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Uruguay Rental Income Guide 2026

Rental income in Uruguay is taxed under the IRPF (Impuesto a la Renta de las Personas Físicas) at progressive rates of 10% to 36%. Landlords can deduct actual expenses including property taxes (Contribución Inmobiliaria), maintenance costs, insurance premiums, depreciation, and management fees. There is no separate rental income tax — it is aggregated with other income under IRPF.

Overview — Rental Income Under IRPF

Rental income (ingresos por arrendamientos) in Uruguay is classified as capital income (renta de capital) under the IRPF system. It is aggregated with all other taxable income and taxed at progressive rates of 10-36%. There is no separate rental income tax. Both residential and commercial rental income are taxed under the same IRPF framework. Landlords may deduct actual expenses incurred in generating the rental income against gross rental receipts. Rental income is reported on the annual IRPF tax return through the DGI online portal.

Deductible Expenses

Landlords may deduct the following actual expenses against gross rental income:

  • Property taxes: Contribución Inmobiliaria and other municipal taxes on the rental property
  • Maintenance and repairs: Costs of ordinary repairs and maintenance (but not capital improvements, which must be depreciated)
  • Insurance premiums: Fire, liability, and other insurance on the rental property
  • Depreciation: Building depreciation at the applicable rate (typically 2% per year on the building value, excluding land)
  • Management fees: Fees paid to property managers or real estate agents for managing the rental
  • Mortgage interest: Interest on mortgages used to acquire or improve the rental property
  • Utilities: Water, electricity, gas, and other utilities if paid by the landlord
  • Legal and professional fees: Fees for lease contracts, legal advice, and accounting related to the rental activity

IVA (VAT) on Rental Income

  • Residential rentals: Exempt from IVA. The landlord does not charge IVA on residential rent and cannot credit input IVA on property expenses
  • Commercial rentals: Subject to IVA at the standard rate of 22%. The landlord must charge IVA on commercial rent and file monthly IVA returns
  • Short-term/tourism rentals: May be treated as commercial or subject to specific IVA rules depending on the nature and frequency of the activity

Rental Contracts and Tax Implications

  • Contract duration: Residential rental contracts typically have a minimum term of 1-2 years. Commercial lease terms are negotiable
  • Rent adjustments: Contracts may use agreed adjustment indices (IPC — consumer price index is common). Annual adjustments are typical
  • Security deposit: Typically 1-2 months' rent, held by the landlord or deposited. The deposit is not taxable income
  • Withholding at source: Corporate tenants may be required to withhold IRPF on rent payments to individual landlords as an advance payment

Reporting Rental Income

  • Annual return: Rental income must be reported on the annual IRPF tax return, due by June 30 of the following year
  • Gross income: Report all rental payments received during the tax year
  • Expenses: Itemize deductible expenses with supporting documentation
  • Foreign property: Uruguayan residents with foreign rental income must report it in UYU (converted at the applicable exchange rate) and may claim foreign tax credits

FAQs

Is rental income subject to a separate tax in Uruguay?

No, rental income is taxed under the general IRPF at progressive rates of 10-36%. It is aggregated with all other income (employment, business, investments) and taxed at the applicable marginal rate.

Can I deduct mortgage interest on my rental property?

Yes, mortgage interest on loans used to acquire, construct, or improve the rental property is deductible against rental income, provided the loan is registered against the specific property.

Do I need to register for IVA as a residential landlord?

No, residential rentals are exempt from IVA. You only need to register for IVA if you rent commercial properties.

Disclaimer

This guide provides general information about rental income taxation in Uruguay for 2026. Rates and rules may change. Always consult a qualified Uruguayan contador or the DGI for specific guidance. InvestmentKit does not provide tax advice.

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