Mountains, Lake  and Rainbow

     Southern Chile Properties


Q: Who Can Buy a Property in Chile?

A: Private property is constitutionally guaranteed in this country and foreign buyers are extended the same protections under the law. There are a few restrictions in cases of buying very close to the national borders…but this won’t affect most of our clients.

Q: I heard that buying a property guarantees me Chilean Residency is that true?

A: No. Buying a property does not allow you to live here all year long (resident status). To live here full time you would have to successfully complete the legal process of applying for a residency visa.

Though you can travel here on a regular tourist visa (most visitor visas allow a ninety days stay in country). When you are visiting in country you can then quite easily get a 90-day extension. So as an owner of a Chilean property, in general you can be here for up to 180 days (just under 6 months) per year. But if you are in the country longer than 185 days you might risk in some instances being considered a “resident” for tax purposes.

Note: (This is a law common to many countries and it is not wise to overstay your visa period. So as long as you keep your visit to your 2nd home here within that timeframe you are fine.)

Regarding visas, in many cases though if you have the funds to purchase property here this demonstrates “means” and your commitment to the country which can be a positive factor in the decision process when applying for a Chilean residency permit. Owning a property signifies that you don’t require funds to cover renting costs. This also lowers the calculations on what amount of money you would need each month to demonstrate support of yourself and your family.

Alternatively certain properties you own in Chile could be used to help you in showing a general income if you lease them, providing you with an easily verifiable income stream. Provable reoccurring income and financial self-sufficiency are two of the factors required for a successful residency application.

Q: What is a promesa de compraventa?

A: It is a written contractual agreement to purchase property what we in the USA refer to as a buy-sell agreement.

Q: How much is the standard deposit on a property?

A: In general sellers will expect to see you offer 10% of the sale price…and these funds will be held in trust with the Notary. It is held as a pledge to buy the property upon signing of the Promissory Contract whilst you wait to see the results of the title study.

Q: Can I get a bank loan there to buy a property?

A: No. Banks here operate on a know-your-customer basis so without any in country credit history there is no way for them to guarantee your ability to make payments.

Q: So this means I will be an all cash buyer?

A: In most instances yes. But to a Chilean seller this is seen as a plus since they can close their sale faster & easier than selling to someone buying with a bank mortgage. Chilean banks can be notoriously slow processing mortgage related paperwork so this is the reason most sellers prefer a cash buyer.

Q: How much are the property taxes there?

A: In general, the real property tax is at an annual rate of 1% for rural properties. These are determined by a municipal (fiscal) matrix (not the market rate). That being said, in developing rural and farming areas of the country there exist some tax exemptions for agricultural land classifications.

Non-rural residential property is subject to an annual rate of 0.98% on the cadastral value up to approximately USD 120,000, then an additional 1.143% on the overage there of. There remains a possibility of applying surcharges in some instances. There is a rate of 1.2% on developed non-rural property

Property taxes usually termed “contribuciones” or “impuestos territiorial” in Chile are payable in 4 installments during the year. Please check with an accountant for the latest tax updates.

Q: Can I leave my Chilean property to my heirs?

A: Yes. But depending on a number of factors too numerous to mention here there may be tax consequences. Therefore please consult with a lawyer for details according to your personal legacy planning strategy.

Q: If I sell my Chilean property in the future will I be obligated to pay capital gains taxes?

A: No, if you buy your property under an individual ownership situation as opposed to putting your property into a company and you are not deemed to be a “habitual seller” one who sells in under a year of purchase.

Q: So is there any seller financing there?

A: There is but it is somewhat rare and you would need to be pre-screened to qualify. Of course in this scenario the rates and terms are up to the individual seller.

A: What measurements are properties sold by?

Smaller properties are sold in square meters/metre/metros. Larger properties are sold in hectares/hectáreas.

For your reference, one hectare is 10,000 square meters/metres/ m2.

Q: Can I buy home owners insurance there?

A: Yes and No. Generally, If you own a property as a “vacation home” (meaning it is unattended most of the year) usually you wouldn’t qualify to get standard home owners insurance. This is not unlike the insurance policies of many western cultures due that the building is usually unoccupied and therefore “at risk”. There are exceptions under certain conditions, please speak with an insurance agent for clarification.

Q: Are real estate purchases there private?

A: No, real estate sales are a matter of public record.

Q: A seller offered to sell me derechos in a property what does that mean?

A: This means they are selling you the rights to use some of the property. This style of ownership can work well in specific business arrangements but is complicated for individuals, since you are not considered the owner. We suggest that clients buy as a whole domain and in this way they take full registered title.

Q: Do I become the owner of the property as soon as I sign the buy-sell agreement contract?

A: No. Your buy-sell agreement contract (compra-venta) still needs to be registered at the land office; while the purchase funds are being safely held back. In the interim the Conservator will make a final review of the land register. Once they clear the inscription and funds have been released to the seller at that time you can take full physical possession of the property, becoming the titled owner.

Q: What’s the deal with title insurance there?

A: Title insurance is an “insurance policy” in the case that there was an issue with the property you bought. This is a western legal system protection measure. In Chile this kind of insurance policy is not offered nor is it deemed necessary due that a good title study will reveal any debts, liens on the property or other encumbrances…existing issues can then be cleared before proceeding.

Q: Am I required to hire an engineer to inspect the older single family home I wish to purchase?

A: No, this is not a mandatory requirement.

Q: How long do I have to wait for the property to be registered at the land office?

A: This depends on seasonality and where you are buying. Generally expect a 3 to 6 week wait.

Q: Is a real estate purchase subject to the payment of VAT (Value Added Tax) termed in Chile IVA (Impuesto al Valor Agregado)?

A: Generally not for our buyers due to the inventory we carry. However if you are buying a house or apartment that is considered new construction (first time sale) then yes. In this case if it includes land with it then the value of the land will be deducted from the tax valuation. Used buildings and land are not subject to this taxation.

Although in the case of “habitual sellers”…meaning real estate developers or individuals who flip properties or those that sell their property in less than a year from the purchase date…in this case a 19% tax will be imposed on the seller.

Q: If the whole purchase process is going to take 3 months, do I fly down every time I need to sign something? I have a job and family so I can’t stay in Chile for three months waiting to do all of these tasks… what should I do?

A: A competent broker can handle the duties in your place when you arrange for him/her to work with a limited power of attorney. The document must be written by a Chilean lawyer according to Chilean law and specific to your particular needs for the purchasing process.

This can be done in-country while you are visiting or prepared here and sent to your home country to be signed at your nearest Chilean Consulate.

Q: Could you please explain the differences in currency listings on your website?

A: Yes, I would like to note some information regarding the different types of currencies used in our sale listings. Listing in the United States Dollar (USD) is a frequent practice often used to price property to sell into the international market since it is the world reserve currency.

The Chilean Peso is represented with the letters CLP. However in Chile there is secondary monetary instrument termed the Unidad Fomento, or (UF). This is a currency based inflation adjusted index represented as CLF which can be calculated back into Chilean Pesos.

The exchange between UF/CLF and CLP is determined by the Chilean Central Bank and posted on their website daily, in banks and printed in most major newspapers.

Q: Anything else I should be aware of?

A: Yes, please note that our website is programmed to keep track (in real time) of the major world currency exchanges and how these affect the pricing of our property listings. And so each time you reopen our listings pages you will get the up to the moment exchange rates.

We work with a professional exchange house and their information comes to us courtesy of them…so please let’s say thanks to Coinmill for their invaluable service.

In Conclusion:

To learn more about the UF (Unidad Fomento) I refer you to a page in our articles section the Unidad de Fomento.

This covers most of the Q&A (Question and Answer) type of inquiries that we handle. To read further on the specifics of the purchase process please go to our page Buying Process: An Overview.