El Salvador Capital Gains Tax Guide 2026

Overview — CGT as Ordinary Income

Capital gains in El Salvador are not classified separately from ordinary income. Gains arising from the sale or disposal of assets are included in the taxpayer's gross income and taxed at the standard progressive ISR rates. For individuals, this means capital gains are added to other income (salary, business profits, rental income) and taxed across the 0–30% brackets. For companies, gains are included in corporate profits and taxed at 30% (or 25% for small taxpayers). The territorial principle means only gains from assets located in El Salvador or from Salvadoran-source transactions are taxable. Gains from foreign assets held by Salvadoran residents are not subject to ISR.

Calculation of Chargeable Gain

The chargeable gain is calculated as: Sale price minus (Acquisition cost plus improvement costs plus transaction expenses). El Salvador allows indexation of the acquisition cost for inflation using the official consumer price index (IPC), which significantly reduces the real gain for assets held for long periods. Allowable costs include:

• Original purchase price of the asset
• Legal fees and notary costs for acquisition and sale
• Registration and transfer taxes paid
• Capital improvements (enhancements, not repairs)
• Real estate agent commissions
• Other direct costs of acquisition and disposal

The gain must be reported in the tax year in which the disposal occurs. Losses on asset disposals may be offset against capital gains in the same year, with any excess carried forward for up to 6 years.

Real Property Gains

Gains from the sale of real estate in El Salvador are subject to ISR at ordinary rates. The seller must declare the gain in their annual tax return. The purchaser must withhold 3% of the sale price as a provisional ISR payment and remit it to the DGII at the time of registration. This withholding is credited against the seller's final ISR liability. The first USD 30,000 of gain from the sale of a primary residence may be exempt if the proceeds are reinvested in a new primary residence within 12 months. Property held for more than 10 years benefits from significant inflation indexation relief, often resulting in little or no taxable gain.

Share & Securities Gains

Gains from the sale of shares in Salvadoran companies are taxable as ordinary income. Shares listed on the Bolsa de Valores de El Salvador (BVES) are subject to the same treatment. However, because of the territorial system, gains from the sale of shares in foreign companies (even if held by a Salvadoran resident) are not taxable in El Salvador. Dividend income from Salvadoran companies is subject to a 5% withholding tax (final). Capital gains from the sale of bonds and other securities follow the same rules as share gains.

Bitcoin & Cryptocurrency Gains

El Salvador made Bitcoin legal tender in September 2021 (Ley Bitcoin). Capital gains on Bitcoin and other cryptocurrencies are taxable as ordinary income under the same ISR rules. The Dirección General de Impuestos Internos (DGII) has issued guidance confirming that gains from crypto transactions are subject to ISR. However, because Bitcoin is legal tender, certain transactions in Bitcoin may be treated differently from other crypto assets. Key considerations:

• Gains on Bitcoin disposals are taxable as ordinary ISR income
• Crypto-to-crypto trades are taxable events
• Mining income and staking rewards are taxable at fair market value on receipt
• Only gains from transactions within El Salvador or involving Salvadoran parties are taxable (territorial)
• Losses may be offset against crypto gains

The tax treatment of Bitcoin continues to evolve, and the DGII is developing specific guidance for the crypto economy.

FAQs

How do I calculate the indexed cost basis for inflation?

The DGII publishes annual inflation adjustment factors. You multiply the original cost by the factor corresponding to the period between acquisition and disposal. For example, if you bought property in 2016 for USD 100,000 and sold in 2026, the indexed cost might be approximately USD 125,000, reducing the taxable gain.

Are capital losses deductible?

Yes, capital losses may be offset against capital gains in the same year. Any remaining loss may be carried forward for up to 6 years and offset against future gains. Losses cannot be offset against other types of income (salary, business profits).

Do I pay CGT if I sell my house and buy another?

If you sell your primary residence and reinvest the proceeds in a new primary residence within 12 months, the first USD 30,000 of gain is exempt. The remaining gain (if any) is taxable at your marginal ISR rate.

Disclaimer

This guide provides general information about Salvadoran capital gains tax for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Salvadoran tax advisor or the Dirección General de Impuestos Internos for advice specific to your situation. InvestmentKit does not provide tax advice.