to make sure your property always stays competitive and profitable. Our system updates prices daily using real-time data like demand, seasonality, nearby events, and the rates of similar listings in the area. We also tailor discounts for longer stays and adjust pricing by platform so your net income stays consistent no matter where the booking comes from. And if you have a minimum nightly rate you want to protect, just let us know.
📈 Read the full breakdown of our pricing strategy here
Taxes That May Apply
If you rent out a property in Mexico, you are generally responsible for the following:
- IVA (Value Added Tax): 16% federal sales tax
- ISH (Local Lodging Tax): Varies by state (typically 3%-5%)
- Income Tax (ISR): Based on your net income, after allowable expenses
Owner Payout Example
To help clarify how owner payouts are calculated, here are two sample scenarios—one from a booking made through Airbnb, and the other through VRBO. Both examples assume a 7-night stay with a 5% weekly discount applied (our default setting).
Airbnb Example
| TYPE | AMOUNT (USD) |
|---|---|
| Standard Rate (7 nights x $100) | $700.00 |
| Weekly Discount (5%) | –$35.00 |
| Subtotal Before Tax | $665.00 |
| Sales Tax (IVA 16%) | +$106.40 |
| Airbnb Service Fee (3% + IVA) | –$23.14 |
| Total Received | $748.26 |
Beach Please receives 20% commission of the total received, which in this case equals $149.65. The owner’s final payout would be $598.61 USD, which also includes their full IVA amount. Owners are responsible for handling their own tax obligations.
VRBO Example
| TYPE | AMOUNT (USD) |
|---|---|
| Standard Rate (7 nights x $107) | $749.00 |
| Weekly Discount (5%) | –$37.45 |
| Subtotal Before Tax | $711.55 |
| Sales Tax (IVA 16%) | +$113.85 |
| VRBO Commission (5%) | –$35.58 |
| Credit Card Processing Fee (5.1%) | –$42.10 |
| Total Received | $747.73 |
Again, Beach Please receives 20% commission of the total received: $149.55. The owner’s final payout would be $598.18 USD, which also includes their full IVA amount.
Booking.com Example
| TYPE | AMOUNT (USD) |
|---|---|
| Standard Rate (7 nights x $117) | $819.00 |
| Weekly Discount (5%) | –$40.95 |
| Subtotal Before Tax | $778.05 |
| Sales Tax (IVA 16%) | +$124.49 |
| Booking.com Commission (15%) | –$116.71 |
| Credit Card Processing Fee (5.1%) | –$46.03 |
| Total Received | $739.80 |
Again, Beach Please receives 20% commission of the total received: $147.96. The owner’s final payout would be $591.84 USD, which also includes their full IVA amount.
Direct Reservation Example
| TYPE | AMOUNT (USD) |
|---|---|
| Standard Rate (7 nights x $105) | $735.00 |
| Weekly Discount (5%) | –$36.75 |
| Subtotal Before Tax | $698.25 |
| Sales Tax (IVA 16%) | +$111.72 |
| Credit Card Processing Fee (5.1%) | –$41.30 |
| Total Received from Guest | $768.66 |
In the case of direct reservations, the net payout is slightly higher compared to other platforms. This is because there are no third-party platform fees (like Airbnb or VRBO commissions) deducted from the total. Aside from the standard credit card processing fee, the full reservation amount goes directly through our system, allowing owners to retain more of their earnings.
These examples demonstrate how our dynamic pricing system is designed to keep your earnings consistent—no matter which platform a guest uses to book. Whether it’s Airbnb, VRBO, or Booking.com, we adjust nightly rates to account for each platform’s unique fees, so your net payout remains nearly the same. The one exception is direct reservations, where owners typically earn a bit more since there are no platform commissions—just the standard payment processing fee. This means more income for you, while guests still enjoy a seamless, professional booking experience.
What is an RFC and how do I obtain it?
Having an RFC allows you to issue official invoices (facturas), deduct expenses legally, and stay in good standing with the SAT. It’s essential for anyone receiving rental income in Mexico. The first step to pay taxes and meet your tax obligations is to obtain your tax ID known as the Federal Taxpayers Registry (RFC) with the Tax Administration Service (SAT).
1. Get Residency
First, apply for temporary or permanent residency at a Mexican consulate. Once in Mexico, visit an immigration office to get your residency card.
2. Get Your RFC
After getting your residency, make an appointment at the SAT office. Bring your passport, residency card, proof of address, CURP, and a USB stick. At your appointment, you’ll receive your RFC and digital files for taxes.
3. Start Filing Taxes
Work with an accountant to register your tax setup and handle your monthly and annual tax filings.
Important: You Will Not Be Double-Taxed
If you file taxes in another country, you should know that you will not be double-taxed. Mexico has tax treaties with 32 nations, including the U.S. and Canada. For example, in the US it is possible to apply foreign tax credits from taxes paid in Mexico to help reduce your income tax burden. Avoid being double-taxed with a document that your accountant can provide stating that you already paid taxes on your income in Mexico. Remember that there are a variety of expenses that you can deduct (depending on your tax strategy and economic activity), such as:
- Water bill
- Electricity
- Internet service
- Cleaning products
- Repairs
- Monthly HOA payments
- Furniture
It is important to keep all proof of expenses and get an official invoice (factura) under your RFC in order to reduce your taxable income.
Recommended Local Service Providers
- Taxes and RFC registrations: Equilibrium Tax & Law (https://en.equilibrium.mx/)
- Immigration help: KL Mexico Legal & Migration Solutions (facebook.com/KLMexico/)
- Helping foreigners living in Mexico: Saira Hernandez Attorney at Law (sairataylor@outlook.com)
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