Quick Answer
Deductible expenses against rental income include: property management fees, cleaning and maintenance, HOA fees, property taxes (predial), fideicomiso annual fee, homeowners insurance, advertising and listing fees, depreciation (5% annually for residential), repairs and improvements, accounting fees, and utilities (if included in rental). Keep all receipts for tax documentation.
Detailed Answer
Mexico's tax code provides a comprehensive list of deductible expenses for rental property owners, making it possible to significantly reduce your taxable income. Allowable deductions include: property management fees, professional cleaning, maintenance and repairs, HOA fees, property taxes (predial), fideicomiso annual fee, homeowners insurance, advertising and listing platform fees, professional photography, accounting and legal fees, utilities paid by the owner, and — perhaps most significantly — 5% annual straight-line depreciation on the building value.
The depreciation deduction alone can shelter a substantial portion of rental income. On a $400,000 condo where 70% of value is attributed to the structure, the annual depreciation deduction is $14,000 — a non-cash expense that directly reduces taxable income. Combined with operating deductions, many owners show a minimal tax liability or even a paper loss on their Mexican returns, even while generating meaningful cash flow. All deductions require proper documentation through Mexican invoices (facturas) or receipts.
To claim these deductions, you must have an RFC and file regular ISR returns. A local accountant handles this for $100-$200 per month and ensures every eligible expense is captured. Our team connects every rental buyer with experienced bilingual accountants. For more on maximizing your after-tax returns, explore our FAQ hub or contact us for a referral.