SAT goes after foreign landlords: what happens if I rent a house or property?


The Tax Administration Service (SAT) will go after the landlords of houses, apartments or commercial premises, landlords who according to the law have the obligation to present declarations for the payment of VAT and ISR.

In addition to value-added and income taxes, the owners of real estate in that condition must register in the Federal Taxpayer Registry (RFC). 

And yes, there are foreigners in Mexico who have rented real estate, either as a home or commercial premises but are unaware that their income has to be notified and pay taxes to the SAT.

What happens if I rent a house and do not pay taxes?

If you registered as a lessor, you are required to file returns and pay taxes. If the SAT detects the arrival of income without the payment and declaration of taxes,  the treasury can audit you up to the last five years of the fiscal year.

These taxes are determined in the Fiscal Code of the Federation (CFF), the VAT Law (LIVA), the ISR Law (LISR), and other rules in Mexico.

Therefore, among the obligations that the SAT determines are registering in the RFC and keeping the information updated, even more so when there are cases of change of address, increase or decrease of obligations, and suspension of activities.

How much does the SAT charge for renting a house?

If you rent a property to a legal entity, you are required to withhold 10% of the income for income tax. You can subtract that amount in your statements.

Only house rentals and farms used for agricultural or livestock purposes are exempt from paying VAT.

Ejemplo de llenado de facturas utilizando el servicio gratuito ofrecido por  el SAT Arrendamiento de casa habitación amueblada

What are the obligations of lessors before the SAT?

Among the main responsibilities are keeping the accounts, if you opted for deductions specific to your activity. Also, issue electronic receipts when you receive the amount of the rents in which you must write down the property account number of the property in question.

In addition, request tax receipts, submit declarations: provisional ISR, definitive VAT and annual (during the month of April of each year) and informative.

What taxes are paid when renting a house?

Lessors are required to pay ISR and VAT to the SAT. The first is paid monthly, and if you have income of less than 26,411.52 pesos per month, every quarter. These provisions are detailed in articles 106 and 96 of the LISR.

The tables to calculate the ISR payment for individuals in the Leasing Regime are published every year beginning in the Miscellaneous Fiscal Resolution, and are calculated for lessors with monthly income from 644 pesos and from 324 thousand 845 pesos and upwards.

For the quarterly payment, the income range goes from 1,933 and 974,535 pesos onwards.

When is ISR not and when is it paid?

The levels of ISR rates that are applied depend on the level of income, ranging from zero percent when you have monthly income of less than 644.58 pesos, and up to 32% for people with a monthly income of 350 thousand pesos.

The formula for calculating the ISR rate is the same as that applied to employed persons, that is, based on the tables published at the beginning of the year in the Resolution. This is what is deducted from your ISR salary.

According to article 20 of the VAT Law, section II, this tax will not be paid for the use or temporary enjoyment of real estate destined or used exclusively for home-room.

The VAT payment of 16% must be made each month, and applies to the rent of commercial premises, furnished house,s or real estate that is destined or used as hotels or on online rental platforms.

How are digital tax receipts issued?

To issue digital tax receipts (CFDI) you need: current advanced electronic signature; process in the SAT the certificate for the use of digital seals.

And send the CFDIs to the SAT before they are issued, so that it validates the requirements, assigns a folio, and incorporates the digital seal of the SAT, in addition to issuing digital documents of CFDIs to clients or tenants.

Those who dream of living off their income have to file monthly or quarterly ISR provisional declarations. VAT every month in case of renting business premises or home. 

When should taxes be paid to the SAT?

Also the annual one during the month of April of each immediately previous fiscal year. These are presented no later than the 17th day of the month immediately following the corresponding payment.

They must also make informative declarations, in the event that other income is received in cash, in national currency, as well as in gold or silver pieces, whose amount is greater than 100 thousand pesos.

If you have workers to whom you made salary payments and to whom you made payments for employment subsidies (only for 2016 and previous years).

If the total income of the immediately preceding fiscal year did not exceed four million pesos, you are relieved from presenting the information on operations with third parties (DIOT) and from sending the electronic accounting.

“The custom has made many people not declare an income, but that does not mean that it is good and that it is very expensive. It is an obligation for landlords and, most importantly, this chapter, unlike others, is much cheaper, beyond what is sometimes thought”, concluded the member of the Tax Investigation technical commission of the Association of Public Accountants of Mexico.

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