US Taxpayers with rental property in Mexico not only have to pay their Mexican taxes on that income, but also are required to report their rental income and expenses on their US Income Tax Returns.  Most of the rules that apply to Mexican properties are the same as those located in the USA.  The primary difference is that residential property located outside of the USA must be depreciated over 40 years, whereas the depreciation rate for properties located in the USA can be depreciated over 27.5 years.

You also can claim deductions for IVA taxes and local lodging taxes paid in Mexico and can claim a foreign tax credit for any income taxes paid in Mexico on the rental income which will offset any US tax you must pay on that net rental income.