New Mexico Short-Term Rental Tax, Lodgers Tax, and Albuquerque STR Permits

Running a short-term rental in New Mexico is substantially more complex — and more expensive on the tax side — than running a standard long-term rental. The same property that generates zero Gross Receipts Tax as a 12-month residential rental becomes fully taxable as an STR. Add local lodgers' taxes on top, and the combined tax load can reach 8% to 9% of gross revenue before you factor in platform fees.

The regulatory picture in Albuquerque and Santa Fe is equally specific. Both cities have enacted permitting requirements that investors must navigate before the first guest checks in.

The Gross Receipts Tax Distinction

New Mexico taxes business activity through the Gross Receipts Tax (GRT), not a traditional sales tax. The rate — and whether it applies to your rental at all — depends entirely on how long your rentals are.

Long-term rentals (30+ days): Under NMSA § 7-9-53, receipts from the rental or lease of real property for at least one month are explicitly exempt from GRT. A standard residential landlord with 6-month or 12-month leases pays no GRT on rental income. This exemption is broad and reliable for traditional landlords.

Short-term rentals (under 30 days): The New Mexico Taxation and Revenue Department classifies rentals of fewer than 30 consecutive days not as real property leases but as licenses to use real property — functionally similar to hotels. The NMSA § 7-9-53 deduction does not apply. All STR receipts are subject to the full combined GRT rate.

The combined state, county, and local GRT rate varies by municipality:

• Albuquerque: approximately 7.875%
• Santa Fe: approximately 8.4375%
• State rates outside municipalities: 5.125% minimum

These rates are applied to gross rental revenue — not profit, not net income. If your Albuquerque STR generates $4,000/month in gross bookings, the GRT alone costs approximately $315/month.

New Mexico Lodgers Tax

Separate from the GRT, short-term rentals in New Mexico are subject to the municipal Lodgers Tax wherever the locality has enacted one. Most major New Mexico cities have done so.

The Lodgers Tax is typically collected and remitted to the municipality, not the state. In Albuquerque, the lodgers tax rate is 5%. In Santa Fe, it varies but runs similarly. This tax applies in addition to the GRT, not as a substitute.

STR operators who use Airbnb or VRBO platforms should verify which taxes the platform collects and remits on their behalf versus which they must remit independently. Platforms vary in what they handle for New Mexico operators; the operator retains the obligation to register with the Taxation and Revenue Department and remit any taxes not handled by the platform.

Albuquerque STR Permit Requirements

The City of Albuquerque requires all STR operators to hold a valid STR permit and a current business registration.

Permit fees:

• Initial permit: $120
• Annual renewal: $90

Occupancy limits: Maximum of two adults over age 12 per bedroom, plus two additional occupants. Gatherings cannot exceed twice the maximum overnight occupancy and may not exceed 20 persons under any circumstances.

Insurance requirement: Operators must maintain a minimum of $250,000 in general liability insurance. This is a hard requirement, not a best-practice recommendation. Standard homeowners policies do not cover commercial STR activity; investors need a dedicated short-term rental or landlord policy.

Operational requirements:

• A "Good Neighbor Agreement" must be visibly posted inside the unit
• A local 24/7 contact must be designated and capable of responding to complaints
• The contact's information must be provided to the city and posted in the unit

Albuquerque's STR regulations include nuisance controls enforced through the permit system. Repeated violations — noise complaints, occupancy violations, parking issues — can result in permit revocation.

Santa Fe STR Permit Cap

Santa Fe has implemented the most restrictive STR regulatory environment in New Mexico.

1,000-permit hard cap: The city limits active STR permits in residentially zoned areas to exactly 1,000. When the cap is reached, new applicants are placed on a waiting list with no timeline for availability. As of mid-2026, the market has periodically reached the cap, particularly for non-owner-occupied permits.

Proximity restrictions: A new residential STR cannot be located within 50 feet of an existing STR, measured from the property boundary.

Multi-unit restrictions: In buildings with four or more units, no more than 25% of units may operate as STRs, and no single building may hold more than 12 permits.

Annual fees: $290 permit fee plus $100 processing fee.

Owner-occupied vs. non-owner-occupied: Santa Fe distinguishes between hosted rentals (owner present) and non-hosted. Non-owner-occupied STR permits face tighter restrictions and are more likely to be affected by the cap.

For investors evaluating a Santa Fe STR acquisition: verify permit availability before signing a purchase agreement, not after. A property that cannot obtain a permit will generate long-term rental income only — which changes the underwriting entirely.

Tax Registration Requirements

Every STR operator in New Mexico must register with the New Mexico Taxation and Revenue Department and obtain a Combined Reporting System (CRS) identification number. GRT and any other applicable state taxes are reported and remitted through this account.

Failure to register and remit GRT is not a gray area. The Taxation and Revenue Department has increased enforcement on STR platforms, and back-tax liability accumulates with interest and penalties. Investors who discover they owe two years of unreported GRT face a significant retroactive bill.

The Long-Term vs. Short-Term Decision

The regulatory and tax differential between long-term and short-term rentals in New Mexico is large enough to be a genuine investment strategy decision, not just an administrative detail.

A long-term rental:

• Pays zero GRT on rental income
• Requires no STR permit
• Faces no occupancy density restrictions
• Operates under the UORRA with predictable rules
• Is unaffected by Santa Fe's permit cap

A short-term rental:

• Pays 7% to 9% GRT on every dollar of revenue
• Pays municipal lodgers tax on top
• Requires permits that may be unavailable or capped
• Faces more complex insurance requirements
• Can generate higher gross revenue per night during peak demand

Whether the STR premium justifies the tax load and regulatory friction depends entirely on the specific market, the property type, and the operator's capacity to manage compliance. In Santa Fe, many investors have concluded that the permit cap risk is too high and the compliance overhead too substantial — making long-term premium rentals more attractive despite lower gross revenue.

The New Mexico Investment Property Guide covers the full GRT framework, the STR permit requirements in both Albuquerque and Santa Fe, and the operational landlord rules under the UORRA that apply to long-term rentals.

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