Chile Tax Reform Clears Congress With a VAT Break for New-Home Buyers

Chile · Expats

The part most buyers will feel is not the company rate at all. But a rare one-year window to buy a new-build home without the value-added tax.

The Gran Torre Santiago tower, lit green during construction, rises over the capital’s financial district at night. Chile’s new tax law opens a one-year window in which a qualifying new-build home is freed from the 19% value-added tax. (Photo: Jorge Barrios Riquelme, CC BY-SA 3.0, via Wikimedia Commons.)

The Chile tax reform, the sweeping overhaul known locally as the megarreforma, has cleared Congress and now awaits the president’s signature. Its headline measures cut the company tax rate toward 23% and offer new-home buyers a one-year break from the 19% value-added tax.

What the Chile Tax Reform Changes

The package does two big things. It lowers the tax that companies pay on their profits.

And it gives new-home buyers a temporary escape from a large sales tax. For a business, the general company rate starts at 27% and falls in stages.

For a home buyer, the prize is a one-year window with no value-added tax on a qualifying new build. Chile’s value-added tax, known locally as the IVA, is set at 19%.

Removing it from the price of a new home is the single biggest saving in the law for a foreign buyer.

The VAT Break on New Homes, Explained

In Chile, buying a brand-new home from a developer normally means paying the 19% value-added tax on top of the price. That tax is baked into what the seller charges.

The reform sets up a temporary exemption for new-build homes. During the window, a qualifying first sale of a new dwelling is freed from that 19% charge.

The exact rules are set by the tax authority rather than by a headline. So the precise list of which homes qualify, and how, will be spelled out in the fine print.

How Big the Saving Is for a Foreign Buyer

The math is simple, and it is why this clause matters. If a new home would normally carry the 19% value-added tax, the exemption takes that whole slice off the price.

Put plainly, the tax is close to a fifth of what you would otherwise pay. On a mid-range new apartment, that is a substantial sum kept in your pocket.

No other part of the reform touches a foreign buyer so directly. The company rate cut helps investors and firms, but the VAT break helps anyone signing for a new home.

What a Signed Purchase Agreement Means

The relief is tied to a document Chileans call a promesa de compraventa. It is a signed promise-to-buy contract, agreed before the final deed is done.

In practice, the buyer and seller commit in writing to complete the sale on set terms. Coverage indicates the promise must be signed within the 12-month window to count.

That timing is the part to watch. If the window matters, then when you sign the promise.

Not just when you move in, is what decides whether the break applies.

The Corporate Tax Cut, Phased to 2029

The company rate does not drop to 23% overnight. It steps down over several years, which is easy to misread if you only see the start and end numbers.

The reported path is 27% now, then 25.5% in 2027 and 24% in 2028. The rate reaches 23% from the 2029 tax year.

Smaller firms have their own track under the Pro Pyme regime. That regime is reported at 12.5% through 2027, rising to 15% in 2028.

Where the Reform Stands in Congress

The bill has moved through its final legislative steps. The Chamber of Deputies backed the presidential vetoes on Monday, 10 August 2026.

The Senate then approved the same vetoes on Wednesday, 12 August 2026. With both chambers done, the text is one step from becoming law.

The remaining act is promulgation, the president’s formal signing and publication. Until that happens, the measures are approved but not yet in force.

The Constitutional Court Still Has a Say

Approval by Congress is not always the last word in Chile. The reform faced challenges lodged with the Constitutional Court, the body that reviews whether laws fit the constitution.

Reporting points to three challenges filed against parts of the text. A ruling was awaited around 13 August 2026.

As of publication, no final court decision had been confirmed in the sources reviewed. The outcome could shape the timing of the law taking effect.

Confirmed Versus Still Pending

It helps to separate what is settled from what is not. The corporate rate cut and the new-home VAT break are in the approved text, with strong support in tax briefings.

What is still moving is the final paperwork. Promulgation had not been confirmed as complete, and the Constitutional Court review was still open.

The precise mechanics of the housing exemption are the softest part. The 12-month window and the promise-of-sale trigger are reported, but the fine print governs the detail.

Who Stands to Benefit

Two groups gain the most. Companies see a lower profit tax over time, and buyers of new homes get a rare tax-free window.

For a foreigner planning a move, the home clause is the headline. A newcomer buying a new apartment in Santiago could avoid a large one-off tax.

Existing homes bought from a private owner are a different case. The value-added tax generally applies to new builds sold by developers, not to ordinary resales.

What a Buyer Should Do Now

The sensible move is to confirm the details before acting. Check whether the law has been promulgated and whether your target home qualifies.

Ask the developer and a local tax adviser to put the exemption in writing. Timing around the signed promise is where the saving is won or lost.

The reform is a real opportunity, not a guarantee. Treat the VAT break as confirmed in principle, but verify the effective dates before you sign anything.

Frequently Asked Questions

What changes for a homebuyer?

A qualifying new-build home can be bought without Chile’s 19% value-added tax during a temporary window. The relief is tied to a signed purchase promise made within that period.

How big is the VAT saving?

Chile’s value-added tax is 19%, so the exemption removes close to a fifth of a new home’s price. On a mid-range new apartment, that is a substantial one-off saving.

When does it take effect?

The bill cleared Congress on Wednesday, 12 August 2026, but it must still be promulgated by the president. The measures are approved and not yet in force until that signing.

Is it final yet?

Not entirely, as of publication. Promulgation was pending and the Constitutional Court was still reviewing challenges to parts of the text.

Sources: Infobae América, KPMG and Cuatrecasas tax briefings, Chilean government (Ministerio de Hacienda), EFE.