RFC, ISR and IVA: A Plain-Language Guide to Vacation Rental Taxes in Mexico

Most owners in Puerto Escondido meet Mexican tax law the same way: the first Airbnb payout arrives and a third of it is missing. Vacation rental taxes in Mexico come down to three acronyms, the RFC, ISR and IVA, and once you understand how they fit together the system is far less hostile than that first payout suggests. This guide explains each one in plain language, shows what the platforms withhold with and without a tax ID, and lays out the decisions you (and your accountant) need to make before your property goes live. It is a general orientation, not tax advice: rates and thresholds are set by the Ley del ISR and the Ley del IVA and reviewed every year, so confirm the current figures with a contador before you file.

RFC, ISR and IVA in One Minute

Before any regime, form or deadline, it helps to know what each acronym actually does.

RFC: your Mexican tax ID

The Registro Federal de Contribuyentes is the taxpayer number issued by the SAT (Servicio de Administración Tributaria), Mexico’s tax authority. It is what the platforms ask for in their tax settings, what appears on every invoice (factura or CFDI), and what decides whether you are withheld at the low rate or the punitive one.

ISR: income tax

Impuesto Sobre la Renta is the tax on your rental income. For short stays booked through a platform, it is collected mostly at the source: the platform keeps a percentage of each payout and sends it to the SAT on your behalf.

IVA: value-added tax

Impuesto al Valor Agregado is Mexico’s 16% VAT. Here is the point many owners miss: renting an unfurnished home as a residence is exempt from IVA, but furnished short stays are treated as lodging, and lodging pays 16% IVA. A vacation rental in La Punta or Rinconada booked by the night is lodging.

Getting Your RFC as a Property Owner

Registering is the single decision with the biggest effect on your income, so it comes first, before the listing photos and before the first booking.

Mexican citizens and residents

If you have a CURP (every Mexican has one, and so do foreigners with temporary or permanent residency), you can register online on the SAT website or at a SAT office by appointment. For rental activity you will also want the e.firma (the electronic signature), which requires an in-person appointment with ID and proof of address. Once registered, download your Constancia de Situación Fiscal: the platforms and your contador will ask for it.

Foreign owners who live abroad

Non-residents who own property in Mexico are taxed under a different part of the law (Title V of the Ley del ISR). On rental income from Mexican real estate, the general rule is 25% of gross income with no deductions, or 35% on net income if you appoint a legal representative in Mexico. Registration without a CURP is less straightforward and the paperwork changes, so this is the case where hiring a local contador before you list is not optional.

What Airbnb, Vrbo and Booking.com Withhold

Since 2020, platforms that intermediate lodging in Mexico must withhold ISR and IVA from the hosts they pay. The rates for lodging (hospedaje) as set by articles 113-A of the ISR law and 18-J of the IVA law, which you can read in the official text of the Ley del ISR, are:

Two things to read from that table. First, the difference is 4,800 MXN (~$260) on a single modest month, which is more than many contadores charge for several months of filings. Second, the 12% with an RFC is not always the end of the story: depending on your regime, the remaining half of the IVA and any extra ISR are settled in your own monthly or annual return. Whether that IVA comes out of your nightly rate or is added on top for the guest depends on how your listing price is configured, so check your platform’s tax settings rather than assuming.

Each month the platform sends you a withholding statement (a CFDI de retenciones). Keep every one: they are the proof that tax was already paid, and your contador credits them in your returns.

Choosing How You Are Taxed

Having an RFC is step one. Step two is the regime you register under, and that is a decision to make with a contador who knows your full picture. The options most Puerto Escondido owners end up discussing:

The platform regime and the definitive-payment option

Individuals who earn through digital platforms are registered under the regime for actividades empresariales con ingresos a través de plataformas tecnológicas. If your platform income in the previous year was no more than 300,000 MXN (about $16,200), you can elect to treat the platform’s withholding as a definitive payment. In practice that means the 4% ISR and the withheld IVA close the matter for that income: no deductions, but also very little paperwork. For a small apartment rented part of the year, this is often the simplest route.

Above the threshold: deductions start to matter

Above 300,000 MXN, or if you choose not to use the option, the withholding counts as an advance payment and you file returns where real costs can be deducted: cleaning, maintenance, utilities, internet, platform fees, the municipal property tax (predial) and depreciation of the building and furniture. A villa with a pool, staff and high running costs often pays less this way, provided every expense is backed by a factura issued to your RFC. Some owners also qualify for RESICO, the simplified regime with low rates on gross income for individuals under 3.5 million MXN a year; whether it fits your mix of income is a question for your contador.

Long-term leases are a different animal

If you rent unfurnished by the year to someone who lives there, you are in the arrendamiento regime instead: the rent is IVA-exempt, and you can deduct either real expenses or a flat 35% of income. Many owners mix both models across the year, short stays in high season and monthly tenants in the rains, which is one more reason to get advice before setting up. Our long-term rentals section shows what that market looks like in town.

Direct Bookings, Facturas and the Filing Calendar

Repeat guests who book you directly by bank transfer are good business, but there is no platform withholding on that money, so the tax falls entirely on you. Under the platform regime, income you collect directly is generally paid on your own by the 17th of the following month, at the same rate the platform would have applied. Guests, especially companies booking for staff, may ask for a factura: you issue it through the SAT portal or your contador’s software, with IVA itemised.

The calendar most owners live by:

• Monthly, by the 17th: the return for the previous month, when your regime requires one (your contador files it).
• Every month: download the platform’s withholding statement and the facturas for your expenses.
• April: the annual return for individuals, where withholdings, advance payments and deductions are reconciled.
• Early in the year: the municipal predial, separate from the federal taxes above.

A local contador typically charges in the range of 1,500 to 3,000 MXN a month (approximately $80 to $160) for this, depending on volume. Our complete owner’s guide covers the rest of the setup, from pricing to management.

The State Lodging Tax and Local Costs

On top of the federal ISR and IVA, the state of Oaxaca levies its own tax on lodging services. Some platforms collect it from guests automatically and some do not, and the rule can change, so check your platform’s tax page for Oaxaca and ask your contador whether you owe it yourself on direct bookings. Add the municipal predial and you have the full list of taxes that touch a rental property here.

Where the property sits also changes the numbers you are taxing. A two-bedroom near the beach in La Punta books more nights than a similar home on the edge of town, which can push you over the 300,000 MXN threshold sooner; a family house in Rinconada may suit monthly tenants in the off-season. Our breakdown of rental prices by neighborhood helps you estimate annual income before you choose a regime, and browsing the current rentals shows what comparable properties charge.

Frequently Asked Questions