The tourism market is booming, and options like Airbnb offer you the opportunity to generate extra income. However, to make the most of it, it’s crucial to fully understand a few aspects before diving into this business, including taxes.
It’s also important to know the tax responsibilities that Airbnb hosts in Mexico must fulfill.
It’s essential to be aware of the taxes you need to pay and how to meet your tax obligations to avoid penalties. In this practical guide, we’ll help you understand the key points, from available tax regimes to allowable deductions.
If you want to be the perfect host in Mexico, the first step is to register with the SAT (Tax Administration Service).
How to Register with SAT for Airbnb?
First, gather documents such as your CURP (Unique Population Registry Code) or proof of address. Then, you can start the registration process online through the SAT portal to obtain your RFC (Federal Taxpayer Registry).
The RFC will help you meet your tax obligations.
Airbnb Tax Regime:
Once you have your RFC, you must decide which tax regime to register under, with the following options available:
This means that your Airbnb hosting activity is linked to a registered company or legal entity.
Therefore, you’ll need to comply with stricter tax responsibilities, including keeping a detailed record of your income and expenses and regularly filing tax reports to the SAT.
This is a more formal and detailed regime, ideal for those who want to operate as a business or manage multiple properties.
Choosing this regime means Airbnb will act as an intermediary, withholding and reporting your taxes to the SAT.
This option simplifies compliance with your tax obligations, as the platform can handle a significant part of the process automatically. This reduces your administrative burden and makes it easier to manage.
Depending on your needs and long-term goals, it’s essential to choose the right tax regime. It might be worth consulting an accountant to make the best decision based on your personal situation.
Now, let’s talk about the taxes Airbnb hosts in Mexico must pay, which are several. But don’t worry—we’ll explain each one so you can manage your obligations easily.
Airbnb Taxes Mexico:
ISR is one of the taxes that affects your earnings as a host. This tax is applied progressively, meaning that the more you earn, the higher the percentage you’ll pay.
The maximum ISR rate can reach up to 35%. Therefore, it’s crucial to calculate the amount owed accurately according to the SAT’s current tax tables.
IVA is the second tax you must pay attention to. In this case, it’s not applied directly to your earnings but rather to the total amount you charge your guests.
The standard rate in Mexico is 16%, and it’s your responsibility as a host to include it in the final price. You also need to remit this percentage to the tax authorities to ensure you meet the filing deadlines.
The ISH varies depending on the state where your property is located. On average, the rate ranges between 2% and 5% of the total reservation amount.
This tax is also paid by guests as part of the lodging fee, and you must remit it to the relevant state government.
If you operate as an individual, Airbnb makes the tax withholding process easier.
The platform withholds 4% of ISR from your earnings, as long as your RFC is properly registered. If not, the withholding could increase to 20%.
As for IVA, the withholding also depends on whether you have registered your RFC, with a range between 8% and 16%.
This simplifies tax administration since part of your taxes is automatically managed.
It’s not enough to follow a set of tips for a successful Airbnb listing—you need to ensure you’re up to date with all your tax obligations. When renting through Airbnb, there are several obligations to fulfill to stay compliant and avoid penalties.
Your main responsibilities as a host are:
Each month, you must file your declarations for ISR and IVA. Here, you report the monthly income generated from your rentals while determining the amounts owed for both taxes.
To simplify this process, keep a detailed record of all your financial inflows and outflows. This ensures that what you report is accurate and reflects your actual Airbnb activity.
All Airbnb hosts in Mexico are required to file their annual ISR return at the end of the fiscal year. This declaration compiles all the income and expenses from the previous 12 months.
This filing allows you to adjust any additional tax payments or claim refunds if you’ve overpaid.
To ensure a smooth and accurate process, it’s essential to keep your financial records organized throughout the year.
Part of your obligations includes issuing invoices to your guests for the lodging service you offer. These invoices must comply with the fiscal requirements set by the SAT, and it’s important to maintain an organized record of each one.
You’ll also need to keep electronic accounting to support all your tax filings.
How to Pay Less Tax as an Airbnb Host?
One way to optimize your tax situation and reduce your tax liability is to take advantage of the deductions allowed by law.
As a host, you can deduct various expenses related to the maintenance and operation of your property, including:
Repairs.
Improvements.
Utilities like water, electricity, and gas.
Purchases of basic supplies.
This helps reduce the total amount of taxes owed, as long as you have valid receipts to support the deductions.
Staying up to date with your tax responsibilities as an Airbnb host is crucial. It’s the best way to provide comfort and security to your guests while operating legally.
Knowing the taxes you must pay and taking advantage of allowable deductions can make a big difference in the profitability of your business. Whether you manage one or multiple properties, or even if you’re a digital nomad looking for income-generating options while traveling.
Staying compliant with your tax obligations also allows you to focus on providing a quality experience while maximizing your profits with transparency.
And speaking of earnings, remember that you can get paid in dollars through DolarApp. In addition to avoiding devaluations, the app offers you the best exchange rate if you want to convert them to pesos, with a quick and secure process.
The world has borders. Your finances don’t have to.
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