Seasonal rentals in Mexico: what are the regulations?

Unlike many countries, Mexico lacks a uniform national framework for seasonal rentals. The regulations vary significantly from state to state and even between municipalities within a state. The different laws can be challenging for property owners to understand, so search is key.

Most cities and states in Mexico require specific licences or permits for seasonal rentals. This is applied for via the local municipality or government website (see below). Obtaining a licence usually involves inspections, a reasonable fee (check with the individual municipality for the amount), and compliance with certain standards such as fire regulations.

For example, all seasonal or short-term rentals in Mexico City must be registered with the Mexico City Tourism Ministry (SECTUR – La Secretaría de Turismo del Gobierno de México). Several documents have to be submitted such as your ID, proof of ownership and signed confirmation that the property meets the health and safety requirements.

If you have a seasonal rental in other parts of Mexico, such as the popular Riviera Maya or Puerto Vallarta, you must register with the National Tourism Registry (Registro Nacional de Turismo) which is different from the Mexico City registration. This also requires documentation such as ID, proof you own the property and where you pay taxes. You can apply online or in person.

As each municipality has different regulations that may be additional to those above you should contact the one where your property is located. It is also advisable to enlist the services of a lawyer specialised in rentals if you are unsure about any of the local regulations.

Once you are granted a licence you are free to advertise your property for seasonal rentals. The licence usually lasts for one or two years, again depending on the municipality. The government’s tourism website can provide more information, however, it is currently only available in Spanish.

Some regulations may set restrictions on the number of guests allowed in a rental property, especially in complexes in the more upmarket areas. This is to manage noise levels, protect local infrastructure, and ensure neighbours are not disturbed.

This can influence your pricing strategy so it is essential to ensure that the permitted occupancy levels are profitable

Seasonal rentals might be prohibited in certain residential zones – this must be checked before applying for a licence. This is because Mexican zoning laws often determine whether a property can be used for commercial purposes.

When planning to buy a property in Mexico it is worth knowing that foreigners are restricted from directly owning property within 50 kilometres of Mexico’s coastline or 100 kilometres of its borders.
To circumvent this limitation, a legal procedure known as a fideicomiso is used. This is a bank trust that allows foreigners to hold beneficial ownership of property within these restricted zones. In essence, the bank owns the property and the buyer has a legal interest in it.

Some municipalities require the registration of guest information at seasonal rental properties to collect tourism data and protect the country’s security. This requires every guest over 16 to provide their details, including a copy of their passport, just as if staying at a hotel.

Rental income in Mexico is subject to income tax (ISR – Impuesto Sobre la Renta at the rate of 25% and VAT is applied at the standard rate of 16% if the property is furnished. Tax regulations in Mexico can be complicated, and non-compliance can lead to large penalties.

As a property owner in Mexico, you must comply with the tax and payment obligations. The United Kingdom has signed a treaty to avoid double taxation, which it is important to be aware of if you live outside Mexico for some of the year. Contact a tax expert to avoid unpleasant surprises.

Insurance is essential for seasonal rental property owners in Mexico. Check your policy as a standard homeowner policy is unlikely to cover seasonal rentals. This means you will have to take out a separate policy that specifically covers liability for guest injuries, property damage, and loss of rental income.

If you are planning to use your property for seasonal rentals it is wise to build a good relationship with your neighbours. This reduces the potential for conflict, such as if your guests are making a little too much noise when jumping in the swimming pool. It also offers the opportunity for you to ask the neighbours if they would be kind enough to keep an eye on things at your property and contact you if there is a problem.

Given the different regulations depending on the area, it is crucial to conduct thorough research for the specific location where you plan to operate your seasonal rental. Here are some steps to help you with this:

• Contact local tourism boards – they can provide valuable insights into regulations and permits.
• Check municipal websites – look for information on business licenses, permits, and short-term rental regulations.
• Consult with a local lawyer – legal professionals can offer expert guidance tailored to your situation.
• Join online communities – platforms like Airbnb and Vrbo may have local forums where hosts discuss regulations.

Managing a seasonal rental in Mexico can be complex and time-consuming due to the unique regulations. For this reason, you should consider hiring a local property management company to handle day-to-day operations. They can take bookings, communicate with guests and ensure compliance with local laws. They can also take care of cleaning and maintenance. This takes the stress off you as the property owner, and frees you up to enjoy your time in Mexico or another country of the world whilst reaping the benefits of your investment property.

Our iad Overseas property  consultants can help you find your dream home in Mexico and can put you in touch with the experts you need.

Are you thinking of buying a property in Mexico to take advantage of seasonal rentals? We have a vast selection of properties and can offer you expert advice on purchasing a property in Mexico.