National Reconstruction Act · about to be enacted
The property reform about to be enacted: how much does the taxation of your rental income change?
The National Reconstruction Act, about to be enacted, creates a flat tax of 5% on gross rent for DFL2 affordable housing, from the third property onward — a significant change for real estate investors. Load your portfolio below and the analysis updates on its own.
Your DFL2 properties — one row per property (DFL2 = up to 140 m²)
| # | Floor area (m²) | Purchase date | Monthly rent | Purchase price (opt.) | New 140 m² | Treatment | |
|---|---|---|---|---|---|---|---|
| 1 | Exempt | ||||||
| 2 | Exempt | ||||||
| 3 | 5% |
Your other income — to place you in the right bracket (if you live only off rent, leave 0)
View / adjust the assumptions
Executive summary of the reform’s impact
What your rental income pays today and what it would pay under the reform.
$244.800 per year
in taxes on your rental income. Today you would pay $652.800; under the reform, $408.000 — all in your own name.
| Item | Today | Under the reform |
|---|---|---|
| Other income (salary + other income) | $30.000.000 | $30.000.000 |
| (+) Rental income subject to income tax — today all taxable ones; under the reform only those over 90 m² | $8.160.000 | $0 |
| (=) Taxable base for income tax | $38.160.000 | $30.000.000 |
| Income tax on that base (SII table) | $1.600.763 | $947.963 |
| (−) Tax you already pay on your other income | $947.963 | $947.963 |
| (=) Tax on the rental income that goes to regular income tax | $652.800 | $0 |
| (+) 5% flat tax — optional regime, properties up to 90 m² | — | $408.000 |
| = TOTAL tax on your rental income | $652.800 | $408.000 |
Your situation today (no reform)
How your rental income is taxed under today’s rules.
Of your portfolio, your 2 oldest DFL2 propert(ies) are exempt (they pay no tax on rent). The rest pays personal income tax (Global Complementario), which is progressive: the more you earn in total, the higher the rate on your top bracket. To see how much the rent adds, we look at your tax without it, with it, and the difference.
Why do we subtract in step 3? You pay the tax on your other income either way, with or without rent. Subtracting it leaves only what the rent adds. Think of a bill: if your main course cost $947.963 and with dessert it goes up to $1.600.763, the dessert cost the difference.
And that tax, bracket by bracket
👉 In short: today, as an individual, your rental income pays (or should be paying) $652.800 per year — only for the taxable properties. The 2 oldest DFL2 properties pay nothing.
Under the tax reform
The new 5% flat tax and how your bill adds up.
A flat tax of 5% on gross rent (with no deductions) is created for DFL2 properties from the third property onward, of up to 90 m², rented to someone who is not a direct relative. It is an optional regime: you can elect the 5% or keep paying regular income tax, whichever suits you. The 2 oldest stay exempt; those over 90 m² keep paying regular income tax. It takes effect on January 1, 2027.
Those over 90 m² (regular income tax)
Since you have no taxable properties over 90 m², under the reform everything taxable moves to the 5%.
Those up to 90 m² (5%)
Total under the reform
The full today vs. reform comparison is in the Executive summary above.
Is a company worth it?
We compare holding the properties in your own name with holding them in a company.
Before the reform, it was very common to transfer properties —from the third one onward— to a company or a sole proprietorship. The idea was to defer the tax: with building depreciation and expenses, the company showed little or no profit and paid little or nothing that year, knowing the tax would still be paid later, when profits were withdrawn. A company can depreciate on a normal or accelerated basis; in this example we use accelerated, which writes off the building in about a third of the time (roughly 16 years instead of 50) and sharply reduces corporate income tax in the early years. But that money stays inside the company, and only when you move it into your pocket does it pay the deferred tax. It is not less tax: it is the same tax, later (“deferral”). Let’s see whether, under the reform, transferring properties to a company still makes sense.
a) If I keep everything in my own name (as an individual)
Under the reform you save $244.800 per year, with no structure at all. The simplest option and, for most people, the cheapest.
b) If I transfer the taxable rentals to a company
Two ways to look at it: under today’s rules, and under the reform.
b1) Under TODAY’s rules (deferral)
You pay $583.200 this year instead of $652.800. But that is deferral: the tax you postpone is paid when the profits are withdrawn, crediting the corporate income tax (Primera Categoría) against your personal tax. Once you withdraw it all you end up paying ~$652.800, the same as in your own name. The reform makes this even clearer, because it re-integrates the system: the corporate income tax credit is once again 100% creditable, so the deferral is neutral. A company does not lower the tax, it postpones it.
b2) Under the REFORM
Under the reform you pay $408.000 of 5%. Slightly more than deferring, but it is final: the 5% leaves that income free and clear — no hidden bill for the future.
b3) In conclusion: is transferring to a company worth it?
Under the reform, for properties of up to 90 m² a company may not be so attractive: they would pay the same 5% as in your own name, but leaving the money inside the company and losing the 8,000 UF exemption you have as an individual on sale. It may be better to keep them in your own name — they pay 5% once, the remainder is free of tax (tax obligation fulfilled), and you keep the benefits on sale. A company still makes sense for those over 90 m², where depreciation allows you to keep deferring (pay less today and more on withdrawal or sale).
The structure that will probably be the most common
🏠 In your personal estate
All DFL2 properties of up to 90 m². The 2 oldest stay exempt, the rest pay only 5%, and you keep the benefits on sale.
🏢 In a company (with accounting)
Properties of over 90 m², and with them keeping the deferral.
Naturally, this estimate does not replace professional tax advice.
General recommendation: for most individuals, taking the 5% in your own name is the simplest and cheapest route. A company is justified for other reasons (succession, financing, bringing in partners), not for paying less tax. Assumptions: 16-year depreciation and 27% corporate tax.
- As of today, the law has not been enacted. This simulation is a projection based on the text approved by Congress; amounts and conditions may change before publication. The 5% regime would apply from January 1, 2027.
- The count of the «2 oldest» properties assumes a portfolio acquired after 2010 with no inheritances (still to be defined in the text), and considers the properties you load in the table.
- The simulator assumes rental to unrelated third parties: the 5% does not apply to rent paid by a direct relative — that property would stay under the general regime.
- Individual without accounting records: the tax base is the gross rent.
- Under the reform the system is re-integrated: the corporate income tax credit is once again 100% creditable, so deferral through a company is neutral. The company scenarios do not include the cost of transferring the properties nor the loss of the 8,000 UF non-taxable income on sale.
From the estimate to your real case
This is an estimate. Your real case deserves firm numbers.
Vgilant models your full portfolio, keeps you current with the SII and supports you through the decision.
Free, no commitment · we reply the same day
Legal basis: Bill 18.216-05 (text approved, Official Letter 21.440), articles 24 bis and 24 ter of DFL No. 2, and the personal income tax table AT 2026 (SII). Indicative estimate — it does not replace professional tax advice.