Property Taxes in Chile

Nonresidents are taxed on their Chilean-sourced income. Married couples are taxed separately, but the husband reports the income derived from marital community properties.

Income Tax (Impuesto Adicional)

Nonresidents earning Chilean-sourced income are subject to a final withholding tax at the general rate of 35%. Other taxes paid by the nonresident, such as the First Category Tax (FCT) and property taxes, are credited against the taxpayer's Additional Tax (AT) liability. The 35% headline rate can look alarming to foreign property owners, but it’s important to understand how it actually applies. The 25% First Category Tax is credited against the 35% rate, leaving non-residents with an additional tax burden of only 10%. In other words, the total effective tax rate on rental income is 35%—not 60%. You pay 25% at the First Category level, plus an additional 10% after applying the credit.

For comparison purposes, annual gross rental income of $18,000, $72,000 and $144,000 is assumed to incur deductible expenses equal to 30% of gross rental income, leaving net taxable rental income of $12,600, $50,400 and $100,800, respectively.

Applying Chile's 35% Additional Tax rate for a nonresident individual results in estimated tax of $4,410, $17,640 and $35,280, respectively. This represents an effective tax burden of approximately 24.5% of gross rental income under the standardized 30% expense assumption.

Capital Gains

Capital gains on the sale or transfer of real estate are taxed as normal income for non-residents at 35%. For a non-resident, the relevant final tax is generally Chile’s Impuesto Adicional (Additional Tax) rather than the Global Complementary Tax. The SII specifically states that non-resident individuals selling qualifying Chilean real estate are subject to Additional Tax on the taxable gain, and that the optional 10% substitute tax is available only to individuals domiciled or resident in Chile. 

Value Added Tax (Impuesto al Valor Agregado)

Chile imposes 19% VAT on most goods and services. As a general rule, the sale of real estate is exempt from VAT, but the leasing of real estate is subject to VAT.

Corporate Taxation

Income Tax (Impuesto de Primera Categoria)

Income and capital gains earned by companies are subject to the flat corporate tax rate of 27%. Income-generating expenses are deductible when calculating taxable income.

Property Buying and Selling Costs/Taxes

Property Holding Tax

Real Estate Tax (Impuesto Territorial)

Real estate tax is levied on Chilean property annually, payable by the property owners. The tax base is the cadastral value of the property, and an exemption is granted for properties whose cadastral value does not exceed a certain limit. The tax rate is 1.4% for urban properties. For residential properties, the tax rate is 0.98% on part of the cadastral value not exceeding a certain limit and 1.143% on the remaining value. Surcharges may apply.