VAT on furnished rentals in Mexico

The two articles that matter

Article 20, fraction II. “No tax shall be paid for the temporary use or enjoyment of … real estate intended or used exclusively as a dwelling. If a property has several purposes or uses, the tax is not paid for the part intended or used as a dwelling. This provision does not apply to property, or parts of it, that are supplied furnished or that are intended or used as hotels or guest houses.”

So the exemption has two exceptions written into the same sentence: furnished, and hotel or guest-house use. The law read does not say how many items make a property “furnished”, and it does not define “guest house”. A landlord who is unsure should ask the tax authority (SAT) or an accountant.

Article 9, fractions I and II. VAT is not due on the sale of land or of buildings used as dwellings; hotels are not covered by that exemption. The sale of a home is therefore outside VAT, which is why this issue arises only for rentals. See the capital gains guide for the income tax on a sale.

How the tax is computed

• The VAT rate is 16% (art. 1). It is not part of the base: it is added to the rent. The landlord must show it “expressly and separately” to the tenant.
• The base is the rent agreed plus other amounts charged to the tenant: taxes, fees, maintenance charges, reimbursements, interest, contractual penalties “or any other concept” (art. 23).
• VAT is payable when the consideration is collected, on each payment (art. 22). Under art. 1-B, advances and deposits count as collected, whatever they are called. If a deposit is returned, art. 7 lets the landlord deduct it in a later return, provided it is stated that the VAT charged was refunded.
• Written as a formula: monthly VAT due = VAT charged on rents collected - creditable VAT paid on expenses (art. 4). Creditable VAT has conditions in art. 5, which this guide does not list.

When VAT applies, a rent R becomes R x 1.16 for the tenant (a formula, not an example).

Place of use and non-resident owners

Article 21 says that the temporary use of a tangible property is granted in national territory when it is used there, whatever the place of delivery or of signing the contract. A furnished apartment in Mexico is used in Mexico, so the rule applies to it. This guide does not cover how a non-resident owner registers or files; ask the SAT or a tax adviser. For the income tax on non-residents, see non-resident rental tax.

Filing

Art. 5-D: VAT is computed per calendar month, paid by return no later than the 17th of the following month. The monthly payment is the VAT on all the month’s activities minus creditable VAT and any VAT withheld.

Art. 5-F lets an individual whose only income is rent from real estate, with monthly rent not above ten minimum wages raised to the month, calculate VAT quarterly if the person has chosen quarterly provisional payments for income tax (LISR art. 116). Because federal laws now read the minimum wage as the UMA, this is a calculation: 10 x MX$3,566.22 (INEGI, from 1 February 2026) = MX$35,662.20 a month. Quarterly payments are definitive.

Short-term and platform rentals

Tourist-style stays are often furnished and may count as lodging. Platforms that intermediate in Mexico have their own VAT withholding duties: see short-term rental platform taxes.

Practical consequences

• A lease that is silent on VAT leaves open whether the rent already includes it. Ask a lawyer; the law requires VAT to be shown separately.
• A landlord who charges VAT also has income tax duties (registration, invoices, returns); see rental income tax for residents.
• A tenant who is a business may credit the VAT paid, subject to art. 5.

Which professional to consult

• A tax accountant, to decide whether a property is “furnished” within art. 20 and to file.
• A real estate lawyer, to draft the lease with the VAT line: real estate lawyer page.