While costs associated with the contract and negotiations are shared, the buyer is responsible for paying other fees. The title search (Estudio de Títulos) and registration of the formal contract at the land registry are paid for by the buyer.
Property taxes in Chile (contribuciones)
The amount of tax payable on a property is decided by the government’s assessment of the value of the property (avalúo fiscal). The tax rate is determined by the property value as set by the Chilean Tax Office, or SII.
Be aware the value of your property used to determine tax is not related to its market value. In some areas, it is often lower than a property’s market value and you shouldn’t use it as a guide to a possible purchase price. Taxes usually work out at around 0.5% of the market value of a property.
With regards to urban property, all houses and apartments with an official value below CLP $14,655,788 do not pay property tax. This applies to all buildings in general, but not for vacant land in urban areas. All agricultural land is exempt from property tax up to CLP $5,306,642.
If you want to find out how much tax you can expect to pay, you can ask the Chilean Treasury Department (Tesorería General de la República) for a debt certificate. You will need the property tax identification number (Rol de Avalúo) to track the property.
If you want to know the official tax value of the property, you can ask for the Certificado de Avalúo Fiscal from the Chilean Tax Office (SII). You can find this certificate online at the SII website if you have the property tax identification number.
Before buying a property, the notary must inform the Chilean Tax Office to check all the taxes have been paid. Without the tax certificate stating that the property is free from debt, you cannot buy it. You will need to check with the seller that they can clear any outstanding tax debt before you go ahead with the purchase.
NB. Failure to pay your property taxes will result in your house being put up for auction in order to pay the debt.
How to pay property tax
Paying your property tax is easy from within Chile, however if you are abroad the process is more complicated.
Taxes are due quarterly and can be paid online through the SII website . However, this service only applies if you are currently in Chile. From outside Chile, you will need to use the services of a company such as Spencer Global . In some instances, you can pay your property tax in advance if you know you will be out of the country when it’s due. This, however, may depend on your region.
Mortgages
While you may be able to buy property in Chile on just a tourist visa, getting a loan or mortgage to finance it is another matter. In the past, it was nearly impossible for foreigners to get a mortgage from Chilean lenders. In recent years, however, there have been signs that banks are becoming more welcoming for expat home-buyers.
To even be considered for a loan, you will need to have residency and have lived in Chile for at least three to five years. You need a bank account - a checking account not just a savings account. To achieve this you usually need to have residency and have been in Chile for over a year.
You will also have to show proof you have been paying tax in Chile, so some form of employment contract will be required. You have to be well established in the country before banks will even consider lending to you.
One way around this may be to arrange a private mortgage with the seller of the property. These are normally short-term deals in order to complete the transaction. The seller may agree on a 6 month mortgage so that you have time to wire the funds into the country. However, this is on a case by case basis and you shouldn’t rely on this being the case.