Taxation For Landlords / Tenants
Understanding your tax obligations and benefits is crucial for both parties involved. In this comprehensive guide, we'll explore the taxation aspects for landlords and tenants, helping you make informed decisions and comply with tax regulations.
9/6/20232 min read
Your landlord must give you a fiscal receipt or invoice in exchange for the rental payment. A fiscal receipt must show the landlord's full name, fiscal domicile, RFC, the rental property address, your RFC (if you have one, otherwise the generic RFC for "Sales to the General Foreign Public" XEXX010101000 must be used), the rent amount, the period covered by that payment and, if a furnished dwelling, the IVA tax must be disclosed, and the receipt must be duly authorized by the SAT. Official facturas are evidence that your rent payment will be properly reported as income by the landlord. A tourist can not legally be a landlord.
Many landlords would tell you that, if they give you a receipt meeting all fiscal requirements, they will charge you IVA tax above and beyond the rent; of course. They are mistaken. For furnished rentals, IVA tax MUST be included in the agreed upon rent, by law. Any landlord attempting to add a second IVA tax to the rent may be subject to fiscal and criminal penalties, if reported or otherwise discovered, above and beyond the criminal penalties applicable for the fraud committed against the tenant.
HOW DO FOREIGN RESIDENTS PAY TAXES?
Foreign residents (not residing in Mexico) who are landlords etc. subject to tax payment in Mexico generally fulfilll this obligation when the person (tenant, etc) who pays them withholds the tax and pays it to the Tax Administration Service (Servicio de Administración Tributaria).
Residents in Mexico, or foreign residents with a permanent establishment in Mexico, and who pay foreign residents, are compelled to withhold the tax. When the rent is paid to a trust company / property manager, the fiduciary institution must issue the receipts, withhold and pay the corresponding tax. The tax is 25% that tenant must withhold by law.
The person who withholds the tax must pay monthly, at the latest on the 17th day of the following month to that in which withholding was carried out. If a fiduciary they must pay by 15th of the following month. Payment shall be made through the Internet or at a banking window, according to the person's obligation.