Chile Forum

Hi,

I have a question regarded the calculation of bienes racies for a urban zoned terreno with no house.

Couldn't find anything on this forum, and from a quick internet search the taxes seem to work like this

- Residential property is exempt to apprximately $17000000, and from $17000000 to $52000000 1 % is charged.

- Property without a house is subject to a 100% surcharge.

- Property values are based on a value determined by government, not on transactions prices.



Therefore a terreno valued at $25000000 without house will have taxes of $500000 ( 1% of 25000000 + 100 %),

and once the terreno has a house built on it the taxes will be ( assumed new valuation of $40000000)

1% of ($40000000-$23000000) = $170000


Have I got the calculation process correct?

yea, sorry not even close.

It is way more complicated than that.

1. the tax value normally legs a lot. They are only update about once every 10 years, then it is a process that takes several years to do again on a region by region basis. The tax value almost never equals even the appraised liquid value. Don't ever try to use it for anything but tax purposes.

2. Once the new tax value is set, and the new tax rate is issued it can only be increased at a rate of 10% a year until it reaches the new rate. This is to stop sudden undo hardship on the owner. Even at that, the new rate can be contested. So, a property with a pending review might also have a different rate.

3. There are special exemptions for property zoned rural agricultural properties. Sometimes that includes properties well within what we would consider urban areas.

4. There is also special property tax exemptions related to the owners income level.

5. Even property zone agricultural property, typically can have up to three houses on it, not including barns and sheds without needing to be rezoned urban. So the buildings on property often are no indication of the zoning. For larger properties, it is often quicker to just subdivide and build and register another lot. Then you can build another three houses. On the other hand, properties can be rezoned urban that are a long way from any sort of civilization. I can think of several right off hand that are good 20 mins from any town we know about. The smallest that a property can be subdivided in most of Chile without being rezoned is 5,000 square meters from the designation rural agricultural property. I have also seen large buildings (a 5 story school comes to mind ) in the center of cities in Chile, that the renters got some big surprises when they turned out not to be zoned for commercial purposes because the real estate agent lied to them and they failed to check.

So, for all the above reasons (I am sure I am missing more than a few also) two properties that are exactly equal in every way on the surface and located right next to each other, might have completely different property tax rates. Best to request the property tax certificate on the particular property in question.

The good news, is that for the most part, property tax in Chile is really low no matter what witchcraft the IRS is using to determine the payment.

By the way, a heads up to anyone that does own property in Chile. The new property tax assessments were just completed and go in to effect in 2010. This is especially important to check for anyone that has a property that was tax exempt. It might not be tax exempt anymore. If you for instance picked up a piece of a lot that was tax exempt, and just forgot about it you might come to find it is no longer yours in a couple years because you did not pay the property tax on it.

Get a new copy of the property tax assessment.

Thanks for that.

The question was specfic because we just recieved our first notice for land taxes on a urban zoned 5000 m2 terreno with no house on it , with a valuation for tax purposes of $25000000. The tax was more than I would have expected - $290000 for six months.

Although to be fair, I hadn't checked out what the taxes would be before buying the property.

We had seen a couple of 5000 m2 lots that the owners told us they had built 3 by 4 m shacks on, to avoid a much higher land tax. That tied in with the 100% surcharge in taxes I found for undeveloped urban residential land.

Anyway, we requested an explanation of the calculation process for out property . We see what that turns up.

Question, where is that property located?

An aside question -- are people in Chile more adept at reading long strings of zeros without commas (or periods)? I went to school in the daytime, but I'm having some trouble making sense of numbers like 2500000000 versus 250000000.

Pichilemu - Cerro de la Cruz.

yea, I know the area. Let me ask around and see if we know of the rates on any similar properties near there.

No longer relevant

Yea, if you pay 250 million pesos for a lot in Pichi with no building, chances are you made someone very very happy. If you payed 2.5 million (again I know that is just the tax value), you likly got a sweet deal. The real price has got to be something in between I am sure. Land in that area is not cheap. My blind guess is you payed somewhere between about 15 and 40 million for those 5,000 meters.

How close did I come to pinning the tail on the donkey?

15 - 40 million covers almost every 5000 m2 lot in Pichi. People are asking 50 + million for prime lots with views of Punta Lobos, but I'm not sure how many are selling.

I paid 25 million. I think that was a good deal, (I know most of the adjoining landowners, and what they have paid over the years for their lots) but there were a lot of other factors besides the money influencing the decision.

With regards to my original question of how the taxes are calculated from the rateable value - I know i can ask someone down there ( when I get back), I was just trying to clarify how the tax is calculated.

Yea, 25 million is about par for that course.