Navigating Tulum’s Rental Tax Landscape: Furnished vs. Unfurnished Properties

Living in or considering Tulum as a digital nomad or expat? Understanding the nuances of rental tax laws can significantly impact your financial planning. This year, the tax landscape has shifted, presenting two distinct paths for foreign owners based on whether their property is furnished or unfurnished.

Furnished vs. Unfurnished Properties

Furnished properties in Tulum are subject to a 16% IVA (Value Added Tax), whereas unfurnished residential leases are exempt from this tax. This distinction can influence your decision on how to furnish your rental property, impacting both your upfront costs and ongoing expenses.

• Furnished properties: 16% IVA applied
• Unfurnished properties: No IVA, but other taxes may apply

Residency and Tax Implications

Residency status plays a crucial role in determining your tax obligations. Mexican tax residents can deduct up to 35% of their gross income, including property tax, without needing detailed receipts. Non-residents, on the other hand, must pay 25% of the gross rent, with no deductions allowed.

Despite common misconceptions, spending 183 days in Mexico does not automatically make you a tax resident. Instead, the law focuses on establishing a *casa habitacion* and the location of your *centro de intereses vitales*. For a typical Tulum owner, spending significant time in Denver but owning a rental property here could still make you a non-resident for tax purposes.

For those looking to minimize tax obligations, the 25% withholding tax on non-residents can seem daunting. However, there is a potential solution under the Mexico-United States tax treaty, though the current rules may have changed for 2026. Consulting with a Mexican accountant is highly recommended before making any decisions.