Airbnb (and all other rental platforms) ARE automatically remitting taxes from rentals.

NEW 2022 TAX HOLDINGS: 25% - Income Tax 16% - VAT Tax 3% - Occupancy Tax*

*The Occupancy Tax is not new and has always been taken out.

If you obtain your residency and then apply for a RFC - personal Mexican tax ID, you will have a deduction in tax withholdings, however, there are still other steps that have costs.

Obtaining your RFC is possible and you DO NOT need a Mexican Corporation. You DO need to apply for temporary or permanent residency in Mexico. Then, (I think) you must begin this process in your home country then will need to spend a certain amount of time in Mexico to go through the paperwork (in the month-two month range). My understanding is there is a time allotment to stay here to properly fulfill these needs. You will have to hire an accountant and/or lawyer to help you with this process. You will then need a Mexican bank account and attach your Airbnb account to this bank. The money you make will go into your Mexican account. You will retain an accountant (+/-$100 per month) in Mexico as the taxes are filed and paid on a monthly basis. You will then be able to make dedications on expenses, especially the VAT and Income taxes.

One other option.

Mexican Corporation. There is cost up front and you can put your home/land under your corporation. There are also costs associated but just like getting your RFC through residency, a corporation gives you a multitude of other benefits. I recommend consulting a lawyer and accountant if you want to start this process.

TAX CONCLUSION: From my understanding and in my opinion only…..

You are making approximately 10%-12% more each month if you obtain your RFC. You will still have a few other fees (accounting) and the big one (money exchange from peso to USD/CAD) that are not accounted for in this percentage as they are variable, plus the initial fee of getting your residency (a few thousand dollars). All in all - your take from Airbnb without an RFC is about 43%. Your take if you have an RFC is about 54%. This number is calculated after our fees, but does not take into account any US taxes, exchange rates, Airbnb fees (~4.5%), or accounting fees (US or MX).

Please know I am NOT an accountant and I am only doing my best to understand. To get 100% correct information, we implore for you to reach out to an accountant to find out first hand.

Where do the taxes AIRBNB withholds go once taken out? - Absolutely zero idea. Your guess is as good as mine, but I will assume Airbnb is working hard to stay in compliance with the Mexican government.

How does this impact our taxes in the US? - We honestly do not know. It is important you ask your accountant in the US as we do know you should claim this income - with or without an RFC. Without an RFC, my understanding is you can claim these taxes off as a deduction as you should not be double taxed. That is the extent of my knowledge. Please teach me more once you find out!!

Adding Fees to Airbnb to cover costs.

We can now add an additional TAX to cover these costs through Airbnb if you have your RFC. We can add a rental management tax to Airbnb if you do or do not have an RFC . This is a good way to recover costs, but please know this could deter rental activity as other owners are eating the costs. Please let us know your thoughts on this option!