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Last updated on 11/09/2025
If you own property in Chile — or are thinking about it — you need to understand the taxes that apply. This article covers the main ones: rental income tax, capital gains tax, VAT on real estate, and property tax. The rules differ depending on whether you are a tax resident or not, and the difference can be significant.
Rental Income Tax
Rental income from your properties in Chile is subject to income tax and must be declared in your annual tax return (Form 22, filed in April). This income is added to your other income and taxed according to the Chilean progressive income tax scale.
Possible Deductions
You can deduct from your rental income:
- Maintenance and repair costs
- Gastos comunes (condominium fees)
- Property insurance premiums
- Annual depreciation (3% of property value per year)
- Rental management fees
- Mortgage interest
Non-Residents
If you are not a Chilean tax resident, your rental income is subject to a flat 35% tax on the gross amount, with no possibility of deductions. This makes a meaningful difference in your effective tax rate. If you plan to rent out property while living abroad, factor this into your investment calculations.
Capital Gains Tax
Since the 2017 tax reform, the sale of real estate is subject to capital gains tax. This applies to all types of real estate — land, houses, apartments, commercial premises.
General Rules
- Properties purchased before 2004: exempt from capital gains tax
- Properties purchased after 2004: capital gains taxed at 10% for tax residents
- Capital gain calculation: Sale price minus purchase price adjusted for inflation (IPC)
Exemption for Individuals
Individuals benefit from a cumulative lifetime exemption of 8,000 UF (approximately USD 280,000 at current UF values). This exemption works as a credit that decreases with each sale generating a capital gain.
Example:
- 1st sale: Capital gain of 5,000 UF → No tax. Remaining credit: 3,000 UF
- 2nd sale: Capital gain of 4,500 UF → Tax on 1,500 UF (4,500 - 3,000) = 150 UF tax
Special Cases
Co-ownership: the capital gain is distributed proportionally to each co-owner's share. Each uses their own exemption credit.
Inheritance: the inherited property is revalued at market value at the time of succession. This new value is the basis for calculating future capital gains.
Tax residency matters: residents benefit from the 8,000 UF exemption. Non-residents pay 35% on the total capital gain, with no exemption. If you are leaving Chile and plan to sell, the timing of your departure relative to the sale can make a difference of tens of thousands of dollars. Consult a tax accountant before deciding.
Companies do not benefit from the 8,000 UF exemption. They pay corporate tax (27%) on real estate capital gains.
Value Added Tax (IVA/VAT)
Chilean VAT (19%) applies in several real estate situations:
1. Furnished Rental
Any rental considered "furnished" is subject to 19% VAT. You must:
- Register with SII as a VAT taxpayer
- Issue electronic invoices
- Declare and pay VAT monthly
An Airbnb rental with services (cleaning, linens) is generally considered furnished rental.
2. Sale of New Properties
Buying new real estate directly from a developer is subject to 19% VAT on top of the sale price. This is a significant cost when purchasing new construction.
3. "Habitual" Sales
A sale is considered habitual (and therefore subject to VAT) if:
- You resell within 12 months of purchase
- You resell within 12 months of delivery (for off-plan purchases)
- You have regular buying-selling activity
How to avoid VAT on resale: rent the property for at least 12 complete months after acquisition before selling.
Property Tax (Contribuciones de Bienes Raíces)
This is the annual property tax, payable in 4 quarterly installments (April, June, September, November).
Calculation
The calculation base is the avalúo fiscal (tax assessment), which generally represents 50-70% of market value.
Progressive scale for residential use (2024-2025):
- Exemption: up to CLP 26,840,000 of assessed value
- Bracket 1: 1.0% from CLP 26,840,000 to CLP 95,953,200
- Bracket 2: 1.2% above CLP 95,953,200
Example
For a property with a tax assessment of CLP 120,000,000:
- Exempt bracket: CLP 26,840,000 → CLP 0
- 1% bracket: (95,953,200 - 26,840,000) × 1% = CLP 691,132
- 1.2% bracket: (120,000,000 - 95,953,200) × 1.2% = CLP 288,564
- Annual total: CLP 979,696 (4 payments of CLP 244,924)
Amounts are adjusted semi-annually according to the IPC (Consumer Price Index). Updated values are available on the SII website.
Tax Assessment
The avalúo fiscal is determined by land area, built area, construction characteristics, and location. Not declaring extensions or additions to reduce the assessment constitutes an infraction punishable by fines.
Stamp and Seal Tax (Real Estate Credit)
Although not strictly a real estate tax, the impuesto de timbres y estampillas applies to all credits in Chile, including real estate loans.
Calculation
- Rate: 0.066% of the credit amount per month
- Cap: maximum 0.8% of total credit amount
- Payment: in one payment at credit signature
Example
For a real estate loan of CLP 100,000,000 over 20 years (240 months):
- Calculation: 100,000,000 × 0.066% × 240 = CLP 15,840,000
- But capped at 0.8%: 100,000,000 × 0.8% = CLP 800,000
- Tax to pay: CLP 800,000
Declaration Obligations and Penalties
What You Must Declare
- Rental income: annual declaration in April (Operación Renta)
- Capital gains: declaration within 3 months of sale
- VAT: monthly declaration if applicable
- Property taxes: automatic — no declaration required
Penalties
In case of non-compliance:
- Fines: 10% to 30% of tax due, plus late interest
- Serious cases: up to 200% fine and possible criminal prosecution
- Undeclared VAT: possible administrative closure
Practical Advice
- Keep rigorous accounting of income and expenses
- Keep all receipts for at least 6 years
- Consult a specialized accountant to optimize your taxation
- Systematically declare furnished rentals to the SII
Rental Income Tax
Rental income must be declared in your annual tax return (Form 22, filed in April). It is added to your other income and taxed according to the progressive income tax scale.
Yes — maintenance, repairs, gastos comunes, insurance, depreciation (3% per year), rental management fees, and mortgage interest. Keep all receipts for at least 6 years.
Furnished rental is subject to 19% VAT. You must register with SII as a VAT taxpayer and issue electronic invoices. Unfurnished rental is not subject to VAT but the income is still taxable under income tax.
Capital Gains Tax
When selling property purchased after 2004. The rate is 10% on capital gains for tax residents, with a cumulative lifetime exemption of 8,000 UF (approximately USD 280,000). Properties purchased before 2004 are exempt.
Sale price minus purchase price adjusted for inflation (IPC). If the gain is within your remaining 8,000 UF lifetime credit, no tax is due. Gains exceeding the credit are taxed at 10%.
Only if you are a Chilean tax resident at the time of sale. Non-residents pay 35% on the total capital gain with no exemption — a significant difference.
The inherited property is revalued at its market value at the time of succession. This new value serves as the basis for calculating future capital gains.
Real Estate VAT (IVA)
Three situations: 1) furnished rental, 2) purchase of new properties from developers, 3) resale within 12 months of purchase or delivery (considered 'habitual' selling).
Rent the property for at least 12 complete months after acquisition before selling. This avoids being classified as a habitual seller.
If the rental includes services (cleaning, linens), it is generally considered furnished and subject to VAT. A bare Airbnb rental without services may be classified differently depending on circumstances.
Property Tax (Contribuciones)
Based on the avalúo fiscal (tax assessment), which is typically 50-70% of market value. 2025 rates: exemption up to CLP 26,840,000, then 1% up to CLP 95,953,200, then 1.2% above. Payable in 4 quarterly installments (April, June, September, November).
Yes. File a complaint with the SII with supporting evidence (independent appraisals, comparable sales). The avalúo fiscal is set by the SII based on land area, built area, construction characteristics, and location.
Tax Optimization
Companies lose the 8,000 UF capital gains exemption and pay 27% corporate tax. A company structure can be advantageous for large portfolios or estate planning, but for a single property, buying in your own name is usually better.
Flat 35% tax on gross rental income (no deductions), 35% on total capital gains (no exemption), and an obligation to appoint a tax representative in Chile. If you plan to sell, consider timing the sale while you are still a tax resident.
Fines of 10% to 30% of tax due, plus interest. In serious cases, up to 200% fine and possible criminal prosecution. Undeclared VAT can lead to administrative closure of your tax registration.
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