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Property ownership

The costs of owning a property in Chile differ depending on the type and size of the property, the location, and other individual circumstances. However, as a general guide, owners should bear in mind the following:

• Income tax – divided into ‘category taxes’, which are to be paid on certain types of incomes, and ‘global taxes’ to be paid on all incomes.
  
  Non-residents will have to pay first category tax on rental income from their property at a flat rate of 17%.
  
  The global tax that applies to non-residents is called additional tax, payable at a rate of 35%. First category tax and property tax can both be deducted from the total taxable income, so that the rate is 35% in total, payable on the net amount after deductions.
  
  Agricultural real estate is treated differently in terms of income tax. It is assumed that the income from the property will be around 7% of the property’s fiscal value. If the income is above 11%, then the property owner will be taxed on their total income.
  
  Chile has a law known as DFL-2 (‘Decreto con Fuerza de Ley 2’) which was created in the 1950s in order to boost the amount of affordable properties under a certain size (140 sq. m.) by making such properties exempt from income and global taxes. This now applies to all properties that fall below the 140 sq. m. size limit, including prestigious properties.
• Real estate tax – the rate is calculated using the property’s fiscal value on January 1st of each year according to the authorities, and the rate goes up each year on 1st July in line with the Consumer Price Index. Real estate tax is payable at 1.2% of the valuation, plus 0.025%, and payments are made in four instalments, due in April, June, September and November.
• Value added tax – goods and services are subject to VAT at a rate of 18%, which applies to rental of real estate, but not the sale of real estate.
• Capital gains tax - unless the vendor of a property regularly buys and sells property as part of a business, no capital gains tax will apply to its sale or transfer. If the sale is of an apartment within four years of purchase, or of other immovable property within one year of purchase, it is treated as taxable as a habitual transaction and is taxed as ordinary income (at the 17% flat rate of first category tax).
  

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Documents and Reports

	Chile property investment report (339Kb)
Documents and Reports

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