Chile Rental Income Guide 2026

Overview — Rental Income Under Global Complementario

Rental income (ingresos por arrendamiento) in Chile is classified as income from capital (renta de segunda categoría) under the Income Tax Law (Ley sobre Impuesto a la Renta). It is aggregated with all other income and taxed at the progressive Global Complementario rates of 0-40%. There is no separate tax regime for rental income — it is simply one component of total income. However, the law provides two methods for calculating the net taxable rental income: the presunto (deemed) method and the actual expenses method. Landlords can choose the method that results in lower taxable income. Rental income is reported on the annual F-22 tax return. Commercial and residential rentals are treated similarly, though the presunto method is more commonly used for residential properties while actual expenses are often preferred for commercial properties.

Deemed Income Method (Renta Presunta) — 10% of Property Value

The presunto method calculates taxable rental income as a deemed percentage of the property's assessed value (avalúo fiscal), regardless of the actual rent received. Key features:

• Calculation: The taxable deemed income is 10% of the property's assessed value (avalúo fiscal) as determined by the SII for property tax purposes. The avalúo fiscal is typically lower than market value (approximately 70-80% of market value for residential properties)
• Example: If a property has an avalúo fiscal of CLP 100,000,000 (approximately USD 110,000), the deemed annual rental income is CLP 10,000,000 (10%). This amount is added to other income and taxed at progressive rates
• Advantages: Simple calculation (no need to track actual rent, expenses, or vacancies), no documentation required, and often results in lower taxable income than actual rent (especially if the property's actual rental yield exceeds 10% of avalúo)
• Disadvantages: If actual rental income is lower than 10% of avalúo (e.g., due to vacancies or below-market rent), the deemed method produces a higher taxable income. In this case, the actual expenses method may be preferable
• Eligibility: Available to individual landlords (not companies) for both residential and commercial properties. The property must be registered in the taxpayer's name and used for rental purposes
• Irrevocable election?: The choice between presunto and actual expenses is made annually on the F-22 return. The taxpayer is not locked into the method — they can switch each year based on which method is more favorable

Actual Expenses Method (Renta Efectiva)

Under the actual expenses method, net taxable rental income is calculated as gross rental income received minus actual deductible expenses. This method is more complex but may be beneficial when expenses are high or actual rental income is low:

• Gross rental income: All rent payments received during the tax year, including security deposits (when forfeited by the tenant), and any other payments from the tenant (e.g., utilities if paid by the landlord as part of the rent). Rent in kind (e.g., services instead of cash) is valued at market price
• Deductible expenses: Property taxes (contribuciones), insurance premiums, mortgage interest, maintenance and repairs (not improvements), management fees, advertising costs for finding tenants, legal fees for lease contracts, depreciation (2% per year for buildings, based on acquisition cost), and utilities if paid by the landlord
• Non-deductible expenses: Capital improvements (ampliaciones, mejoras) that increase the property's value must be capitalized and depreciated. Personal use of the property (e.g., if the landlord uses the property part of the year) results in a proportionate reduction of deductible expenses
• Documentation: All expenses must be supported by electronic invoices (facturas electrónicas) or equivalent documentation. The SII can audit deductions. Landlords should maintain detailed records for at least 6 years
• Depreciation: Buildings can be depreciated at 2% per year (50-year useful life) on the construction value (not land value). The depreciation basis is the acquisition cost or construction cost, adjusted for inflation. Land is not depreciable

Tax Rates — Progressive 0-40%

Rental income (whether calculated under the presunto or actual expenses method) is added to all other income and taxed at progressive Global Complementario rates. For the 2026 tax year:

• 0%: On the first ~CLP 15,000,000 of total annual income (approximate, adjusted by UTM — Unidad Tributaria Mensual)
• 4%: On income over ~CLP 15,000,000 up to ~CLP 30,000,000
• 8%: On income over ~CLP 30,000,000 up to ~CLP 45,000,000
• 13.5%: On income over ~CLP 45,000,000 up to ~CLP 60,000,000
• 23%: On income over ~CLP 60,000,000 up to ~CLP 90,000,000
• 30.5%: On income over ~CLP 90,000,000 up to ~CLP 150,000,000
• 40%: On income over ~CLP 150,000,000

Note: These brackets are approximate and adjusted annually by the UTM (Unidad Tributaria Mensual). The SII publishes the exact brackets each year before the filing period. Rental income is combined with all other income (employment, business, investments) to determine the applicable bracket. The effective rate depends on total income.

IVA (VAT) on Rental Income

Rental income is generally exempt from IVA (VAT) in Chile, with specific exceptions:

• Residential rentals: Exempt from IVA. The landlord does not charge IVA on residential rent and cannot credit input IVA on property expenses
• Commercial rentals: Generally exempt from IVA for traditional leases. However, certain commercial rentals may be subject to IVA if: (1) the lease is for parking spaces (estacionamientos), (2) the lease includes significant services (hotel-like services), or (3) the property is used for specific commercial activities subject to IVA. In practice, most commercial leases in Chile do not include IVA
• Short-term/tourism rentals (Airbnb): Subject to IVA at 19% if the landlord provides additional services (e.g., cleaning, breakfast, concierge). Pure rental without services may be exempt. The SII has issued specific guidance on the tax treatment of short-term rentals, treating them as hospitality services when significant services are provided
• IVA registration: Landlords whose rental income is subject to IVA must register for IVA, issue electronic invoices with IVA, and file monthly F-29 returns. This applies primarily to commercial parking and short-term rentals with services

Lease Contracts and Reporting

Chile has a well-regulated rental market with specific legal and tax requirements:

• Written contracts: Lease contracts (contratos de arrendamiento) are not mandatory to be notarized but should be in writing. The contract should specify: parties, property, rent amount, payment schedule, deposit, duration, and responsibilities
• Security deposit: Typically 1-3 months' rent for residential properties. Deposits must be held in a bank account (or guaranteed by a bank or insurance company). The deposit is not taxable income (it must be returned to the tenant)
• Rent adjustments: Rent can be adjusted annually based on the IPC (CPI) or any other agreed index. Monthly adjustments are prohibited for residential leases
• Minimum lease term: No statutory minimum term for residential leases (unlike some countries). However, tenants have the right to early termination after 1 year with 30 days' notice
• Tenant registration: There is no mandatory registration of lease contracts with the SII. However, landlords must self-report rental income (whether presunto or actual). The SII may cross-reference property tax records with rental income declarations to identify undeclared rental income
• Withholding at source: Corporate tenants (empresas) that pay rent to individual landlords are required to withhold tax at source: 11% (or the applicable rate under the Global Complementario) as an advance payment of the landlord's annual tax. The landlord receives a certificate of withholding (certificado de retención) and credits the withheld amount on the annual return

FAQs

Is there a separate rental income tax in Chile?

No, there is no separate rental income tax. Rental income is taxed under the general Global Complementario Tax (IIT) at progressive rates of 0-40%. It is classified as second-category income (renta de segunda categoría) and aggregated with all other income for rate determination. The presunto method (10% of avalúo fiscal) is a calculation shortcut for taxable rental income, not a separate tax rate.

Can I choose between presunto and actual expenses each year?

Yes, the election between the presunto (deemed income) method and the actual expenses method is made annually on the F-22 tax return. The taxpayer can switch between methods each year based on which produces a lower taxable rental income. There is no requirement to use the same method consistently. However, once the return is filed, the election is binding for that tax year.

How is the avalúo fiscal calculated for the presunto method?

The avalúo fiscal (fiscal assessed value) is determined by the SII for property tax (contribuciones de bienes raíces) purposes. It is typically 70-80% of the market value for residential properties. The avalúo fiscal is based on: (1) the physical characteristics of the property (land area, construction area, age, location), (2) market studies conducted by the SII, and (3) periodic revaluations (typically every 4-5 years). The avalúo fiscal is shown on the property tax bill (giro de contribuciones). Taxpayers can request a revaluation from the SII if they believe the avalúo is incorrect. The SII maintains a public registry of avalúos fiscales (www.sii.cl).

Can I deduct mortgage interest on my rental property?

Yes, mortgage interest (intereses de crédito hipotecario) is deductible under the actual expenses method. The mortgage must be registered against the specific rental property. The interest deduction is limited to the proportion of the year the property was rented (not periods of personal use or vacancy). Under the presunto method, no expenses (including mortgage interest) are separately deductible because the deemed income already accounts for costs. If you use the presunto method, you cannot also deduct mortgage interest — you would need to switch to the actual expenses method to claim this deduction.

What are the tax implications of renting on Airbnb or similar platforms?

Short-term rentals through Airbnb, Booking.com, or similar platforms are treated as rental income for tax purposes. However, if the landlord provides significant additional services (cleaning, breakfast, concierge, daily linen changes), the SII may reclassify the income as business income (renta de primera categoría) or hospitality services, which has different tax implications. Short-term rental hosts must: (1) register with the SII for IVA if services are provided (IVA at 19%), (2) issue electronic invoices to guests (if IVA-registered), (3) report income on the F-22 (annual return), and (4) comply with municipal permits (patente municipal) for tourism rentals in some municipalities. The SII has actively audited Airbnb hosts since 2022, cross-referencing platform data with declared income. Non-declaration carries significant penalties.

Disclaimer

This guide provides general information about rental income taxation in Chile for the 2026 tax year. Tax laws, rates, brackets, and rental regulations are subject to change. The information presented reflects published SII, Ministry of Finance, and tax legislation data and may not reflect individual circumstances. Always consult with a qualified Chilean tax advisor or real estate lawyer for advice specific to your rental property situation. InvestmentKit does not provide tax or legal advice.