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Everything you need to know before buying real estate is included in our Mexico Property Pack
Mexico's short-term rental market has transformed dramatically in 2025, with cities like Mexico City implementing strict registration requirements and occupancy caps that directly impact Airbnb profitability.
While tourist destinations like Cancún and Puerto Vallarta still offer opportunities, new tax obligations, licensing fees, and increased competition have reduced net profits by 15-25% compared to previous years, making careful market analysis essential before investing.
If you want to go deeper, you can check our pack of documents related to the real estate market in Mexico, based on reliable facts and data, not opinions or rumors.
Mexico's short-term rental regulations have tightened significantly in 2025, with Mexico City requiring mandatory registration and imposing a 180-night annual cap.
Combined taxes, fees, and platform commissions typically consume 20-35% of gross rental income, while well-located two-bedroom units can still generate MXN $30,000-$50,000 monthly net profit in prime markets.
| City/Region | Registration Required | Annual Night Limit | Average Monthly Net Profit (2BR) |
|---|---|---|---|
| Mexico City | Mandatory + Operating Permit | 180 nights | MXN $30,000-$45,000 |
| Cancún | Registration Required | No current limit | MXN $35,000-$55,000 |
| Playa del Carmen | Local Permits | Under consideration | MXN $32,000-$48,000 |
| Tulum | Basic Registration | No current limit | MXN $40,000-$60,000 |
| Puerto Vallarta | Municipal License | No current limit | MXN $33,000-$50,000 |
| Mérida | Registration Required | No current limit | MXN $25,000-$40,000 |
| San Miguel de Allende | Local Permits | No current limit | MXN $28,000-$42,000 |
What are Mexico's current short-term rental regulations and how do they vary by location?
Mexico's short-term rental regulations have become significantly more complex and restrictive as of September 2025, with each major city implementing its own specific requirements.
Mexico City leads with the strictest regulations, requiring all hosts to register with the city's Host Registry and obtain a unique registration number for each property. The registration must be renewed every two years, and hosts operating four or more properties need additional merchant establishment keys and operating permits.
Tourist destinations like Cancún, Playa del Carmen, Tulum, and Puerto Vallarta have implemented varying levels of registration requirements, though enforcement differs significantly between municipalities. Cancún requires formal registration with local authorities, while Tulum maintains more basic registration processes.
Smaller cities and emerging destinations often have less developed regulatory frameworks, but this is changing rapidly as municipalities recognize the need for oversight. Many coastal areas are in the process of implementing stricter rules similar to Mexico City's model.
It's something we develop in our Mexico property pack.
Do I need special licenses or permits to legally operate an Airbnb in Mexico?
Yes, operating a legal short-term rental in Mexico requires specific licenses and permits that vary by city and property count.
In Mexico City, all hosts must obtain a Host Registry number and display it prominently on their listings. If you own four or more short-term rental properties, you'll need to secure a merchant establishment key (clave de establecimiento mercantil) and an operating permit from local authorities.
Most major tourist destinations require at least basic registration with municipal authorities. Cancún requires hosts to register with the municipal tourism office, while Puerto Vallarta requires a municipal business license for short-term rentals.
Additionally, all properties must comply with safety standards including proper smoke detectors, carbon monoxide detectors, and fire extinguishers. Some cities require proof of civil liability insurance before issuing permits.
What are the penalties for operating without proper authorization?
Penalties for unauthorized short-term rental operations in Mexico are substantial and can quickly eliminate any profit margins.
Mexico City imposes fines up to MXN $21,000 (approximately USD $1,085) for operating unregistered rentals or providing false information during registration. Repeat offenders face removal from platforms like Airbnb and permanent cancellation of operating licenses.
At the federal level, tax avoidance penalties range from 55% to 75% of the omitted tax amount, plus accumulated interest. Severe cases can result in criminal liability for tax evasion.
PROFECO (Mexico's consumer protection agency) can impose additional fines for consumer protection violations, including inadequate safety standards or misleading advertising. These fines typically range from MXN $5,000 to MXN $50,000 depending on the severity of the violation.
How much are taxes on rental income and what are the reporting requirements?
Mexico's tax structure for short-term rentals involves multiple layers that significantly impact profitability.
The lodging services tax ranges from 3% to 5% depending on the state and is typically collected directly by platforms like Airbnb. The federal Value Added Tax (IVA) adds another 16% to all rental income.
All rental income must be reported to SAT (Mexico's tax authority) and requires issuing official invoices called "Facturas" for every transaction. Hosts must file monthly reports and maintain detailed records of all income and deductible expenses.
| Tax Type | Rate | Collection Method |
|---|---|---|
| Lodging Services Tax | 3-5% | Platform withholding |
| Value Added Tax (IVA) | 16% | Host responsibility |
| Income Tax | Variable (progressive) | Monthly SAT filing |
| Platform Commission | 3-14% | Automatic deduction |
| Property Management | 10-20% | Service agreement |
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Are there caps on rental nights per year in major Mexican cities?
Mexico City has implemented a strict 180-night annual cap, representing the most restrictive limitation in the country.
This cap is rigorously enforced through mandatory platform reporting, meaning Airbnb and other platforms automatically track and prevent bookings once properties reach the 180-night limit. The restriction effectively limits properties to 50% annual occupancy.
Other major destinations are considering similar caps but have not fully implemented them as of September 2025. Cancún and Playa del Carmen have proposed night limits but are still in the legislative review process.
Tulum, Puerto Vallarta, and Mérida currently have no annual night restrictions, though local authorities are monitoring the situation and may implement caps if overtourism concerns intensify.
What safety and building requirements must properties meet?
All short-term rental properties in Mexico must comply with comprehensive safety and building standards regardless of location.
Mandatory safety equipment includes functioning smoke detectors in all bedrooms and common areas, carbon monoxide detectors near gas appliances, and accessible fire extinguishers on each floor. Properties must also maintain adequate emergency exits and proper lighting.
Building code compliance covers structural integrity, electrical systems meeting current standards, and proper plumbing with reliable water pressure. Many cities require professional safety inspections before issuing rental permits.
Additional requirements include proof of civil liability insurance, compliance with local zoning regulations, and maintaining hygiene standards that meet municipal health codes. Properties in historic districts or protected areas face additional architectural restrictions.
How competitive is the market and what are current rates and occupancy?
Competition in Mexico's major tourist destinations has intensified significantly, with thousands of new listings added monthly across platforms.
As of September 2025, average nightly rates range from MXN $1,500 to $3,500 (USD $80-$185) depending on location, season, and property quality. Mexico City commands premium rates during business travel periods, while beach destinations peak during winter months.
Occupancy rates vary dramatically by location and season, with prime areas achieving 60-75% occupancy while secondary locations struggle to reach 45-55%. The most successful properties combine excellent locations with professional management and competitive pricing strategies.
Market saturation is particularly evident in Tulum and Playa del Carmen, where new developments have flooded the market with similar offerings, driving down both rates and occupancy for average properties.
What are typical operating costs for short-term rentals in Mexico?
Operating costs for Mexican short-term rentals typically consume 25-40% of gross rental income when including all necessary services and compliance requirements.
| Cost Category | Percentage of Gross Income | Monthly Cost (2BR Unit) |
|---|---|---|
| Property Management | 10-20% | MXN $6,000-$12,000 |
| Cleaning Services | 3-7% | MXN $2,000-$4,500 |
| Maintenance & Repairs | 2-5% | MXN $1,500-$3,000 |
| Utilities | 5-8% | MXN $3,000-$5,000 |
| Insurance | 1-2% | MXN $800-$1,500 |
| Supplies & Amenities | 2-4% | MXN $1,200-$2,500 |
| License & Registration Fees | 1-2% | MXN $500-$1,200 |
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Mexico versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
Do local communities and HOAs restrict Airbnb operations?
Homeowner associations and local communities frequently impose their own restrictions that can be more limiting than municipal regulations.
Many upscale residential developments prohibit short-term rentals entirely through HOA bylaws, while others limit the number of rental nights per month or require advance notification for all guests. These restrictions are legally enforceable and can result in fines or legal action.
Condominium buildings often require board approval before allowing short-term rentals, and some impose guest registration requirements or restrict access to common amenities for rental guests.
It's something we develop in our Mexico property pack.
What percentage of income goes to taxes, fees, and commissions?
The total deductions from gross rental income in Mexico typically range from 20% to 35%, varying significantly by location and management structure.
- Platform commissions (Airbnb, Vrbo): 3-14% of booking value
- Lodging services tax: 3-5% (state-level)
- Value Added Tax (IVA): 16% on rental income
- Income tax: Variable based on total income bracket
- Property management fees: 10-20% if using professional services
- Registration and licensing fees: MXN $2,000-$8,000 annually
- Insurance and compliance costs: 1-3% of gross income
Hosts who manage properties themselves can reduce costs to 20-25% of gross income, while those using full-service management typically see deductions of 30-35%.
How stable are current regulations and what changes are expected?
Mexico's short-term rental regulatory environment remains highly volatile, with major cities implementing significant changes throughout 2024 and 2025.
Mexico City's recent reforms represent the most comprehensive overhaul, introducing registration requirements, occupancy caps, and enhanced enforcement mechanisms. Other major destinations are actively developing similar frameworks, with Cancún and Guadalajara expected to announce new regulations before 2026.
Future risks include potential expansion of night caps to other cities, increased tax rates on short-term rentals, and stricter zoning restrictions in residential areas. Rising gentrification concerns are driving political pressure for more restrictive policies.
The federal government is also considering nationwide standards that would create uniform requirements across all states, potentially eliminating the current patchwork of local regulations.
What's the realistic monthly net profit for a two-bedroom unit in major cities?
Net profit calculations for well-located two-bedroom units vary significantly by city and management approach, but realistic expectations have decreased from previous years.
In Mexico City, properties achieving 60-70% occupancy (within the 180-night cap) generate gross monthly income of MXN $45,000-$65,000, with net profits of MXN $30,000-$45,000 after all expenses and taxes.
Beach destinations like Tulum and Puerto Vallarta can achieve higher gross income of MXN $50,000-$80,000 monthly during peak seasons, but seasonal fluctuations and higher operating costs result in annual net profits similar to Mexico City.
Cancún and Playa del Carmen offer steady year-round demand with monthly net profits typically ranging from MXN $32,000-$50,000 for well-managed properties in prime locations.
It's something we develop in our Mexico property pack.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Short-term rentals in Mexico remain profitable for well-positioned properties, but success now requires careful compliance with evolving regulations and realistic profit expectations.
The combination of stricter licensing requirements, occupancy caps, and increased competition has reduced profit margins by 15-25% compared to previous years, making thorough market research essential before investment.
Sources
- Garrigues - Mexico Current Overview Short-Term Rental Regulation
- Hostaway - Airbnb Short-Term Rental Mexico City Guide
- The LatinVestor - Setup Short-Term Rental Mexico City
- BnbCalc - Mexico City Short-Term Rental Regulation Guide
- Own Property Abroad - Start Airbnb in Mexico
- Brevitas - How to Operate Airbnb in Mexico
- GGI - Tax Evasion in Mexico
- Airbtics - Airbnb Rules in Mexico City