Chile Forum

Some countries base the property tax on the number of meters or 'solar' of the dwelling vs. the actual appraised market price for the house at any one time. How does the government there in Chile appraise the value of the home for property tax purposes? So for example, you could have a home sale for $300,000 USD, but the property tax is on the meters and land which results in an appraised 'declared' value for taxation of only $150,000....Anybody?...Thank You.

Not easy to answer, in general. There are a lot of tax exceptioms in Chile and the property tax is based in "avaluo fiscal" calculated by local office of the tax service, so it is almost impossible to answer in general. Try to look for proprrties constructed under "DFL-2" law, those are exempt, people usually purchase homes excemtp and then they improve it, it may pass decades before valuation is recalculated, usually it never it is.

The less favorable situation (in tax costs) is for properties brand new in the luxury segment, you have to pay taxes during the eternity

yea, it is not by the meter.

For example, almost every property deal we have handled that is zoned as rural agriculture is either completely tax exempt or pays almost nothing. I am talking properties in the thousands of hectares that pay something less than 30,000 pesos a year.

Came across this the other day:
http://www.farminguk.com/news/Chile-Wea ... m.9384.asp
They claim there is $71 billion US in agricultural land in Chile. Not sure how they did that calculation. Valuing land is tricky buisness in Chile. For instance a farm in the Patagonia might be say 2,000 hectares, but not produce much of anything beyond a couple heads of cattle. That is mostly for lack of access to resources. The land could be as productive as anything in the Northern United States or Canada given the proper technology. Land values can be as low as 200,000 pesos or $400 a hectare. On the other hand, around Santa Cruz prices run about 10 million a hectare and they have the technological resources to make use of the land. Much of Chile's farm land is simply not used. So, how do you value it?

Also a urban property say in Temuco, all other things being equal, will not pay the same as an urban property in Vina del Mar.

There is a revaluation going on in the country also. Even then, there is phased in plan that restricts the increase each year to no more than 10% increase until it reaches the new value. There is a recognition that property tax values have not kept up with market values.

Chile still does not get major revenue from its property taxes.

admin wrote:. . . . Came across this the other day:
http://www.farminguk.com/news/Chile-Wea ... m.9384.asp
They claim there is $71 billion US in agricultural land in Chile. Not sure how they did that calculation. Valuing land is tricky buisness . . . .

It indeed is difficult to value land; that's why the best (though hardly perfect) systems employ an adjusted root of most-recently realized sale price.

I read the indicated article as stating not that all Chilean farm land is worth the sum of US$71,000,000,000.00 but, rather, that all the net assets of the eighty-two thousand richest Chilean farming families total that sum; though I don't doubt that these hundreds of thousands of Chileans (how many persons in a typical rich Chilean household? four or five?) control nearly all valuable Chilean farm land, I don't doubt, either, that most own much, much more than farm land. The total assumed value of all Chilean farm land would, therefore, probably be significantly less.

Here's the brief article in full:

"FAMILES CONTROL US$71 BILLION.
The 82,000 Farming family’s that control the business and land of Chile, have a combined wealth of US$71 billion, according to a report published last week by Labrainvial, the international investment house.

The economy of Chile is booming and they are the only Latin American country, that has preferred to rely on business with the USA, as opposed to Venezuela, with the exception of Colombia.

The vast mineral wealth has boosted the economy. There are 8,500 of the families estimated to be worth between one and thirty million dollars.

The wealth of the families is inherited wealth in the main, also they traditionally control the majority of the farm land in the country."

Regarding DFL2 and property sizes, I believe the limit for the DFL2 (urban?) property tax exemptions is 140 square metres (my house was built just under the limit to qualify, at 139 point something metres, giving me a 50% discount on both the bienes raices and the up-front tax associated with the purchase). This only applies to properties less than 10 years old. I also saw a document somewhere on the Web indicating that there are size limits below 140 with additional exemptions (I think the discount lasts longer for smaller new properties, if I remember correctly).

Cheers,

James.

RWS wrote:

admin wrote:all the net assets of the eighty-two thousand richest Chilean farming families total that sum

Does Pinera own any farms?

I like how the URL was truncated to "Chile-Wea"

James.

There is some information on property taxes at the tax office Web page, here:

https://zeus.sii.cl/avalu_cgi/br/brc203.sh

You can look up the tax valuation of any property on that page if you have the "ROL" number. I think the tax is something like 1% of that valuation anually (the exact figure and differences between urban and rural properties are probably buried somewhere under that page, if you can read Spanish).

James.

yea, Pinera owns the southern half of Chiloe island, which is agriculturally zoned property. He has it setup as nature reserve with Tompkins. He has a lot of other properties down south also I believe.

Yea that random number does not make a lot of sense to me. I know a lot of ranchers in the Patagonia with properties worth and easy 1 million to about 3 million US and that live in small houses and a 100,000 pesos a month doing basically subsistence farming. When they get old they like to sell them and move to town on the money. Are they counting those guys?

If there are 10,000 guys (likely way more than that) in the Patagonia ( just south of PM), with properties worth 1,000,000 US or more, I don't think they are counting those guys or even scratching the true total land value in Chile. We would need to know way more about how they put that number together.

There are some articles on allsouthernchile.com about valuing land, and why it is nearly impossible to go by recent sale values when putting price tags on the market in Chile.