It’s been coming for a while. Sales taxes for online rental property in Mexico have kind of slide under the radar. Until now.

The Ministry of Finance and Public Credit has recently issued statements that show they intend to collect taxes from properties in Mexico owned by foreign citizens. Their attention is turned to online bookings, done through sites like AirBnB, or VRBO.

IVA, or the Value Added Tax, is based on the gross amount of rent charged for the term of the rental agreement. It can differ from state to state in Mexico. Here in Puerto Peñasco, it is 16%. This differs from the property tax, which can be offset by deductions.

One misconception about the IVA on rentals is that if the transaction is made to a US bank, income for the rental would be paid in the US. However, with the property being located in Mexico, that is where the tax is to be paid.

So heads up. Cancun property owners have already seen the tax authorities begin putting attention on collecting these taxes. Get together with your accountant or whoever advises you on local real estate matters.

Besides being the law and keeping out of trouble with the powers that be, it’s the right thing to do. You might criticise how efficiently taxes get used for their intended purposes in Mexico, or the US for that matter. But it does go to make the community here a better place for locals and renters alike.