Taxes for property investors in Chile: Renting and Reselling

This article explains the additional costs facing those who plan to use property as an investment for rental or resale rather than as their own home.

What taxes arise when renting out property

Rental income from property in Chile must generally be included in the annual tax return. If the owner is an individual with tax domicile or residence in Chile, the rental income is included in their total annual income and is subject to Impuesto Global Complementario (a progressive personal income tax for individuals resident in Chile). The calculation takes into account not only the rent received but also the owner’s other taxable income for the relevant year. 

An exception applies to DFL‑2 housing. An individual is exempt from income tax on rental income from the two DFL‑2 properties acquired earliest.

The Impuesto Global Complementario scale established for tax year 2026 applies to income received in 2025:

• Annual income of up to CLP 11,265,804 (approximately $12,000) – no tax is payable;
• from CLP 11,265,805 to CLP 25,035,120 (approximately $12,000–27,000) – 4%;
• from CLP 25,035,121 to CLP 41,725,200 (approximately $27,000–45,000) – 8%;
• from CLP 41,725,201 to CLP 58,415,280 (approximately $45,000–63,000) – 13.5%;
• from CLP 58,415,281 to CLP 75,105,360 (approximately $63,000–81,000) – 23%;
• from CLP 75,105,361 to CLP 100,140,480 (approximately $81,000–108,000) – 30.4%;
• from CLP 100,140,481 to CLP 258,696,240 (approximately $108,000–280,000) – 35%;
• above CLP 258,696,240 (approximately $280,000) – 40%.

The stated rates are marginal: the relevant rate does not apply to the owner’s entire income. The tax is calculated progressively according to the established brackets.

VAT must be considered separately. The ordinary rental of unfurnished residential premises is generally exempt from IVA (value added tax). If the property is rented furnished, including on a daily or short-term basis, the rent is subject to IVA at 19%. To calculate the taxable base, an amount corresponding to 11% of the annual cadastral value – avalúo fiscal – is deducted from the rent in proportion to the actual rental period. Therefore, the DFL‑2 income tax exemption for rental income does not always mean exemption from VAT.

If the property is owned by a legal entity, the rental income is included in the company’s taxable result. Under the general tax regime, Impuesto de Primera Categoría (First Category Tax on income from capital and business activities) applies at a rate of 27%, while companies qualifying for the Pro Pyme General regime (the general tax regime for small and medium-sized enterprises) are subject to a temporary rate of 12.5% in 2025–2027.

For owners who are not tax residents of Chile and do not have a permanent place of residence there, income from Chilean property remains Chilean-source income and is generally subject to Impuesto de Primera Categoría (First Category Tax on income from capital and business activities) and Impuesto Adicional (tax on Chilean-source income for non-residents). Its calculation depends on the owner’s status, the ownership structure, and the existence of a double taxation agreement.

What taxes arise when selling property

When property is sold in Chile, tax is charged not on the property’s full price but on the profit earned – mayor valor. In general, it is calculated as the sale price minus the indexed acquisition cost and documented capital improvements to the property.

Individuals are entitled to a lifetime tax-free allowance of UF 8,000.

UF (Unidad de Fomento) is an inflation-linked unit of account whose value is adjusted daily. In Chile, it is used to quote property prices, loans, and tax thresholds, while the actual amounts are calculated in pesos using the prevailing UF value. We explained how UF works in more detail here.

The limit applies to the total profit from all relevant property sales completed by the taxpayer during their lifetime. If part of the allowance has already been used, only the amount within the remaining limit is exempt on the next sale.

However, the UF 8,000 exemption does not apply automatically. The main conditions are as follows:

• the seller must be an individual;
• the property must be located in Chile;
• the property must have been acquired on or after January 1, 2004;
• the property must not be held as an asset of the seller’s sole proprietorship;
• the buyer and seller must not be related through family or corporate ties;
• a residential property must be held for at least one year before it is sold;
• a holding period of more than four years applies to the sale of subdivided land or individual apartments within a building.

DFL‑2 status does not by itself provide a separate exemption for gains on sale. The general rules governing the UF 8,000 limit and holding periods apply.

If the gain is covered by the remaining UF 8,000 allowance and all conditions are satisfied, no income tax is due. If the gain exceeds the limit, the owner may choose between two ways of taxing the excess:

• include the excess in the Impuesto Global Complementario tax base. Subject to the applicable conditions, the tax may be recalculated using the average rates for the property’s holding period, up to a maximum of ten years;
• pay Impuesto Único y Sustitutivo (a single substitute tax) at a fixed rate of 10%. This tax applies to the taxable gain actually realized.

Conclusion

Property taxation in Chile depends on the property’s characteristics and use, whether it is owned by an individual or a legal entity, and whether the owner is a Chilean tax resident.

The price of a new home may include IVA (value added tax), while mortgage financing may be subject to Impuesto de Timbres y Estampillas (stamp tax on credit documents). Once ownership is registered, the owner may be liable for Impuesto Territorial (annual property tax), which is calculated using the property’s cadastral value rather than its market value.

Rental income and gains on sale are taxed differently depending on whether the owner is an individual, a company, or a non-resident. Individuals may qualify for DFL‑2 property benefits, reduced annual property tax for elderly owners, and a lifetime exemption on gains of up to UF 8,000, provided all applicable conditions are met. These benefits generally do not apply to legal entities, whose income forms part of the company’s taxable income.

As UF and UTA values, cadastral thresholds, and peso amounts are regularly adjusted, the latest figures should be checked on the SII website before buying, renting out, or selling a property. Where necessary, advice should also be obtained from a Chilean tax specialist.