Tax on property income in Paraguay
Taxation Researcher | June 30, 2022
Effective Tax Rate on Rental Income |
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| Monthly Income | €1,500 | €6,000 | €12,000 |
| Tax Rate | 7.50% | 7.50% | 7.50% |
| Click here to see a worked example | |||
| Source: Global Property Guide |
Disclaimer | ||
INDIVIDUAL TAXATION
Nonresidents are taxed on their income sourced from Paraguay. Married couples are taxed separately. For couples married under the marital community property regime, each spouse must declare 50% of the income.
INCOME TAX
Taxable income is gross income less income-generating expenses, personal and family expenses, and investments.
Paraguayan-source taxable income occasionally derived by nonresident individuals is subject to withholding taxes.
RENTAL INCOME
Rental income earned by nonresident individuals from Paraguayan real property is subject to 15% withholding tax levied on 50% of the gross rent (i.e. 7.50% withholding tax on the gross income).
VALUE ADDED TAX (VAT)
Leasing real estate in Paraguay is liable to VAT at the reduced rate of 5%.
CAPITAL GAINS
Occasional capital gains realized by nonresidents from selling Paraguayan property are taxed at the standard withholding tax rate of 15%. Taxable capital gains are generally 50% of the sales price (i.e. effective capital gains tax of 7.50% on the gross capital gains).
Taxpayers may calculate the taxable capital gains by deducting acquisition costs from the sales price, if there is a written agreement registered in a public registry.
PROPERTY TAX
Real Estate Tax impuesto inmobiliario)
Real estate tax is levied annually at 1% of the cadastral value of property, as assessed by the national cadastre service. The cadastral value is gradually adjusted to the market value over a period of five years subject to certain limitations.This tax rate is reduced to 0.5% for rural properties smaller than five hectares used for small scale farming. In the case of rural properties, improvements or buildings are not computed in the tax base.