Mexico IVA and Income Taxes Will be Witheld from Payments made to VRBO, ARBNB, by vacation rental renters

Mexico vacation rental through VRBO

The Hacienda or SAT has reached a deal with VRBO, ARBNB and other web based vacation rental companies to withhold Mexico income taxes and IVA from payments made by renters on vacation homes. If you are using one of these services to rent your property stating June 1, 2020, these taxes will be withheld from your rent receipts prior to the balance being remitted to you as the property owner.

When you rent out yourself or a long term rental  or do not use one of web vacation rental companies you still must pay rental income tax and the tenant must pay IVA which you must collect.  If you are a premanent resident and have an RFC number you must file a tax return monthly and if you are a nonresident who owns the real property rented in Mexico you need to use one of the services such as the Settlement Company to pay those taxes. The tax rates are different for residents with RFC numbers versus others. Read more about it here.

The good news is that you get a credit for the Mexico income taxes paid against the tax you pay in Canada or US on that rental income and get to deduct the IVA. If you need assistance claiming the credit email us.  Many US accountants do not know how to claim a foreign tax credit while we have been doing for our clients for over 30 years. Email Kauffman Nelson LLP  .....US CPAs