Chile Forum

Hi all,

Would appreciate some assistance in my "buy to let" calculations. Especially the taxes I am not sure about. I have looked at http://www.globalpropertyguide.com/Latin-America/Chile/Taxes-and-Costs but, of course, have to doublecheck with the experts in this forum. Seems like Chile has the second highest rental income tax in the world (after Switzerland)!!

Being non-chilean with permanent residency (and zero income inside Chile) I wish to understand what taxes I need to pay on the rental income I receive? What deductions can I possibly make? Do people normally pay this kind of tax ? Any other "gotcha's" I should know about?

Thanks.
/Magnus

As long as I know there are no specific tax on rental a property

Only for furnished properties rented in summer the person who rent is supposedly oblied to pay 19% IVA (Decreto Ley N° 825 de 1974) and the landlord has to collect the IVA, issue a boleta and declare/pay the tax. I have never met someone who pay that in Arica, despite the fact is full of furnished apartment for rent.

Anyway, if you start economic activities as "arrendamiento de inmuebles amoblados" you have to issue boletas and add IVA to your prices, obviously you may disccount this IVA from IVA you pay for your operation (purchases) so impact may be quite low, but the problem is that you will probably uncompetitive with regard to those that not declared and rent informally (probably the most of your competitors). Anyway certain corporate customers may ask you for boleta.

For rent of empty apartment you are only subject to regular income tax at the end of the year, as far as I know.

Thanks Tom for the info ...

yea, as near as I can tell that web site is pretty much gibberish, or at least too vague to be of help. At best it is out dated, and worst it just a random compilation of various laws. If you are doing anything on a commercial level, consult a tax attorney before you start. If you are just renting a property, consult an accountant in Chile.

That said, I have never seen anyone collect IVA (they might be required to and just don't ) for property rentals outside of tourism related type property or larger commercial developments. Most rentals in Chile are simply done as cash transactions. Again, consult an accountant at least.

Some of the other highlights from that site:

Failure to register a property transfer makes the contract void.

and

The signing of the public deed is done after the payment of 0.1% of the property price. The registration of the public deed at the Real Estate office is completed upon payment of 0.2% or 0.3% of the property value as Stamp Taxes. The bigger cities of Santiago, Valparaiso and Viña el Mar charge 0.2% while the other cities require 0.3% stamp tax payments.

????? Where they got this from, I have no idea. Let's just say, if you follow that you would not own a property. I am no great expert on taxes in Chile, but if their tax information is as well researched you will either end up in jail for not paying or broke from over paying.

Yes, I knew I had better check this forum to get some reliable info ... ... Thanks.

This renting is on a very small personal scale i.e. renting one apartment furnished. The apartment is in a summer resort type place where all the renting activities is done without my involvement meaning that the booking, cleaning, delivery of keys, etc etc is done by a rental-agency (on the property) so hopefully I will just see a regular deposit to my account . I am basically trying to figure out how high my taxes will be on this income given that I have no other income reported in Chile.