Chile is not like the United States, where even tax experts and the IRS
have to close their eyes and guess at what the tax law means.
|The classic saying goes that there are only two things that are certain in life: death and taxes. We would add a third: tax increases. All property in Chile recently went through the process of revaluation, and very few properties in Chile managed to escape an increase in the tax for 2006. We will explain basics of the property tax system in Chile,
and what the new tax rate means for you when buying and owning property
and real estate in Chile. We will also tell you where you can check the tax
online for individual properties in Chile.
we promise we will try to make this as painless and brief as possible;
after all, we are talking about taxes here. Luckily, the Chilean tax
system is well organized and fair. Chile is not like the United
States, where even tax experts and the IRS have to close their eyes and
guess at what the tax law means. Regardless, we still would recommend
for the most part that you get advise from a good tax accounting expert
or a tax attorney to help you get started with any tax related issues
in Chile. We hope here to give you the basics, so that you can at least
know what it is you are asking for when talking to an expert.
Chilean Property Tax law 101: Real
Estate Tax (Contribuciones)
tax in Chile is payed over the governments' assessment of the value
of the property called "avalúo fiscal". The
government value of each property is determined by the Chilean Tax
Bureau, according to the rules as regulated in the Real Estate Tax
Law or "Ley Sobre Impuesto Territorial" The
tax you pay is also known as your "contribuciones"
in Chile. The tax rate is based on the official value of the property
as set by the Chilean Tax Bureau or Chilean IRS. The IRS in Chile is
also known as "SII" or "Servicio de Impuestos Internos".
us warn you, the official value of the property "avalúo
fiscal" DOES NOT represent the market value of the property.
It is set by the Chilean Tax Bureau (SII) taking into consideration
objective sources such as real estate prices for sales, size,
constructions, quality of the construction, year of the construction,
use of the property. It is often typically less than the market value
in some areas, and should not be used as any sort of measure of the
market value of property when attempting to purchase a property.
rules for valuating the tax differ depending on the use of the land.
The major categories are: urban and agricultural property. Urban
properties also have different categories based on if it has
commercial or residential status. This does not mean that the land is
necessarily zoned for say construction or is even being used in this
way. It is simply a tax use designation. The construction zoning
is regulated on county by county bases by the Municipalities.
Exemptions in Chile:
urban property, all houses or apartments with an official value below
CLP $14,655,788 DO NOT PAY Property Tax. This applies to buildings in
general, but does not include lots located in urban areas with no
construction on them. All
agricultural Land is exempt up to CLP $5,306,642.
Chilean Tax Rate for Property and Real Estate as of 2006
Properties: non agricultural - non commercial land:
from $14,655,788 to $52.342.100 CPL
than $52.342.100 CPL 1,2%
than $ 14.655.788
$ 14.655.788 and $ 52.342.100
than $ 52.342.100
property (non agricultural)
1,2% plus an additional 0,025% tax.
taxes in Chile may be paid in 4 payments with due dates in April,
June, September and November, or in one lump sum per year.
to find the property tax rate for a particular piece of property:
you are looking at buying a piece of real estate or own a piece of real estate in Chile and you
want to know the taxes. This is what you need to do. To check for the
taxes a property must pay in Chile, you can ask at the Chilean
Department of Treasury (Tesorería General de la
República) for a Debt Certificate. In order to get
this certificate you will have to have the Property Tax
Identification Number or "Rol de Avalúo" to
track the property.
if you want to know the official legal tax value of the property (avalúo
fiscal) you can get a certificate from the Chilean Tax Bureau or "Certificado de Avalúo Fiscal". This certificate is
issued by the Chilean Tax Bureau (SII) and registers the legal value
of the property, official address, name of the owner as registered by
IRS, and any tax exemptions the property might have. This certificate DOES
NOT however constitute a legal document to prove ownership of the
property. The only document that does this is the ownership
certificate or "Certificado de Dominio Vigente" issued by
the Registry or "Conservador de Bienes Raíces" where you registered your property title in Chile.
can get this certificate of legal value online at the Chilean Tax
Bureau website www.sii.cl
, if you have the Property Tax Identification Number or "Rol de
does the new 2006 property tax law in Chile mean for you?
January 2006 the Chilean Tax Bureau re-evaluated all urban property
in the country. As a result, all property taxes experienced a
considerable increased. Many properties in Chile had been undervalued
for years. Because of this, the new tax rate will be applied in a
phased manner to reduce the burden on land owners. All property in
Chile that experienced a tax increase will pay a 25% increase in the
first semester of 2006, and then a 10% increase each semester after
that until reaching the new rate.
also be aware that during this nation wide revaluation, many of the
new values were contested by land owners. Not all of the claims have
been ruled on yet by the Chilean IRS.
time you purchase a property the notary must inform the Chilean Tax
Bureau, and check that all taxes have been payed. Without the proper
tax certificate free of any debt you cannot purchase the property.
There is no exceptions to this rule, and you should check when
negotiating the purchase of a property that the owner is able to
clear the tax debt on the property before buying.
us repeat again, you should talk to an expert and get some help.
The tax law in Chile is in many ways simpler, but it is still law and
should be handled carefully. Mistakes can be costly, and properties
are auctioned off in Chile for failure to pay taxes everyday.
About the Author:
Zandra Valenzuela Delgado is a Chilean attorney and legal editor of All Southern Chile. She is a
graduate of the University of Chile Law School. She is
currently a professor of Public International Law at Catolica
University in Temuco, and Austral University in Valdivia. She is a member of Spencer Global International Consulting
If you have any questions or comments for Zandra, please feel free to