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Realtors’ and lawyers’ fees in Chile and other property purchase costs
Transaction Costs
Fee/ % / Who Pays?
Lawyer’s Fees / 1% - 2.5% / buyer
Stamp Duty / 0.2% – 0.3% / buyer
Transfer Tax / 0.1% / buyer
Agents Fees / 2% / buyer & 2% / seller
Costs paid by buyer: 3.3% - 4.9%
Costs paid by seller: 2%
Roundtrip transaction Costs: 5.3% - 6.9%
Property purchase process in Chile
Any individual or corporate body may acquire and possess real estate in Chile whether or not they are residents. However, there are some restrictions regarding land located near the boundaries of the country. Chile has strong legal protection for property rights, including secured investments in real property.
All sale agreements should be notarized before registration. Failure to register a property transfer makes the contract void. The whole process of registering a property can be completed in around 31 days.
A lawyer is contracted usually to conduct due diligence of the property’s legal history. He is also responsible for obtaining copies of the property titles, the Certificado de Vigencia and the Encumbrance certificate (Certificado de Hipotecas y Gravámanes y de Interdicciones y Prohibiciones de Enajar). After which, he obtains an evidence of complete payment of land tax from the Treasury (Servicios de Tesorerías) from the Servicio de Impuestos Internos.
The signing of the public deed is done after the payment of 0.1% of the property price. The registration of the public deed at the Real Estate office is completed upon payment of 0.2% or 0.3% of the property value as Stamp Taxes. The bigger cities of Santiago, Valparaiso and Viña el Mar charge 0.2% while the other cities require 0.3% stamp tax payments.
The sale of real estate is not subject to VAT, with the exception of the first sale of homes built by a construction company, which is subject to VAT at 18%.
Inheritance
Inheritance, gifts and donations taxes (Impuesto a las Herencias, Asignaciones y Donaciones) are payable by the heirs and beneficiaries. The tax rates vary according to the degree of relationship and the value of the inheritance.
Heirs and beneficiaries are classified into the following categories:
- Category I: spouse, direct descendants, direct ascendants, adoptive descendants, adoptive ascendants
- Category II: siblings, nephews and nieces, aunts and uncles, first cousins
- Category III: any other person
The taxable inheritance is the net value of each heir’s inheritance Annual Taxable Units (ATU) are used as the basis for valuation. Taxable Units are adjusted monthly according to the variation of the cost-of-living index. The Annual Taxable Unit (ATU) as of July 2006 is CLP382.260 (US$).
The inheritance tax rates for different categories of heirs are as follows:
Inheritance tax
Inheritance Value Tax Rate on Different Categories
(ATUs) / I / II / III
Up to 80 / 1% / 1.2% / 1.4%
80 – 160 / 2.5% / 3% 3.5%
160 – 320 / 5% / 6% 7%
320 – 480 / 7.5% /9% 10%
480 – 640 / 10% / 12% / 14%
640 – 800 / 15% / 18% / 21%
800– 1,200 / 20% / 24% / 28%
Over 1,200 / 25% / 30% / 35%
When an inventory is made, all assets located abroad are included. This rule does not apply to foreigners, unless the assets abroad were acquired with domestic-source income. Estate taxes paid abroad on such assets are credited against the total amount of Chilean inheritance and gift taxes. Estates pass either through will, or by operation of law. Property escheats to the State upon intestacy and lack of heirs.
Spouses, legitimate ancestors, natural or adoptive parents, legitimate children and legitimate descendants can receive 50 Annual Taxable units (ATU) tax-exempt. In case of siblings, half-siblings, and other relatives up to the fourth degree, the tax-exempt amount is fixed at 5 ATU, and a 20% surcharge is applied. Non-related parties do not receive any tax exemption and pay a 40% surcharge.
In addition, DFL-2 properties are exempted from this tax.
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