Locals Renting Their Homes Short Term

Like with Airbnb and similar

At the beginning of this year, an agreement was signed to legalize the use of Airbnb in Baja Sur, announced the Director of Public Affairs of Airbnb in Mexico. Rocio Paniagua said there are 2,400 active hosts in Baja California Sur.He said the machinery was in place so eventually, they can collect and send tax money on behalf of the hosts. dear.

Airbnb opened its first offices in Mexico City earlier this year and, in a move that surprised many, sought to ward off the criticism that has plagued it in other parts of the world byagreeing with the local government to collect and remit a 3 percent occupancy tax.

This is seen at a pacifier to the hotels, as the levy equals what hotels pay in ”bed tax” to the city. In a sort of test case, the company tried to ward off the multiple legal problems it has faced in cities such as New York and Barcelona by giving the authorities, and hotel associations more of what they crave: regulation, and of course money. While Alberto Albarran, theCity Hotel Association’s director, agreed that the measure is “positive,” he said it doesn’t go far enough. “We still have to pay licenses, permits, social security, income taxes, have fire alarms, seismic alarms and payroll, just to name a few,” he said in an interview at his office. “There are still many challenges.” Blecharczyk’s response? “There will always be a powerful lobbying group wanting more.”

“We have some pretty big numbers in Mexico,” said Nathan Blecharczyk, Airbnb’s co-founder and chief strategy officer, in an interview in San Francisco. “Home-sharing is very popular there, and the local government is excited about the benefits we can bring.” Well, that last part might have been a bit over the top. Our city government has not always been excited about it. But, the hotel ass. is mostly behind the unhappiness and now they seem to have been bought off.

Airbnb and their hosts profited off more than 1.5 million visits to the country via its platform from June 2016 through May 2017. Travel within Mexico rose in the first couple of months this year as a weaker peso made it more affordable for foreigners to come enjoy the famous beaches, while discouraging locals from traveling abroad.

Airbnb is valued at $31 billion,the market caps ofHilton Worldwide Holdings Inc.andAccorHotelsEurope. The home-sharing website takes a commission of 6 percent to 12 percent from guest’s fees, in addition to a small fee it charges hosts. The company has no expenses related to maintaining and cleaning properties, so it’s a pretty sweet business plan.

The 3 percent tax in Mexico City is the first of its kind in Latin America, and the company is studying whether it can replicate it in other cities and countries. “We want to strike the right balance between the governments and our users,” Blecharczyk said. “If there are concerns, we can work together.”

Mexico could use the extra revenue. In 2015, the country ranked last out of all OECD members in its tax-to-GDP ratio, which at 17.4 percent is half of the organization’s average, according to the latest data available.

Already, Airbnb has become a cottage industry in Mexico, spawning more entrepreneurs. Some offer advice and set up profiles for would-be Airbnb landlords for 2,000 pesos (about $110).

Agustin Samano, a 34-year-old mechanical engineer who has hosted Airbnb guests, came up with AlohaBNB, a platform to help hosts manage their rentals. “Changing sheets, welcoming guests, and cleaning everything takes quite some time,” he said in a phone interview from Zapopan, Jalisco, where the company is based. AlohaBNB takes a 10 percent or 15 percent cut of the rent, depending on which package the host chooses. Here in Cabo property managers who do that want 20% to 30%.

Airbnb now boasts 73,000 Mexico listings. The most popular state is Quintana Roo — home to Cancun, Playa del Carmen and Tulum. It’s followed by Mexico City, Jalisco and then our own Baja California Sur.

For years, the company has faced pressure from governments saying its home-sharing platform squelches the housing supply — which is already tight in many popular cities — by providing landlords with incentives to turn apartments into illegal hotels. Until recently, the startup had taken a combative approach to some city regulators, pushing back on the idea that hosts should have to register their apartments with city officials.

In May, Airbnb settled long-standing disputes with the city governments of New York and San Francisco, two of the company’s most lucrative markets. In San Francisco, Airbnb agreed to require that hosts register their rental properties with the city. In New York, the company agreed to permit its hosts to rent only one unit at a time, the home where they live.

That’s what makes the 3 percent Mexico City tax stand out. The company sidestepped an issue it likely knew it was going to face and set off on the right foot.

“At least there’s now the perception that those involved in renting their properties through Airbnb are paying the same as hotels,” said Alberto Miranda, a partner at Deloitte Mexico who specializes in tax and legal services. The government is now tapping into a new source of income, so it’s a win-win situation, he said.

There could still be some tax-related hiccups, said Bernardo Reyes-Retana, a lawyer at Gonzalez Calvillo Abogados. For instance, there’s really no way for the government to know how much each host is earning from renting out rooms or apartments.

The issue isn’t Airbnb’s responsibility — the company doesn’t get into any levies the hosts should pay regarding the extra income, and instead has a disclaimer reminding hosts that they’re responsible for any taxes due, recommending they check their local rules and regulations.

It is so lucrative for home owners and has seen such a quick growth that Mexican legislation has fallen short. For now.