Costalegre Jalisco Mexico

From a post on Mexconnect

I own rental property in Mazatlan (a condo). Here is how it goes:

1. First you go to immigration to get a special endorsement on your FM3. It costs around $100US. You must have an accountant endorse your request.

2. You go to SAT (Hacienda) and get registered as owning rental property. They don't ask for specific addresses and no permits are issued. You simply make an appointment, fill out a form, and sign some papers. Took about 20 minutes.

3. You file your taxes monthly. If the unit is NOT furnished you pay about 17%. If the unit is furnished, you pay the 17% AND you must pay the 15% IVA tax.

4. At the end of the year, your accountant will do an annual declaration which will report the income & taxes. You should owe nothing.

5. You pay taxes on rental income only when you collect it. It doesn't matter if that income is in US dollars or where the monthly rental is paid. If the property is located in Mexico, you pay taxes in Mexico on that property.

6. If you are a US citizen, you must also report this income to the IRS. Unless you earn a high income in the US, you will not likely have to pay any additional taxes as your expenses & taxes in Mexico will offset your tax liability in the US.

7. When you sell your Mexican rental unit, again you must report the sale to the IRS and pay the appropriate capital gains taxes - if there are any.

The process is straight forward and not very time consuming nor expensive. I pay my accountant 300 pesos a month to handle the paper work in Mexico. Worth every centavo!

Not wanting to stir up a hornets nest here but there are a lot of people who rent their condos / apartments / houses illegally here in the area.

There is a lot of resentment amongst the hotel association as they feel they are losing out too much (but why stay in a hotel at $500pesos a night when you can rent a really good apartment for $400!)

I reckon it is probably only a matter of time before they complain to the right person and they start checking up on people.