Hacienda Tax in Mexico (for U.S. Residents)

[Tyler-And-Holly0]

Help?

If I'm not mistaken, I understand Hacienda Tax is required to host in Mexico. How does it work and more importantly, how do I pay?

I'm really struggling to find a straight answer (we are U.S. residents with property in Mexico.)

I really want to make sure we do the right thing and all that is required. 

Thanks for any guidance you can provide!

Cheers!

[Sarah977]

@Tyler-And-Holly0   You will need to make an appointment at the nearest SAT office (Mex. tax dept, also known as Hacienda), where you will apply for a tax number (it can also be done online) This can take all day, be warned. If you are not fluent in Spanish, you'll need to have a facilitator with you. Then you will need a Mexican accountant (be sure to get references from others) to deal with reporting your rental income, and I believe the accountant could actually apply for the tax number on your behalf, rather than you having to do it yourself. The accountant can explain to you what taxes are charged and how they are reported and submitted. And I also believe you need to have residency status, either temporary or permanent to get the tax number. 

There are plenty of foreign owners who are renting out their properties in Mexico without being registered or paying taxes, but the Mexican govt. is said to be cracking down on this. Very responsible of you to want to comply with the laws.

[Tyler-And-Holly0]

Thank you so much for taking the time to respond, Sarah! We'll definitely look into it all as we truly want to do the right thing. Cheers!

[Sarah977]

@Tyler-And-Holly0   You're welcome. When I said you need an accountant, that isn't actually a requirement, you could take care of your taxes and reporting yourself, but that would take Spanish fluency and the willingness to do it- I have a small business in Mexico (apart from hosting) and do my taxes myself, but I find most foreigners who don't live in Mexico full-time prefer to hire an accountant. Accountant will also be able to advise you as to what deductions you'll be allowed to claim and what kind of receipts for expenses you'll need to produce. It can get pretty complicated for a whole home vacation rental, especially if you have full-time employees. But do get references for good, trustworthy accountants from other home owners or friends in the area to make sure you get an honest, knowledgable one. 

[Florrie0]

Anyone who generates income MUST declare to SAT and if one decides not to he faces potential fines and jail, as per the law.  In the case where this is a foreigner, the DEPARTMENT OF IMMIGRATION will apply sanctions up to expulsion from the country.

[Winifred2]

We are considering buying an investment property in Mexico to Airbnb... Can anyone private message me or answer on here if the financial aspects of it and if its been viable? I have so many questions and would apprecaitive of the guideance. Thanks in advance.

[Adam802]

Like the people above, my wife and I want to buy property and immigrate our family into the Mexican life. I was told by a friend who lives in Mexico half the year, that if you want to have a business in Mexico as a foreigner you are going to have to bribe somebody along the way.  I would like to know if this also holds true to Airbnb and other vacation rental type businesses? and how much and to who?  Also, is it worth it?

[Sarah977]

@Adam802  Your friend is absolutely wrong and that's exactly the kind of misinformation that gives people false impressions of a country. There are tons of foreigners who run businesses here and they didn't bribe anyone. I myself started an upholstery business here 15 years ago, which I'm still doing in addition to the private room I rent out in my home.

Of course you have to follow correct legal procedures, just like you do anywhere. That would mean you would have to obtain either a temporary residency with permission to work, or permanent residency, which carries with it the permission to work. Then you register with the Mexican tax office and pay the appropriate taxes.

I suggest you do research into these things anad join an English language Mexican forum so you can ask questions of people who actually know about these things.

[Alfonso248]

My question is if I'm duak citizenship but currently living in the US and have an airbnb in mexico . Do I also pay taxes in the US or just mexico also would matter is i deposit the money generated by airbnb to my American bank account or I need to have a mexican bank account? That's for the help.

[Sarah977 · Accepted solution]

@Alfonso248  I live most of the year in Mexico, which is where my private room listing is. But I'm Canadian and the money is sent to my Canadian bank account. I believe that IRS rules are that US citizens have to report worldwide income. But Mexico, the US and Canada have a tax treaty- you can't be double taxed on the same income. So lets say you were in a 15% tax bracket in the US, and paid 10% on your rentals in Mexico- that would leave 5% that you'd be taxed on in the US.

[Alfonso248]

Thanks for your response. do you know if Airbnb sends a tax form at the end of the year?  Also do you know if I need to have a tourist license for my airbnb?

[Sarah977]

@Alfonso248  Yes, the tax information is available for your account at the end of the year. They don't "send " anything, you'll find it on the site. As far as a business license for the Airbnb, business licenses in Mexico are administered by the municipalities, rather than being a federal thing, so it could vary from state to state and municipality. Your best bet is to find a well-recommended Mexican accountant in the area where your listing is who can advise you on all you need to do to legally comply.  You may be able to actually do it all yourself, but the accountant can give you a clear picture of all the requirements.

I run a business here, aside from my little private-room Airbnb. What I found was that Hacienda, the Mexican federal tax entity, doesn't have any interest in whether you have a business license or not- they've never asked to see it. All they care about is that you report your earnings and pay the applicable taxes. However, the municipality could send people around to check whether someone has a business license or not.

And as you're a dual citizen, you likely know that sometimes things can be "bent" a little in Mexico. As my daughter, who also lives in Mexico, says-" Mexico- where nothing is allowed, yet everything is allowed" 🙂

[Alfonso248]

Thank you so much for your help I will look for an accounted