Airbnb and Short-Term Rental Rules in Mexico City

Airbnb’s rise as a global disruptor in the hospitality sector is transforming cities worldwide and Mexico City is no exception. With over 23,000 active rentals as of September 2024, the platform has reshaped the local accommodation market, offering everything from trendy lofts in Santa Fe to charming historic homes in Coyoacán. Known for its rich culture and historical landmarks, the city has become a top destination for travelers and digital nomads alike.

While Airbnb boosted tourism and generated over $40 million for hosts in 2022, it also raised concerns about rising housing costs and gentrification. In response, Mexico City introduced regulations to balance the benefits of short-term rentals.

This guide outlines what hosts and property managers need to know about short-term rental laws in Mexico City in 2024 to run a legal and successful business.

Mexico City's Short-Term Rental Boom and New Regulations

Mexico City has experienced a sharp increase in short-term rentals in recent years, largely owing to a growing number of remote workers who are seeking affordable, vibrant cities with reliable internet connections. 

Despite the economic benefits this has brought to some areas, locals have also complained about it. Many argue that the influx of tourists and temporary residents has driven up housing prices, contributed to gentrification and disrupted the traditional sense of community.

Mexican city officials have introduced new regulations to address these issues by balancing the growth of short-term rentals with the need to protect local neighborhoods.

Key Regulations for Short-Term Rentals in Mexico City 

Host registration and platform registry

All local or foreign hosts must now register with the city's Registry of Technological Platforms. This registry lists properties available for short-term rental and is a key tool for the city to regulate the market.

During the registration process, hosts must:

• Identify the platform (e.g., Airbnb) through which they offer their property.

• Provide proof of civil liability insurance to cover potential damages or accidents.

This registration is valid for two years and must be renewed 30 days before expiration. Each listed property requires separate registration, receiving a unique number that must be displayed on all booking platforms.

Mexico City has limits on how many properties an individual can register. Starting with the fourth property, hosts must meet additional requirements, including obtaining a merchant establishment key and operating permit.

Penalties 

Failure to register your property can result in penalties, including removal from the registry and fines of up to MXN 21,000 ($1,085) for providing false information or failing to submit required occupancy reports. Hosts must also submit two reports annually to provide details about the occupancy of their property.

50% occupancy limit

One of the most debated rules is the 50% occupancy limit. Mexico City authorities have introduced this measure to reduce the impact of short-term rentals on the local housing market, particularly in popular neighborhoods like Roma, Condesaand Polanco. The rule mandates that hosts can only rent out their properties for 50% of the time—effectively limiting the number of nights they can list their property on platforms like Airbnb.

This measure has been met with opposition from some groups, particularly property owners and certain lawmakers, who argue that it infringes on property rights and could lead to the growth of an unregulated black market for rentals.

Limit on rental days per year

In addition to the occupancy limit, there is also a cap on the number of days a property can be rented out per year. Hosts are limited to 180 rental days per calendar year. This rule is particularly significant for digital nomads, who often seek longer-term accommodations. Hosts offering their properties for extended stays may find it difficult to comply with this restriction while meeting the demand of long-term travelers.

Short-Term Rental Licensing in Mexico City

Licensing is a mandatory step in operating a legal short-term rental in Mexico City. Once registered in the Host Registry, hosts automatically apply for an operating license, which is also valid for two years. The license applies to individual properties and each must display its registration number on listings.

There are limits on the number of properties a host can license, with additional requirements beginning at the fourth property. Failure to comply can result in fines and the removal of the property from platforms.

Required Documents for Short-Term Rentals in Mexico City

When registering short-term rental properties, hosts must provide specific documents, depending on whether they are an individual or a legal entity. 

For individuals, the required documents include:

• Official ID (passport or voter ID)

• Proof of address

• Proof of property ownership or legal right to rent

• Signed declaration of safety compliance

• Proof of social responsibility insurance

• Legal entities must provide additional documentation, such as articles of incorporation, tax ID (RFC) and business address. Each property registered requires its own set of documents and changes in property details must be updated within 30 days.

Gathering these documents is essential for a smooth registration process. Failure to provide accurate information can lead to fines or cancellation of the registration.

Zoning Laws and Impact on Neighborhoods

Another important aspect of the regulations is zoning. Not all areas of Mexico City are suitable for short-term rentals and hosts need to ensure their properties are in zones where these rentals are legally allowed.

Popular areas like Roma Norte, Condesaand Polanco have been ground zero for the effects of gentrification, with local residents increasingly priced out of their neighborhoods. The new regulations are designed to curb this trend by limiting the number of short-term rentals and ensuring that traditional accommodations, such as hotels, remain competitive.

Before listing your property, verify whether it is located in a zone that allows short-term rentals. This can be done by consulting with local authorities or using official city resources. Failure to comply with zoning laws can lead to fines and the removal of your listing.

Tax Obligations for Airbnb Hosts

Hosts are subject to several taxes when operating short-term rentals in Mexico City. The Lodging Services Tax (3%-5%) applies to the total listing price and hosts must register with the Ministry of Finance to pay this tax. Payments must be filed monthly by the 15th of the following month.

If you are renting out your property in Mexico City, you are required to pay taxes on any income generated from short-term rentals. Two primary taxes hosts need to be aware of:

1. Income tax: Any income you earn from your short-term rental must be reported to Mexico’s tax authority, the SAT (Servicio de Administración Tributaria). Platforms like Airbnb typically withhold a portion of your earnings to cover income tax, but it is essential to ensure that the correct amount is being paid.

2. Value-added tax (VAT): Mexico City imposes a 16% VAT on short-term rental income. Like income tax, this is usually withheld by the platform, but you should confirm that all taxes are being correctly handled to avoid any discrepancies.

Failure to meet tax obligations can result in penalties. Mexico City has ramped up its enforcement, collecting millions in taxes annually. Keeping detailed financial records and consulting with a local tax professional is recommended to ensure full compliance.

Safety and Health Standards

Mexico City's regulations also emphasize the importance of safety and health in short-term rental properties. To be compliant, hosts must ensure their properties meet certain minimum standards, including:

• Installing smoke detectors and carbon monoxide detectors.

• Having a fire extinguisher readily available on the property.

• Meeting all local building and health codes to ensure the property is safe for guests.

Regular inspections may be conducted to ensure compliance, so keeping your property in good condition and maintaining safety equipment is essential.

Challenges and Benefits of Adhering to the New Regulations

While the new regulations have faced opposition from some property owners, there are significant benefits to following the rules. Staying compliant can help you avoid fines, legal issues and the risk of having your listing removed from platforms like Airbnb.

Additionally, registered and compliant hosts often attract more bookings, as guests prefer staying in properties that meet local legal and safety standards. Complying with these regulations ensures you remain a trustworthy and reliable host in Mexico City's competitive short-term rental market.

FAQ

1. How do I register as an Airbnb host in Mexico City?

To legally operate a short-term rental in Mexico City, you must register each property in the city's Host Registry. The registration is valid for two years and needs to be renewed 30 days before expiration. You’ll need to submit documents including your ID, proof of address, property ownership, and civil liability insurance. If you manage more than three properties, you must obtain additional permits like the merchant establishment key and an operating permit.

2. What are the occupancy and rental day limits for Airbnb hosts in Mexico City?

Mexico City enforces a 50% occupancy limit, which means your property can only be rented for half of the year. Additionally, there’s a maximum of 180 rental days per year. These rules aim to curb the impact of short-term rentals on housing availability in popular areas such as Roma, Condesa, and Polanco.

3. What are the tax requirements for short-term rental hosts?

Hosts must comply with several taxes, including the Lodging Services Tax (3%-5%) and Value-Added Tax (16%). Income from short-term rentals must also be reported to SAT (Servicio de Administración Tributaria), Mexico’s tax authority. While platforms like Airbnb often withhold these taxes, hosts are responsible for ensuring correct payments and reporting.

4. What safety and health standards must be met for short-term rentals?

Hosts are required to meet specific safety standards, including installing smoke detectors, carbon monoxide detectors, and having a fire extinguisher available. The property must also comply with all local building and health codes. Regular inspections may occur to ensure compliance.

5. What are the penalties for failing to comply with short-term rental regulations?

Failure to comply with the regulations can result in fines of up to MXN $21,000 (USD $1,085) for violations such as providing false information or not registering. Properties that do not comply may also be removed from platforms like Airbnb, and continued violations can lead to the cancellation of the registration.