With the data, payments such as contributions, common expenses, maintenance and broker fees can be recorded.
If you’re planning on investing in a property, setting up a real estate company can help with savings.
This mechanism works with a third home under DFL2 (Decree of Force of Law 2).
DFL2 provides tax benefits when you buy up to two residential homes with space less than 140m2.
If your investment is not qualified as a DFL2 building (if you buy a block), renovate it after purchase.
Under this system, disbursements incurred by the housing administration can be deducted, lowering income tax every year.
“With a real estate company, expenses can be reduced more than with a single person who leases or exploits the real estate. Through being a first-class taxpayer, one can register and then deduct all expenses.
On the other hand, a person who is exempt from the first category tax can only reduce property taxes from their complementary global tax returns (SII),” explains Jaime Varas, lawyer of LegalChile.cl.
The global complementary tax is a personal tribute proportional to all the income that a person receives from their work, savings, leases etc.
Contribution payments, common expenses, maintenance and repair fees, administrator fees and mortgage fall into this category.
“Interest is considered as a tax expenses,” says Francisco Ackermanm, commercial manager of the real estate investment company Capitalizarme.com.
The savings, of course, will depend on the income of the person.
“For the average person, income tax can reach up to 40%, depending on your global complementary tax. The mortgage interest rate has a cap of $4,509,312 (8 UTA) on annual tax returns.
On the other hand, it will be 25% in the other regime,” he says.
While a company can be set up under SpA (Las Sociedades por Acciones) or Limited Liability, Ackermann says that «you can start activities in the Internal Revenue Service as a Real Estate Letting Agency».
“In that case, it must be noted that the draft must be taxed with VAT. It allows me to charge credits on invoices that are associated with the draft,” he says.
Translated from ‘Dato para propietarios de viviendas: hay dos formas para bajar los impuestos‘