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Rental income tax: resident landlords (35 percent blind deduction, 10 percent withholding by companies, trusts) and 25 percent withholding for non residents

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Last verified: 2026-10-26 · Status: Stable

Resident individuals who rent out property may deduct actual expenses or a flat 35 percent of rents plus property tax, make monthly provisional payments by the 17th, and suffer 10 percent withholding when the tenant is a company. When rent flows through a trust, the trustee bank keeps the books, issues invoices and pays 10 percent provisional payments every four months for the owner. Non resident landlords pay 25 percent of gross rent with no deductions, withheld by the tenant or by the trustee bank.

USD conversions use MXN 18.6638 per US dollar, the US Federal Reserve H.10 noon buying rate in New York for 23 October 2026 (FRED series DEXMXUS), the latest observation available when this page was verified. Legal conversions in Mexico use the Banxico FIX, which differs slightly. Conversions are for orientation only.

Key facts

Optional flat deduction for resident landlords, plus property tax	35 %LISR art. 115, as of 2026-10-26 · in force
Withholding by company tenants on rent paid to resident individuals	10 %LISR art. 116, as of 2026-10-26 · in force
Trustee provisional payment on rental income every four months	10 %LISR art. 117, as of 2026-10-26 · in force
Withholding on rent from Mexican real estate paid to a non resident, gross basis	25 %LISR art. 158, as of 2026-10-26 · in force

The rule

1. Resident individuals: deductions. Landlords may deduct property tax and local improvement contributions, maintenance not adding improvements, water if not paid by the tenant, real interest on loans to buy, build or improve the property, salaries, fees and their payroll taxes, insurance premiums and investments in construction and improvements. Instead, they may deduct a flat 35 percent of rental income plus the property tax for the period. Owners who occupy part of the property or lend it free cannot deduct the proportional expenses.
Cost to do it: Tax only.
Example: Monthly rent MXN 30,000 with the 35 percent blind deduction gives a base of MXN 19,500 before property tax. / Rent about USD 1,607.Ley del Impuesto sobre la Renta, DOF 11 December 2013, art. 115, LISR art. 115, 2013-12-11 official text · verified 2026-10-26

2. Resident individuals: payments and withholding. Provisional payments are monthly by the 17th of the following month, applying the tariff to rent less deductions; landlords with only rental income below ten monthly minimum wages may pay quarterly. When the tenant is a company, it withholds 10 percent of gross rent as a provisional payment and gives a withholding invoice, or the landlord's invoice can state the withholding. Landlords must register in the RFC, keep accounts, issue invoices, file provisional and annual returns, and report cash received over MXN 100,000 by the 17th of the next month.
Cost to do it: Tax only.
Example: A company tenant paying MXN 30,000 a month withholds MXN 3,000 and pays the landlord MXN 27,000 plus any VAT. / Withholding about USD 161 a month.Ley del Impuesto sobre la Renta arts. 116 (paragraphs reformed and added DOF 9 December 2019) and 118, LISR arts. 116 and 118, 2019-12-09 official text · verified 2026-10-26

3. Rent through a trust. In trusts granting temporary use of real estate, the income belongs to the settlor even if the beneficiary is another person, unless the trust is irrevocable and the settlor cannot reacquire the property, in which case it belongs to the beneficiary. The trustee bank makes provisional payments of 10 percent of the prior four months' income in May, September and January, gives the annual invoice by 31 January, keeps the books and issues the invoices.
Cost to do it: Trustee fees are contractual.Ley del Impuesto sobre la Renta arts. 117 and 118, last paragraph reformed DOF 12 November 2021, LISR arts. 117 and 118, 2021-11-12 official text · verified 2026-10-26

4. Non resident landlords. Rent from real estate in Mexico is Mexican source. Non residents pay 25 percent of gross income with no deductions, withheld by the payer; if the payer is a non resident, the landlord files within 15 days. Amounts for granting use and enjoyment rights over Mexican property are covered, even when they arise from transferring those rights. Landlords must issue invoices; with a trust, the trustee bank issues them and withholds.
Cost to do it: Tax only.
Example: A non resident landlord with rent of MXN 30,000 a month bears MXN 7,500 a month, MXN 90,000 a year. / About USD 402 a month, USD 4,822 a year.Ley del Impuesto sobre la Renta art. 158, LISR art. 158, 2013-12-11 official text · verified 2026-10-26

Landlord	Monthly withholding or payment	Annual effect
Resident individual, company tenant	MXN 3,000 withheld (10 percent), credited	Tariff on rent less 35 percent or actual expenses
Resident individual, individual tenant	Own monthly provisional payment	Same
Through a trust (resident)	Bank pays 10 percent every four months	Same
Non resident	MXN 7,500 withheld (25 percent), final	MXN 90,000

Income tax on MXN 30,000 of monthly rent (about USD 1,607), before the annual return (LISR arts. 115 to 117 and 158).

Worked example

A resident individual rents a house to a company for MXN 30,000 a month. Using the blind deduction, the monthly base is MXN 19,500 less the property tax; the company withholds MXN 3,000, which the landlord credits in the monthly provisional payment due by the 17th. Unfurnished housing is VAT exempt (LISR arts. 115 and 116; LIVA art. 20).

Step by step

1. Register in the RFC under the rental regime and set up electronic invoicing.
2. Choose actual deductions or the 35 percent blind deduction.
3. File monthly provisional payments by the 17th, crediting company withholdings.
4. Non residents: give the tenant or trustee bank the information to withhold 25 percent.
5. File the annual return (residents) and keep the invoice file for eviction suits.

Common traps

No invoices: in eviction suits the judge asks for them and reports omissions to the SAT (LISR art. 118).
Thinking the trust shifts the tax: income stays with the settlor unless the trust is irrevocable without a right to reacquire (LISR art. 117).
Furnished units: they lose the VAT exemption (LIVA art. 20).
Assuming a tax treaty removes Mexican tax: treaties generally let the country where the property sits tax it; check the treaty with your country of residence and how your home country credits Mexican tax. For investors based in Argentina, see The Argentine Thread guide for the home side.

Sources

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