Authored by the expert who managed and guided the team behind the Mexico Real Estate Pack
Yes, the analysis of Mexico City's property market is included in our pack
Setting up a short-term rental in Mexico City requires navigating new regulations introduced in 2024 that limit rentals to 180 days per year and mandate host registration.
As of June 2025, the Mexico City short-term rental market operates under strict licensing requirements, with all hosts required to register in the official Host Registry and obtain unique registration numbers for each property. Foreign investors can participate but must use a fideicomiso (bank trust) or Mexican company for properties within restricted zones.
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.
Setting up a short-term rental business in Mexico City is moderately complex due to new 2024 regulations requiring host registration, property licensing, and compliance with occupancy caps of 180 days per year.
Foreign investors can legally operate short-term rentals but face additional requirements including using a fideicomiso for property ownership and maintaining civil liability insurance, with total operational costs ranging from 15-30% of rental income.
| Requirement | Details | Timeline/Cost |
|---|---|---|
| Host Registration | Mandatory registration in Mexico City Host Registry | Valid for 2 years, renewal required 30 days before expiry |
| Property Registration | Each property needs unique registration number | Must display on all listings |
| Occupancy Limit | Maximum 180 days per year (50%) | Strictly enforced as of 2025 |
| Insurance | Civil liability insurance mandatory | Varies by property value |
| Taxes | Lodging Tax (3-5%), VAT (16%), Income Tax | Monthly filing required |
| Property Management | Optional but recommended for remote owners | 10-20% of rental income |
| Safety Requirements | Smoke/CO detectors, fire extinguishers | Initial setup cost varies |
How difficult is it to start a short-term rental business in Mexico City in 2025?
Setting up a short-term rental business in Mexico City has become moderately complex due to strict regulations introduced in 2024.
The process requires careful compliance with host registration requirements, property licensing, and operational standards that can take 30-60 days to complete. Foreign investors face additional hurdles including the need for a fideicomiso (bank trust) or Mexican company to hold property titles within restricted zones.
The Mexico City government now limits short-term rentals to 180 days per year (50% occupancy cap) and requires biannual reporting on property usage. Non-compliance with these regulations can result in significant fines ranging from MXN 50,000 to MXN 300,000 or removal from rental platforms like Airbnb.
Despite these challenges, the market remains profitable for well-prepared investors who follow all legal requirements and maintain proper documentation.
What's the complete process to become a short-term rental host?
Starting a short-term rental in Mexico City requires following a 10-step process that typically takes 60-90 days from property acquisition to first booking.
First, you must research permitted zones for short-term rentals as not all Mexico City neighborhoods allow them - areas like Roma Norte and Condesa have specific restrictions. Next, acquire a suitable property ensuring it's not on ejido (communal) land and meets foreign ownership requirements.
The critical regulatory steps include registering yourself in the Mexico City Host Registry (valid for 2 years), registering each property separately to receive unique registration numbers, and obtaining required licenses integrated with the host registration process. Properties must meet safety standards including smoke detectors, carbon monoxide detectors, and fire extinguishers.
Finally, you'll need to register for taxes with the Mexico City Ministry of Finance, obtain an RFC (tax ID), and set up systems for monthly tax filing including Lodging Services Tax (3-5%), VAT (16%), and income tax.
It's something we develop in our Mexico property pack.
Which documents and licenses are mandatory for legal operation?
Operating a legal short-term rental in Mexico City requires specific documentation that varies based on whether you're an individual or legal entity.
| Document Type | For Individuals | For Legal Entities |
|---|---|---|
| Identification | Passport or voter ID (INE) | Articles of incorporation |
| Address Proof | Utility bill or bank statement | Proof of business address |
| Property Rights | Title deed or rental agreement | Property ownership documents |
| Tax Registration | RFC (if applicable) | RFC (mandatory) |
| Safety Compliance | Signed declaration | Declaration of compliance |
| Insurance | Civil liability policy | Commercial liability policy |
| Special Permits | Not required for 1-3 properties | Merchant key for 4+ properties |
Can I manage a short-term rental without being in Mexico City?
You can successfully operate a short-term rental in Mexico City without being physically present, but it requires hiring reliable local support.
Most foreign investors work with property management companies that charge 10-20% of rental income to handle guest check-ins, cleaning, maintenance, and emergency responses. These managers also ensure compliance with local regulations including submitting required biannual occupancy reports.
Remote management technology like smart locks, security cameras, and digital guest communication systems can reduce dependency on local staff. However, Mexico City regulations require maintaining a local representative who can respond to city authorities or guest emergencies within 24 hours.
The biggest risk of remote operation is finding trustworthy property managers - thoroughly vet candidates, check references, and start with short-term contracts before committing to long-term arrangements.
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Can foreigners legally purchase and rent out property in Mexico?
Foreigners can legally buy and operate short-term rentals in Mexico City, but must follow specific ownership structures depending on the property location.
Outside restricted zones (more than 100km from borders and 50km from coastlines), foreigners can own property directly in their name with full rights equivalent to Mexican citizens. However, Mexico City's proximity to coastlines means many areas fall within restricted zones.
In restricted zones, foreigners must use either a fideicomiso (bank trust) costing approximately USD 500-1,500 annually in fees, or establish a Mexican corporation which allows direct ownership but requires ongoing accounting and tax compliance. Both structures provide full rights to rent, sell, or inherit the property.
Once property ownership is established, foreigners have identical rights to operate short-term rentals as Mexican citizens, provided they comply with all registration, licensing, and tax requirements.
What are the current regulations for short-term rentals in Mexico City?
Mexico City's short-term rental regulations underwent major reforms in 2024, creating one of Latin America's strictest regulatory frameworks.
The cornerstone regulation limits short-term rentals to 180 days per year (50% occupancy cap), with strict monitoring through platform reporting. All hosts must register in the official Host Registry, renewing every two years, and each property requires a unique registration number displayed on all listings.
Properties must meet specific safety standards including smoke detectors, carbon monoxide detectors, fire extinguishers, and compliance with local building codes. Civil liability insurance is mandatory for all rentals, with coverage amounts varying based on property value and guest capacity.
Zoning restrictions prohibit short-term rentals in certain neighborhoods and all social housing is excluded from short-term rental use. Hosts operating four or more properties face additional requirements including merchant establishment keys and commercial operating permits.
How have regulations evolved and what changes might come?
Mexico City's short-term rental landscape transformed dramatically with the 2024 reforms aimed at addressing housing shortages and gentrification concerns.
- Pre-2024: Minimal regulation with voluntary registration and no occupancy limits
- January 2024: Introduction of mandatory Host Registry and 180-day annual cap
- March 2024: Implementation of safety standards and insurance requirements
- September 2024: Enhanced enforcement with platform cooperation agreements
- January 2025: Full compliance required with penalties for violations
Future regulatory changes being discussed include further occupancy reductions to 120 days annually in high-impact neighborhoods, increased taxes on short-term rentals to fund affordable housing, and potential complete bans in certain historic zones.
City officials continue monitoring the impact on housing availability and may introduce additional restrictions if the current measures don't adequately address local housing concerns.
What mistakes do foreigners commonly make in this business?
Foreign investors in Mexico City's short-term rental market frequently make costly errors that can jeopardize their investments.
The most expensive mistake is purchasing ejido land or properties without clear titles, which cannot be legally owned by private individuals and results in total loss of investment. Many foreigners also buy properties sight unseen based on online listings, leading to discoveries of structural problems, unfavorable locations, or HOA restrictions prohibiting short-term rentals.
Compliance failures represent another major pitfall - operating without proper registration results in fines from MXN 50,000 to MXN 300,000 and platform delisting. Foreigners often underestimate operational complexity, expecting passive income but discovering that successful rentals require active management, regular maintenance, and quick response to guest issues.
The "gringo price" phenomenon means foreigners typically pay 10-30% more than locals for properties and services unless they work with trusted, certified professionals who advocate for fair pricing.
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.
How reliable are real estate agents and property managers in Mexico City?
The reliability of real estate professionals in Mexico City varies significantly, with certified agents generally providing better service than unlicensed operators.
AMPI (Mexican Association of Realtors) certified agents follow professional standards and ethics codes, typically earning 5-6% commission paid by sellers. However, many unlicensed agents operate in the market, sometimes inflating prices for foreign buyers or misrepresenting property conditions.
Property management companies range from highly professional firms managing hundreds of units to individual operators with questionable practices. Reputable managers charge 10-20% of rental income and provide detailed monthly statements, 24/7 guest support, and proactive maintenance.
To ensure reliability, request references from other foreign owners, verify business licenses and tax compliance, insist on written contracts in both English and Spanish, and start with short trial periods before committing to long-term agreements.
It's something we develop in our Mexico property pack.
What's the complete breakdown of taxes, permits, and operational costs?
Operating a short-term rental in Mexico City involves multiple tax obligations and ongoing costs that significantly impact profitability.
| Cost Category | Amount/Rate | Payment Frequency |
|---|---|---|
| Lodging Services Tax | 3-5% of gross rental income | Monthly |
| Value Added Tax (VAT) | 16% (if applicable) | Monthly |
| Income Tax | Variable based on total income | Monthly advance, annual reconciliation |
| Property Tax (Predial) | 0.1-0.3% of cadastral value | Annual (discount for early payment) |
| Host Registry Fee | MXN 500-2,000 | Every 2 years |
| Civil Liability Insurance | MXN 3,000-10,000 | Annual |
| HOA/Maintenance Fees | MXN 1,500-10,000 | Monthly |
| Utilities (average 2BR) | MXN 1,500-3,000 | Monthly |
| Property Management | 10-20% of rental income | Monthly |
| Cleaning Services | MXN 300-600 per turnover | Per guest |
Should I buy property in cash, and what are the implications?
Cash purchases dominate Mexico City's real estate market, with approximately 85% of transactions completed without financing.
The advantages of cash purchases include faster closing times (15-30 days versus 60-90 with financing), stronger negotiating positions often securing 5-10% discounts, and avoiding Mexico's complex mortgage requirements for foreigners. Cash buyers also eliminate interest payments that would typically add 9-12% annually to purchase costs.
However, cash purchases tie up significant capital that could generate returns elsewhere, reduce liquidity for emergencies or other investments, and increase fraud risk without bank due diligence. Cash buyers must independently verify property titles, tax compliance, and legal status.
To mitigate risks, always use a reputable notario público for transactions, obtain title insurance from international providers, and never transfer funds without proper documentation and receipts.
Is renovation typically necessary, and what are the costs involved?
Most Mexico City properties require renovation to meet short-term rental standards, with costs varying dramatically based on property age and condition.
Older properties in popular neighborhoods like Roma or Condesa often need comprehensive updates including electrical rewiring (MXN 50,000-100,000), plumbing replacement (MXN 40,000-80,000), and structural repairs. Complete renovations can cost MXN 5,000-10,000 per square meter, sometimes exceeding the property's purchase price.
Even newer properties typically require furnishing and decoration costing MXN 150,000-300,000 for a two-bedroom unit to meet guest expectations. Essential upgrades include high-speed internet installation, air conditioning in bedrooms, modern kitchen appliances, and quality mattresses and linens.
Common unexpected costs include addressing humidity issues (MXN 20,000-50,000), pest control treatments (MXN 5,000-15,000), and security upgrades like reinforced doors and windows (MXN 30,000-60,000). Always budget an additional 20-30% contingency for unforeseen issues discovered during renovation.
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.
Setting up a short-term rental in Mexico City offers significant profit potential but requires careful navigation of complex regulations introduced in 2024. Success depends on thorough preparation, full legal compliance, and realistic expectations about operational demands.
Foreign investors can participate in this market but must understand the additional requirements including property ownership structures, local representation needs, and higher operational costs compared to traditional rentals. With proper planning and professional support, short-term rentals in Mexico City can generate attractive returns while contributing to the vibrant tourism economy.
Sources
- Hostaway - Airbnb Short-Term Rental Mexico City Guide
- Own Property Abroad - Start Airbnb in Mexico
- Airbtics - Airbnb Rules in Mexico City
- Garrigues - Mexico Short-Term Rental Regulation Overview
- Global Property Guide - Mexico Buying Guide
- Short Term Rentalz - Mexico City Rental Limits
- Pacific Prime - Mexico City Vacation Rental Regulations
- Wise - Renting in Mexico City Guide
- Caribe Luxury Homes - Short-Term Rental Buying Guide
- BNB Calc - Mexico City Short-Term Rental Guide