Mexico property tax for foreigners: on the way in, on the rent, on the way out.

Is there VAT when buying property in Mexico?

Not on land or on housing. Under Article 9 of the VAT law (LIVA), the sale of land is exempt, and so is the sale of buildings destined or used for housing, which includes new-build residential condos and houses. The building portion of non-housing construction, such as hotel or commercial units, carries VAT at 16%.

Where only part of a building is housing, only that part is exempt, and hotels are excluded. According to Elconta, the price of a commercial or hotel-style unit is split between land and construction for that reason. A local acquisition tax (ISAI) is commonly budgeted; no official rate was confirmed for this page, so ask the notary.

How is rental income taxed for a non-resident owner in Mexico?

At 25% of the gross rent, without any deduction (LISR Article 158). Rent from Mexican property is Mexican-source income. When the tenant is a Mexican resident or has a permanent establishment in Mexico, the tenant withholds the tax. When the tenant is also a resident abroad, the owner pays it by filing within 15 days of receiving the rent.

25% of gross is charged before any cost of owning the property. Model it against the rent, not against what is left after expenses.

Can a US resident be taxed on net rent in Mexico instead?

According to IDC Online (December 2022), yes. US residents can elect to be taxed on a net basis under Article 6 of the US-Mexico tax treaty, through an administrative rule cited as rule 3.18.5 of the 2022 Resolución Miscelánea Fiscal. IDC Online reports that the election is renewed each January to February.

The rule number in the 2026 Miscelánea was not checked for this page. Confirm the current rule with a Mexican tax adviser before you rely on the net election.

Is there VAT on rent in Mexico?

Not on an unfurnished home. Under LIVA Article 20, renting a property used exclusively as a dwelling is exempt from VAT. The exemption does not apply to property let furnished (amueblado) or used as a hotel or guest house, which pays VAT at 16%. So furnished and short-term lets fall into VAT.

Decide whether the unit will be let furnished before you set the rent. The 16% sits on top of the 25% income tax on gross rent for a non-resident owner.

How are Airbnb-type lets taxed in Mexico?

The platform withholds income tax at 4% on lodging services (LISR Article 113-A). According to Tesio, platforms also withhold VAT at 8 points from hosts registered with an RFC, and a host with no RFC faces 20% income tax and 16% VAT withheld. Tesio reports that the 2026 reform left the lodging rate at 4%.

One point was not settled in the sources for this page: whether the 4% platform withholding is final for a non-resident host, or whether the 25% rule on gross rent applies instead. Get a written answer from a Mexican tax adviser before you model a short-term let.

What tax does a non-resident pay when selling property in Mexico?

25% of the total sale proceeds, with no deduction (LISR Article 160). Alternatively, a seller with a representative in Mexico who meets LISR Article 174, selling in a public deed, may pay the top rate of the Article 152 individual tariff on the gain instead. The notary calculates the tax and pays it within 15 days.

Secondary summaries (SDV Asesores) give that top rate as 35%; the tariff table itself was not shown on the statute copy read for this page. If an official appraisal exceeds the agreed price by more than 10%, the whole difference is taxed at 25% without deduction on the non-resident seller. Step by step: selling property in Mexico as a foreigner.

Header photo: Jonathan Salvador, CC BY-SA 4.0, via Wikimedia Commons. All credits: image credits.