Vallarta Rentals & Taxes

by John Youden - March 15, 2016

Vallarta Rentals & Taxes

I recently collaborated with David Connell on an article about renting out real estate properties in Mexico, and the taxes that are due on the incomes received. Researching the article I discovered that although the tax laws are quite clear that Mexican taxes are due on any incomes received from rentals, it seems there are quite a few property owners that are not doing so. Quite a lot.

I looked extensively online for cases where the Mexican tax authority (SAT) has gone after people who are renting, to ensure they are paying their taxes, and could not come up with very much. There was one case in Cabo where SAT did an investigation online, downloaded photos of properties and then went looking for those properties to speak to the owners. And that was about it.

But as a Mexican taxpayer for the past 30 years, having watched how sophisticated SAT has become in its operations over the past few years, I believe it is only a matter of time before they will implement a more comprehensive plan to ensure property owners are paying any taxes due. Gathering information on who is renting certainly won't be difficult because so much is available online. Sometimes with the owner's names and the name of the property, definitely pictures to identify it, and often Google Maps showing the location of the property. From this, and the level of sophistication with regards to their information and investigation capabilities, tying it all together shouldn't take to much to actually implement something.

So it is a waiting game. And in some respects, a gambling game.