I did not post newsletters 8-11. The information is now outdated so we will start back with #12 and continue posting from here. Thanks for your understanding.
The State of Baja Sur Rentals.
Not much has changed for this busy busy rental season yet. We are still seeing high rental rates, but without a ton of pre-bookings. Most people are waiting to make reservations until it is time to travel with the uncertainty of the world. We are hopeful this trend continues through the summer to keep rentals high. That being said, we may see a dip as well. I will continue to go into the Airbnb accounts to make small changes and/or do discounts depending on your goals to keep homes rented as needed.
We are also seeing a large uptick in inventory in our areas of Baja Sur. As a company, we are getting multiple inquiries a week for property and rental management for both private homes and new condos. It seems EVERY single person that comes for a visit is also ready to purchase land to build or purchase a condo as a rental. This impacts current owners in multiple ways. First, your investment is solid! Prices for land and construction continue to increase as demand is high. Second, you may see a downtick in rentals as inventory increases. The positive is the airport has expanded and people keep coming. Also, I imagine some of the rentals will slowly start to disappear off the market. Now that taxes are being remitted at the current rate, I forecast some owners may decide the wear and tear, and the overall hassle of the rental is not worth the small percentage they are able to keep. (I’ll speak more to the tax point below.) What we do know… this season was very strong!
and COVID in Baja and Tu Casa...
Well….. COVID??? There are still a few restaurants or stores that ask you to mask (OXXO), but otherwise we are seeing little to no restrictions. It is time to let our guard down a little and enjoy the beach I suppose. :)
We are working hard to streamline our lines of communication so nothing is missed.
GUEST SERVICES PHONE NUMBER. (970) 331-3798
We now have a dedicated number for guests to contact us at any time. We will no longer be giving guests our personal phone numbers. We are in the process of changing over all the information on Airbnb and in the guidebooks to this new number. We are calling it, Tu Casa 24 HOUR guest line. Also, please keep this number for your information as well, just in case there is an emergency and you are not able to get in touch with one of us. This will be the phone number that someone is always “ON CALL” with if Alex or I cannot be reached.
MEXICAN LINE. (612) 205-8037
We also have a Mexican business number that is used as our office phone. We keep this phone on during office hours, or when Alex or I are out of phone service (Danny or Meghan will have it). Please keep this number for your records as well, just in case there is an emergency. You can also give this phone number to any vendors you may use that need to be in contact with a Spanish speaker.
OWNERS. Alex: (203) 892-5133 or Rachel: (720) 354-0022
Please continue to contact us as normal. You should have both of our numbers and use them freely through text, call, or whatsapp. We will work hard to let you know if we will be out of service for any amount of time, but if you do have an emergency, another staff member will always have our 24 hour line on, so you can always contact us on that line.
In the theme of streamlining our communication, we are working hard to utilize the Airbnb system as much as possible. In the past we requested emails from each guest. We would then send out a separate email through our tucasa gmail address to ensure they received the maps and location. The downside to this, we were giving ourselves multiple extra steps and opening up yet another avenue of communication for guest questions to get lost. MOVING FORWARD. We are in the process of uploading and inputting all directions and check-in information into the Airbnb application and website. The app has a special ‘check-in’ information area where you can upload pictures and add notes. There is also a directions area to put the specific directions and google map link. We are adding the wifi log-in information into the app as well. Finally, we are updating the Airbnb guidebooks with local maps and restaurants. We are changing our initial Airbnb response for guests to check these areas of Airbnb prior to their arrival, and reach out with any questions. Once a house’s check-in information is properly inputted, we will no longer be requesting email addresses or sending out the check-in emails. We have found out that the check-in information does not need data, so one can look at the directions without having a connection. We will still provide the same information in the guidebooks at the home, with any additional information you ask us to provide for the guests.
To note: we have noticed the mobile app and the website do not always sync their information. We are in contact with Airbnb about this issue. In the meantime, we are making sure that the information appears correctly in the mobile app as this is what people will use for arrival.
Please look at your Airbnb app on your phone. Scroll to the bottom of your listing. Click on ‘Check-in instructions’, click on Preview. To note: Not all of the homes are completed, but should be very soon.
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.
Business News- NEW INFORMATION!
Our Mexican bank account and STRIPE are not set up yet as we’d hoped. We are still status quo for paying (ZELLE, VENMO) but are pushing hard for this to come to fruition. We will keep you updated.
As a Mexican corporation we are required to pay Value Added Taxes to Mexico on all our money's moving into our account. Thus far we have been able to get away with having the majority of our clients pay us into the states, but we are no longer able to do this. We must remain in compliance per the Mexican government.
What does this mean? This means we are in the process of opening a new bank account that works with the system STRIPE so all our money is directed into Mexico. As soon as this is open (1 - 2 months), we will invoice typically and have you pay us through this platform. We will send a link for payments to make it very simple and easy. The good news… you will be able to pay us with a credit card or other payment means. We will be charging Value Added Tax on invoices moving forward to stay in compliance starting as soon as this account is open.
Back to good news… if you do apply for an RFC, the 16% that you are charged by Tu Casa is then your deduction from the money you would owe from income from Airbnb. With an RFC, you’d be charged 30% income on your taxes (if you make over 15k usd or more per year) - minus 8% already withheld from Airbnb and minus 16% already paid to Tu Casa on our bill. You can also make deductions on any home improvements with facturas (issued receipts). The downside is to take your pesos back to the states, you will have an exchange rate and fee.
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.
COMMONLY ASKED QUESTIONS.
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!
TCCPM MANAGEMENT FEES.
Please note, there is a very good chance we will need to slightly increase our fees in the future. All expenses down here have increased - including gas, operating expenses, employee taxes and insurance, and general upkeep costs. We will give notice if/when this does happen. It is not something we want to do, but may be necessary to keep our business running. We feel lucky to have you as incredibly supportive and invaluable clients, and appreciate your understanding in this matter.