california resident with foreign property - how do you deal with taxes?

in
Springfield, OH
Level 2
342 Views

hey guys,

I am curious how other hosts are approaching their US taxes for this coming season. I own a full-time rental in mexico and am unsure about how to approach taxation on my income. Would it be prudent to pay the Mexican government tax on these gains or should I be paying the US government (I am a US citizen)?

If the latter, are these rental gains subject to California state and city taxes?

I can find very little information online regarding this specific situation but I am sure there are many other hosts out there dealing with these subtleties. 

I am not expecting "official tax advice" but I would like to hear what the community is doing with rental similar situations!

Thanks in advance,

Rick

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Re: california resident with foreign property - how do you deal with taxes?

in
Sayulita, Mexico
Level 10

It's not a matter of "prudent"- you absolutely have to pay Mexican taxes on your rental there. Did you not get emails from Airbnb regarding this? They sent quite a few. You have to provide your Mexican tax number (RFC #) and be registered with the Mexican tax office- otherwise Airbnb is going to deduct 20% from your rental price (otherwise it's 4%).

 

And as a US citizen or resident, you also have to report worldwide income, so yes, you would also have to report on your US taxes. But Mexico and the US have a tax treaty which prevents double taxation. Meaning that if you are in a 20% tax bracket in the US and a 4% in Mexico, you would have to pay 16% to the US on that income.

@Rick3554

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Re: california resident with foreign property - how do you deal with taxes?

in
Sayulita, Mexico
Level 10

It's not a matter of "prudent"- you absolutely have to pay Mexican taxes on your rental there. Did you not get emails from Airbnb regarding this? They sent quite a few. You have to provide your Mexican tax number (RFC #) and be registered with the Mexican tax office- otherwise Airbnb is going to deduct 20% from your rental price (otherwise it's 4%).

 

And as a US citizen or resident, you also have to report worldwide income, so yes, you would also have to report on your US taxes. But Mexico and the US have a tax treaty which prevents double taxation. Meaning that if you are in a 20% tax bracket in the US and a 4% in Mexico, you would have to pay 16% to the US on that income.

@Rick3554

View solution in original post

Re: california resident with foreign property - how do you deal with taxes?

in
Springfield, OH
Level 2

Thank you for your reply.

 

My wife is a mexican national/us perm resident and we will be putting the income in her name.

Is her social security number (CURP) for mexico adequate for filing? If not, are there any costs to registering for an RFC number?


Re: california resident with foreign property - how do you deal with taxes?

in
Springfield, OH
Level 2

Also, do you know if these gains are subject to state and local taxes in the usa or just federal?

Re: california resident with foreign property - how do you deal with taxes?

in
Sayulita, Mexico
Level 10

No, the RFC doesn't cost anything. And I believe you can get one online, although I'm not sure how- you'll have to research that. (It's possible that your wife already has an RFC in her name if she's ever filed Mexican taxes for anything) What you'll want to do, though, is get facturas under your RFC # for any expenses you have in Mexico for your listing, then you can deduct them from the income. Purchases, repairs, etc.

I don't know anything about state and local taxes in the US, sorry.

@Rick3554

Re: california resident with foreign property - how do you deal with taxes?

in
Sayulita, Mexico
Level 10

Oh, and to answer your other question, no the CURP isn't used for filing taxes. You need the RFC. @Rick3554

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