Chile Rental Income Tax: A Guide for Foreign Property Owners

If you own property in Chile and rent it out (whether long-term or through Airbnb), the Servicio de Impuestos Internos (SII) expects you to pay tax on that income. The rules differ significantly depending on your residency status, the type of property, and how you structure the rental. This guide walks you through the key rules as of 2026 so you can plan with confidence.

How Chile classifies rental income

Rental income from real estate in Chile falls under First Category income (rentas de capital), specifically income from immovable property. This applies regardless of whether you are Chilean, a foreign resident, or a non-resident owner renting from abroad.

The tax treatment depends on two factors:

1. Your residency status. Chilean tax residents pay the Global Complementary Tax. Non-residents pay the Impuesto Adicional (Additional Tax).
2. The type of rental. Furnished rentals are subject to VAT. Unfurnished rentals are not.

All rental income must be declared in the annual tax return (Formulario 22), filed by April 30 of the following year. For example, rental income earned during 2025 is declared in April 2026.

Tax rates for rental income

Residents: Global Complementary Tax (0-40%)

If you are a Chilean tax resident (domiciled or residing in Chile for more than 183 days in a 12-month period), rental income is added to your other worldwide income and taxed at progressive rates. As of 2026, the brackets are:

Annual Taxable Income (UTA)	Marginal Rate
0 to 13.5 UTA	0% (exempt)
13.5 to 30 UTA	4%
30 to 50 UTA	8%
50 to 70 UTA	13.5%
70 to 90 UTA	23%
90 to 120 UTA	30.4%
120 to 150 UTA	35%
Over 150 UTA	40%

One UTA (Unidad Tributaria Anual) equals 12 UTM. As of early 2026, one UTA is approximately CLP $792,000, so the exempt bracket covers roughly the first CLP $10.7 million of annual income.

The First Category Tax (25%) paid on your rental income is credited against your Global Complementary Tax liability. You do not pay both in full.

Non-residents: Impuesto Adicional (35%)

If you are not a Chilean tax resident, the headline rate is 35% on Chilean-sourced rental income. This is the Impuesto Adicional (Additional Tax).

Here is the part that trips people up (and the part worth remembering): the 25% First Category Tax already paid on the rental income is credited against the 35% Additional Tax. So the effective additional burden is only 10% on top of the First Category Tax, not a separate 35% charge.

How withholding works: The tenant or your property manager in Chile acts as withholding agent. They must retain the tax at source and remit it to SII on your behalf. This is not optional. If you manage the property remotely without a Chilean-based intermediary, compliance becomes significantly more difficult.

The DFL 2 exemption: potentially tax-free rental income

Chile’s DFL 2 (Decreto con Fuerza de Ley N.2) provides a powerful benefit for residential properties under 140 usable square meters. If your property qualifies as DFL 2, rental income from up to two DFL 2 properties per owner may be exempt from income tax entirely.

Key conditions:

• The property must be under 140 m2 of usable floor area
• It must be registered as DFL 2 in the Real Estate Registry (Conservador de Bienes Raices)
• The exemption applies to a maximum of two DFL 2 properties per taxpayer
• Properties acquired after 2010 have stricter rules; properties purchased between 2017 and 2022 maintain the exemption under transitional provisions

This exemption can make a significant difference for foreign owners of smaller apartments or houses. Verify your property’s DFL 2 status with your notary or real estate attorney before relying on this benefit.

Deductible expenses

Whether you are a resident or non-resident, you can reduce your taxable rental income by deducting legitimate expenses. The SII allows the following deductions:

Expense	Notes
Property tax (contribuciones)	Quarterly payments to Tesoreria General
Repairs and maintenance	Must be documented with invoices (facturas)
Insurance premiums	Fire, earthquake, liability
Administration fees	Property manager commissions
Mortgage interest	Interest on loans used to acquire the property
Depreciation	2% per year for residential buildings (on the construction value, not land)
Common expenses (gastos comunes)	If paid by the owner, not passed to tenant
Municipal business license (patente)	Required for short-term rentals

Important: The SII also allows a standard deduction of 11% of the fiscal appraisal (avaluo fiscal) to cover presumed expenses, instead of itemizing actual costs. For many small landlords, this simplified option results in a lower tax bill because fiscal appraisals in Chile are typically well below market value.

You choose whichever method (actual expenses or the 11% presumed deduction) results in a lower taxable base. You cannot combine both.

Worked example: a rental property in Coyhaique

Let’s put real numbers on this. Here is a comparison of both methods for a typical Patagonia rental.

Property: A three-bedroom house in Coyhaique, rented unfurnished for CLP $500,000 per month (approximately USD $500).

Annual rental income: CLP $6,000,000

Fiscal appraisal (avaluo fiscal): CLP $45,000,000 (typical for a mid-range house in Coyhaique)

Method 1: Actual expenses

Item	Annual Amount (CLP)
Gross rental income	$6,000,000
Property tax (contribuciones)	-$360,000
Insurance	-$180,000
Repairs	-$300,000
Property manager (10%)	-$600,000
Net taxable income	$4,560,000

Method 2: 11% presumed expense deduction

Item	Annual Amount (CLP)
Gross rental income	$6,000,000
11% of fiscal appraisal	-$4,950,000
Net taxable income	$1,050,000

In this example, the 11% presumed deduction method produces a net taxable income of just CLP $1,050,000, compared to CLP $4,560,000 under actual expenses. The presumed deduction wins by a wide margin because the fiscal appraisal is relatively high compared to the actual rental income.

Tax owed (non-resident scenario):

• Method 1: CLP $4,560,000 x 25% First Category Tax = CLP $1,140,000, plus 10% Additional Tax surcharge = CLP $456,000. Total: CLP $1,596,000
• Method 2: CLP $1,050,000 x 25% = CLP $262,500, plus 10% surcharge = CLP $105,000. Total: CLP $367,500

The difference is substantial. In this case, choosing the wrong method would cost you over CLP $1.2 million in unnecessary taxes.

Airbnb and short-term rental specifics

Short-term rentals through platforms like Airbnb follow the same income tax rules as long-term rentals, but with a few additional obligations that catch people off guard.

VAT on furnished rentals

If you rent a furnished property (which most Airbnb listings are), the rental is subject to 19% VAT (IVA). This is a critical distinction. Unfurnished long-term rentals are VAT-exempt.

When calculating the VAT taxable base, you deduct the 11% fiscal appraisal allowance from the gross rent before applying the 19% rate. This reduces the effective VAT burden.

Municipal business license (patente municipal)

All short-term rental operators need a patente municipal (municipal business license). For individuals without a formal balance sheet, the annual cost is typically 1 UTM (approximately CLP $66,000 as of 2026). This is paid in two installments (January and July).

Invoicing requirements

You must issue electronic invoices (boletas) to renters through the SII system. Since 2026, the SII requires platforms and payment entities to verify the tax compliance status of hosts. Operating without proper invoicing creates audit risk.

Tourism registration

Registration with SERNATUR (National Tourism Service) through their online registry is free and recommended, though enforcement varies by municipality.

Double taxation treaties

Chile has 37 active double taxation treaties as of 2026, covering most major source countries for foreign property investors. Notable treaty partners include:

• United States (entered into force December 2023)
• United Kingdom
• Spain
• France
• Germany
• Australia
• Canada
• Switzerland

Under most of these treaties, rental income from Chilean property may be taxed in Chile (the source country), but the tax paid in Chile can be credited against your home country tax liability. This prevents you from paying full tax in both countries.

The specific relief mechanism varies by treaty. For example, the US-Chile treaty allows income from real property to be taxed in the country where the property is located, with a foreign tax credit available in the other country. Consult a tax advisor familiar with your specific country’s treaty with Chile.

The full list of treaty countries is maintained on the SII website.

Practical steps for foreign owners

1. Get a RUT (Rol Unico Tributario). This is Chile’s tax identification number. You need it to file taxes, issue invoices, and operate legally as a landlord. Foreign nationals can obtain a RUT through the SII.

2. Hire a Chilean property manager. Beyond the practical benefits, a local manager acts as your withholding agent for tax purposes. This is effectively mandatory for non-residents.

3. Choose your expense deduction method. Run the numbers for both actual expenses and the 11% presumed deduction. The better option depends on your property’s fiscal appraisal relative to your actual costs.

4. File your annual tax return. Rental income is declared on Formulario 22, due by April 30 each year. Your property manager or a Chilean accountant (contador) can handle this.

5. Keep records. Maintain all invoices, contracts, and receipts for at least six years (the SII’s statute of limitations for audits).

6. Check your DFL 2 status. If your property is under 140 m2 and registered as DFL 2, you may owe no income tax at all on the rental income.

Frequently asked questions

Do I need to pay Chilean taxes if I already pay tax on the rental income in my home country?

Yes. Chile taxes rental income at the source, meaning you owe Chilean tax regardless of where you live. However, if your home country has a double taxation treaty with Chile (37 countries do), you can typically credit the Chilean tax against your home country liability. You should not end up paying the full rate in both countries.

What happens if I do not declare my rental income in Chile?

The SII has increasingly effective tools for identifying undeclared rental income, including data from property registries, bank transfers, and platform reporting. Penalties include fines of up to 300% of the unpaid tax, plus interest. Starting in 2026, platforms like Airbnb are required to verify host tax compliance.

Can I deduct the cost of furnishing my Airbnb property?

Furniture and equipment can be depreciated over their useful life (typically 7 to 10 years for furniture) if you use the actual expense method. You cannot deduct the full purchase price in the year of acquisition. If you use the 11% presumed deduction instead, no separate itemized deductions are allowed.

Is it better to own the property personally or through a Chilean company?

For most foreign owners with one or two rental properties, personal ownership is simpler and often more tax-efficient (especially with DFL 2 benefits). A company (SpA or SRL) may make sense if you own multiple properties, want to deduct a broader range of expenses, or plan to scale. The First Category Tax rate for companies is 25% (or 12.5% for qualifying SMEs through 2027). Consult a Chilean tax attorney before restructuring ownership.

How do I convert between CLP, UF, and USD for tax purposes?

Tax obligations are calculated in Chilean pesos (CLP). The UF (Unidad de Fomento) is an inflation-indexed unit updated daily by the Central Bank of Chile. As of April 2026, 1 UF is approximately CLP $38,500 (roughly USD $38). The SII uses official exchange rates published by the Central Bank for any currency conversions. See our guide on what is UF for a full explanation.

Related guides

Understanding rental income tax is one piece of the ownership puzzle. These guides cover the other costs and considerations for foreign property owners in Chile:

• Capital Gains Tax on Chilean Property: what you owe when you sell
• Chile Annual Property Tax Guide: the quarterly contribuciones every owner pays
• Selling Costs in Chile: commissions, notary fees, and transfer taxes
• Foreign Buyers Guide: the complete process for purchasing property as a non-Chilean
• What Is UF?: Chile’s inflation-indexed unit explained

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This guide is for informational purposes only and does not constitute tax advice. Chilean tax law changes frequently. Consult a Chilean tax professional (contador tributario) or the SII for advice specific to your situation. Information is current as of April 2026.