Taxes for Foreigners Living in Mexico
Understand your tax obligations as an expat, foreign resident, or property owner in Mexico.
Are You a Tax Resident of Mexico?
You become a Mexican tax resident if you spend more than 183 days in Mexico in a calendar year, or if your primary home is in Mexico. As a tax resident:
- Your worldwide income is taxable in Mexico
- You must file an annual declaration by April 30
- You are subject to ISR (income tax) on all income sources
Non-Resident Tax Rules
If you spend fewer than 183 days in Mexico, you are a non-resident for tax purposes. Only Mexican-source income is taxable:
- Rental income from Mexican property
- Property sales proceeds
- Business activity income sourced in Mexico
Non-residents are subject to withholding rates: 25% ISR on gross rental income, or 35% on net gain for property sales.
RFC Requirement for Foreigners
Most foreigners need an RFC if they own property, receive rental income, or conduct business in Mexico. Foreign residents who have a CURP can often obtain their RFC online. Without a CURP, an in-person SAT appointment is required — often easiest with the help of a Mexican accountant.
Common Tax Obligations for Foreigners
- Property ownership: Predial (municipal property tax) is paid annually to the local municipality, not the federal government.
- Rental income: Short-term rentals (Airbnb, VRBO) are subject to ISR + 16% IVA. Long-term rentals over 1 month are IVA-exempt.
- Property sales: Capital gains ISR applies. Non-residents owe 25% on gross or 35% on net, whichever is lower. Tax residents may qualify for exemptions.
- Business income: Subject to ISR and IVA. Monthly declarations required.
- Employment income: ISR is withheld by the employer through payroll. Annual declaration reconciles the total.
US-Mexico Tax Treaty
The US-Mexico tax treaty prevents double taxation. Income taxed in Mexico can generally be credited against your US tax liability. US citizens must still file a US return regardless of where they live. If you have Mexican bank accounts over $10,000 USD, FBAR (FinCEN 114) filing with the US Treasury may also be required.
Important: The treaty reduces double taxation but does not eliminate US filing requirements. Work with an accountant experienced in both US and Mexican tax law for cross-border situations.
Key Deadlines
- Monthly ISR and IVA declarations: 17th of the following month
- Annual ISR declaration: April 30
- IVA: Monthly, by the 17th
- US FBAR: April 15, automatic extension to October 15
Related Services
Need help?
Talk to an accountant — free consultation
Have questions about your specific situation? We offer a free first consultation with no obligation.
Continue Reading
Related services & guides
Ready to Get Your Accounting in Order?
Whether you're a business owner, foreign investor, or vacation rental operator — we're here to help.