Financial Preparation

• Determine your total investment budget (property + transaction costs + reserves)
• Establish a currency exchange strategy (lump-sum vs. staged transfers)
• Research historical CLP/USD or CLP/CAD exchange rates to identify favorable timing
• Set up international wire transfer capabilities with your home bank
• Consider meeting with a financial advisor familiar with cross-border investment
• Evaluate tax implications in both Chile and your home country

Market Research

• Identify target cities based on investment goals (appreciation vs. cash flow)
• Research neighborhood-specific price trends and rental yields
• Join online forums for foreign investors in Chile (Facebook groups, Expat.com)
• Subscribe to local real estate market reports (Portal Inmobiliario, Cámara Chilena de la Construcción)
• Plan a preliminary market visit to evaluate areas firsthand

Professional Network Development

• Connect with bilingual real estate attorneys specializing in foreign clients
• Identify real estate agents with international client experience
• Research property management companies in your target market
• Establish contact with currency exchange specialists
• Connect with other foreign investors (networking events, expat communities)

Expert Tip: Chile has distinct seasons opposite to North America. Consider scheduling your property viewing trip during both high and low seasons if investing in tourist areas. Winter (June-August) visits are essential for assessing heating systems and water/dampness issues in central and southern regions, while summer visits (December-February) help evaluate cooling needs and tourism potential.

Required Documents for SpA Formation: Passport copies, company bylaws, proof of address, tax representation designation, and initial capital declaration. The process can typically be completed in 2-4 weeks with professional assistance and requires a local legal representative.

Banking Setup

• Opening a Chilean Bank Account: Possible but increasingly complex for non-residents. Requirements typically include:
  • Passport and Chilean temporary residence visa (in most cases)
  • Chilean tax ID (RUT)
  • Proof of income and source of funds
  • Local address in Chile
  • Reference letters (sometimes required)
• Recommended Banks: Banco de Chile, Banco Santander, and Scotiabank have the most experience with foreign clients and offer some English-language services.
• Alternative: Many investors use currency exchange services and international transfers directly to notary escrow accounts for transactions, avoiding the need for a local bank account.

Financing Options

While most foreign investors use cash purchases, financing options include:

1. Chilean Mortgage Financing: Available but challenging for non-residents with requirements including:
   • Chilean residence visa (typically required)
   • Substantial local banking history
   • Maximum 75% LTV (loan-to-value) for residents, lower for non-residents
   • Interest rates 1-3% higher than for citizens with established credit
   • Comprehensive income documentation and local credit history
2. Developer Financing: Common for new construction and pre-sales with terms including:
   • 20-30% down payment
   • 2-5 year financing terms
   • Interest rates of 6-10%
   • More accessible for foreign buyers than traditional bank financing
3. Home Country Financing: Many North American investors leverage equity or obtain loans in their home countries:
   • Lower interest rates
   • Established banking relationships
   • No cross-border financing complexities
   • Potential tax advantages

Currency Management

The Chilean Peso (CLP) fluctuates against major currencies, creating both risks and opportunities:

• Exchange Rate Considerations: Monitor CLP/USD trends to identify favorable exchange windows
• Currency Services: Specialized services like Wise, OFX, or XE typically offer better rates than banks
• Documentation: Maintain clear records of all international transfers for tax compliance
• Forward Contracting: Consider forward contracts for large purchases to lock in exchange rates

Chile has a free foreign exchange market with minimal restrictions on moving money in or out of the country, though transactions over $10,000 USD equivalent must be reported through the formal banking system.

Property Search Resources

• Online Platforms:
  • Portal Inmobiliario – Chile’s largest real estate portal
  • Yapo.cl – General classifieds with extensive property listings
  • Propiedades El Mercurio – Listings from Chile’s leading newspaper
  • Engel & Völkers – Higher-end properties with international standards
• Real Estate Agencies:
  • Local agencies with international divisions
  • International brokerages with Chilean offices (RE/MAX, Sotheby’s)
  • Specialized expat-focused agencies in popular areas
• Developer Direct: For new construction and pre-construction opportunities
• Real Estate Events: Feria Inmobiliaria (Santiago), ExpoVivienda (regional cities)

Property Viewing Trip Planning

Organize an effective property viewing trip:

1. Pre-Trip Research: Identify 10-15 potential properties before arrival
2. Trip Duration: Plan at least 5-7 days per city being considered
3. Local Agent: Work with a bilingual agent experienced with foreign buyers
4. Neighborhood Exploration: Allocate time to explore areas at different times of day/week
5. Property Shortlisting: Visit 8-10 properties to develop market understanding
6. Second Viewings: Return to top choices for more detailed inspection
7. Local Amenities: Visit grocery stores, restaurants, and other facilities nearby
8. Transportation Test: Try public transit options and evaluate commute times

Property Evaluation Criteria

Assess potential investments using these key criteria:

• Location Factors:
  • Proximity to business districts, universities, or tourist attractions
  • Transportation infrastructure (metro in Santiago, main roads, bus routes)
  • Neighborhood safety and security services
  • Development plans and infrastructure projects
  • Walking-distance amenities
• Building Quality:
  • Seismic construction standards (crucial in Chile)
  • Age and condition of property
  • Building systems and maintenance
  • Common area quality
  • Security features (24-hour concierge, access control)
• Rental Potential:
  • Historical occupancy rates in the area
  • Rental restrictions in building regulations
  • Target tenant profile availability
  • Competitive rental inventory
  • Furnished vs. unfurnished market conditions
• Financial Considerations:
  • Price per square meter compared to area averages
  • Common expenses (gastos comunes) and building fees
  • Property tax assessment (contribuciones)
  • Renovation requirements and costs
  • Appreciation potential based on local development

Expert Tip: Properties in Chile are typically listed in Unidades de Fomento (UF), an inflation-adjusted unit rather than Chilean pesos. The UF value changes daily to reflect inflation, making it important to check the current UF-to-peso conversion when evaluating prices. This system provides built-in inflation protection for real estate transactions.

Legal Due Diligence

• ✓
  Title Verification: Obtain property registration certificate (Certificado de Dominio Vigente) from Property Registry
• ✓
  Encumbrance Check: Verify no liens, mortgages, or easements (Certificado de Hipotecas y Gravámenes)
• ✓
  Property Tax Status: Confirm property tax payments are current (Certificado de Deuda de Contribuciones)
• ✓
  Utility Verification: Ensure no unpaid utility bills
• ✓
  Building Administration: Verify no outstanding common expenses (gastos comunes)
• ✓
  Zoning Compliance: Check municipal zoning and land use regulations (Certificado de Informaciones Previas)
• ✓
  Building Regulations: Review building bylaws (Reglamento de Copropiedad) for rental restrictions
• ✓
  Municipal Permits: Verify all construction has proper permits and final reception (Recepción Final)

Physical Due Diligence

• ✓
  Professional Inspection: Hire licensed inspector to evaluate construction quality, systems, and potential issues
• ✓
  Seismic Standards: Verify compliance with Chilean seismic building codes, particularly important given Chile’s earthquake risk
• ✓
  Property Measurements: Confirm actual square meters match documentation
• ✓
  System Functionality: Test electrical, plumbing, heating, and appliances
• ✓
  Moisture/Mold: Check for water damage, particularly in central and southern regions
• ✓
  Building Common Areas: Inspect elevators, hallways, parking, and other common facilities
• ✓
  Renovation Assessment: Obtain estimates for any planned improvements

Financial Due Diligence

• ✓
  Comparative Market Analysis: Verify price aligns with comparable recent sales
• ✓
  Rental Market Research: Confirm realistic rental expectations for the property
• ✓
  Expense Verification: Detailed assessment of all ownership costs
• ✓
  ROI Calculation: Develop detailed cash flow projections and return analysis
• ✓
  Tax Assessment: Understand property tax valuation and potential increases
• ✓
  Future Expenses: Research upcoming building maintenance or special assessments

Expert Tip: Chilean real estate transactions are highly formalized and notarized. While this provides security, it also means that verbal agreements have little legal weight. Ensure all conditions, contingencies, and special terms are documented in writing in the Promesa de Compraventa before making a deposit.

Purchase Agreement (Promesa de Compraventa)

This legally binding document outlines the terms and conditions of the sale:

• Key Components:
  • Property details and legal description
  • Purchase price (typically expressed in UF)
  • Deposit amount (typically 10-20%)
  • Closing timeframe
  • Contingencies and conditions
  • Penalties for non-compliance
• Deposit Handling: Usually held in notary escrow account
• Timeline: Signed after initial due diligence, typically 1-2 weeks after verbal offer acceptance
• Legal Review: Essential to have bilingual attorney review before signing

The Promesa is executed before a notary and provides legal protection during the remaining due diligence period. It’s a crucial document that should include all conditions and contingencies important to you as a buyer.

Closing Process (Escritura de Compraventa)

The formal property transfer occurs at a Chilean notary office:

1. Documentation Preparation:
   • Final purchase deed (Escritura de Compraventa)
   • Property registration certificate
   • Encumbrance and lien certificate
   • Property tax certificate
   • Building administration certificate (no outstanding expenses)
   • Identification documents
2. Notary Appointment: Both parties (or representatives with power of attorney) must appear in person
3. Final Payment: Balance of purchase price transferred at or immediately before closing
4. Document Review and Signing: Notary explains document content before signatures
5. Payment of Taxes and Fees: Transfer taxes and notary fees paid at closing
6. Registration: Deed must be registered with the Property Registry (Conservador de Bienes Raíces)

Registration typically takes 2-3 weeks in major cities, after which you’ll receive the registered deed confirming your ownership.

Transaction Costs

Budget for these typical transaction expenses:

• Notary Fees: 0.1% to 0.2% of property value
• Registration Fee: 0.2% to 0.5% of property value
• Legal Fees: 1% to 1.5% for comprehensive representation
• Real Estate Agent Commission: 2% to 4% (typically paid by seller but may affect negotiated price)
• Bank/Wire Transfer Fees: Varies by institution and amount
• Value Added Tax (IVA): 19% applies to new properties only (included in purchase price)

Total buyer-side transaction costs typically range from 1.5% to 3% of the purchase price, excluding any value-added tax for new properties.

Expert Tip: Unlike some countries, Chile has no general transfer tax on real estate. This makes transaction costs significantly lower than in many other markets. However, first sales of new properties include a 19% VAT component in the price. When purchasing from developers, always clarify whether quoted prices include VAT.

Administrative Tasks

• ✓
  Property Tax Registration: Update ownership information with the Internal Tax Service (SII)
• ✓
  Utility Transfers: Register utilities in your name (water, electricity, gas, internet)
• ✓
  Building Administration: Register with building management and set up monthly fee payments
• ✓
  Insurance: Obtain property and earthquake insurance (strongly recommended)
• ✓
  Banking Setup: Establish payment mechanisms for ongoing expenses

Property Management Setup

If planning to rent your property:

• Management Structure: Determine whether to self-manage or hire professional property management
• Rental Readiness: Prepare property with appropriate furnishings based on target market
• Marketing Strategy: Develop listing approach for long-term or vacation rentals
• Legal Documentation: Prepare standardized lease agreements compliant with Chilean law
• Tenant Screening: Establish protocols for evaluating potential tenants
• Maintenance Network: Identify reliable contractors for various property needs

For vacation rentals, registration with regional tourism authorities may be required depending on the area. Professional property managers can typically assist with this process.

Record Keeping

Maintain comprehensive records for tax and legal purposes:

• Purchase Documentation: Keep all closing documents, property deed, and transaction records
• Expense Tracking: Maintain detailed records of all property-related expenditures
• Income Documentation: Record all rental income with formal invoicing
• Improvement Investments: Document all property improvements with receipts and contracts
• Tax Filings: Archive all property-related tax filings in Chile and your home country
• Correspondence: Save important communications with property management, tenants, and authorities

Digital storage with secure backups is recommended for all documentation, with key documents also maintained in physical form.

Expert Tip: Chile has moved toward electronic invoicing and digital tax systems. Consider setting up electronic access to the SII (Chilean tax authority) portal for simplified compliance and record-keeping. This system allows foreign property owners to manage their tax obligations remotely with greater ease than in many other Latin American countries.

Chilean Tax Obligations

• Property Tax (Contribuciones):
  • Paid quarterly based on fiscal value (typically lower than market value)
  • Rates vary from 0.98% to 1.2% annually of the fiscal value
  • Exemptions exist for properties below certain values
  • Payable online through the SII website
• Income Tax on Rental Income:
  • Non-residents pay a flat 35% tax on gross rental income
  • Residents pay progressive rates from 0% to 40% on net rental income
  • Limited deductions available for non-residents
  • Annual filing required by April
• Capital Gains Tax:
  • Non-residents pay 35% on capital gains
  • Possible exemptions for properties held longer than one year under certain conditions
  • Main residence exemption may apply for properties owned more than one year
  • Properties acquired before 2004 may have different treatment
• Value Added Tax (IVA):
  • 19% on the first sale of new properties by developers
  • Included in the purchase price
  • Not applicable to resale of used properties

Home Country Tax Obligations

Consult with tax professionals specializing in cross-border taxation to ensure compliance with both Chilean and home country requirements. Chilean tax laws undergo periodic reforms, making professional guidance particularly valuable.

Tax Planning Strategies

• Entity Structures: Evaluate whether holding property through a legal entity provides tax advantages
• Expense Documentation: Maintain thorough records of all deductible expenses
• Depreciation: Utilize available depreciation allowances in both jurisdictions
• Timing Strategies: Consider timing of income recognition and expense payments
• Treaty Benefits: Utilize provisions of the Chile-U.S. or Chile-Canada tax treaties
• Capital Improvements: Properly document improvements to increase cost basis for eventual sale

Chile has well-established tax treaties with numerous countries including the United States and Canada, helping prevent double taxation and providing clarity on tax treatment of cross-border investments.

Expert Tip: Chile’s tax administration (SII) is increasingly sophisticated with digital systems that make compliance more accessible for foreign investors. The SII website (www.sii.cl) offers English-language navigation options and support. Consider engaging a Chilean accountant who specializes in helping foreign investors, as the annual cost is reasonable (typically $500-1,000 USD) and can prevent costly compliance issues.

Selecting a Property Manager

Evaluate potential property managers using these criteria:

• Experience with Foreign Owners: Look for firms accustomed to working with international clients
• Language Capabilities: English proficiency and clear communication systems
• Digital Systems: Online portals, electronic reporting, and international payment options
• Market Knowledge: Deep understanding of your specific neighborhood
• Tenant Screening: Rigorous vetting procedures for potential tenants
• Maintenance Network: Established relationships with quality contractors
• Legal Expertise: Knowledge of Chilean rental laws and regulations
• Financial Reporting: Transparent financial management and regular statements
• References: Verifiable testimonials from other foreign clients

Management Agreement Essentials

Ensure your property management contract includes these key elements:

• Scope of Services: Detailed description of exactly what is included and excluded
• Fee Structure: Clear explanation of all management fees, commissions, and additional charges
• Reporting Requirements: Frequency and format of financial and property condition reports
• Maintenance Authority: Spending limits for repairs without prior approval
• Tenant Selection Criteria: Parameters for approving potential tenants
• Lease Terms: Standard lease agreement terms and conditions
• Security Deposit Handling: Procedures for collecting, holding, and returning deposits
• Termination Provisions: Conditions and notice requirements for ending the management relationship
• Liability Limitations: Insurance requirements and liability boundaries

Have your attorney review any management agreement before signing to ensure it complies with Chilean law and adequately protects your interests.

Expert Tip: In popular tourist areas like Viña del Mar, Pucón, and the Lakes District, consider property managers who can switch between short-term and long-term rental strategies based on seasonal demand. The high season (December-February) can generate premium short-term rental rates that are 2-3 times higher than long-term rental values, while shoulder and off-seasons might be better suited for medium-term rentals.

Exit Options

Sale Process

When selling your Chilean property:

1. Market Analysis: Evaluate current market conditions and property values
2. Agent Selection: Choose between:
   • Local agency with strong Chilean buyer network
   • International agency targeting foreign investors
   • Multi-agency approach for broader exposure
3. Property Preparation: Complete any necessary repairs and enhancements
4. Documentation Preparation: Organize all property records, certificates, and legal documents
5. Marketing Strategy: Develop online and offline marketing plan
6. Tax Planning: Consult with tax advisors to optimize transaction structure
7. Closing Process: Similar to purchase process but in reverse:
• Promesa de Compraventa (with buyer obligations)
• Due diligence period for buyer
• Escritura de Compraventa at notary
• Registration of ownership transfer
8. Fund Repatriation: Transfer proceeds through formal banking channels
9. Tax Compliance: File Chilean capital gains tax returns and report transaction in home country
10. Currency Conversion: Consider timing of peso-to-dollar conversion to maximize returns

The sale process typically takes 2-3 months from listing to closing in major cities, potentially longer in less active markets or for high-value properties.

Market Exit Timing Considerations

Several factors should influence your exit timing decision:

• Market Cycle Position: Real estate markets typically follow multi-year cycles; selling during expansion phases usually optimizes returns
• Currency Exchange Rates: Monitor CLP/USD or CLP/CAD trends; strengthening peso can significantly enhance returns for foreign investors
• Local Economic Indicators: GDP growth, unemployment rates, and interest rate trends can signal ideal selling windows
• Political Climate: Major elections or policy changes can impact market sentiment and property values
• Infrastructure Developments: Completion of major transportation or urban projects often boosts nearby property values
• Tax Law Changes: Stay informed about potential changes to capital gains tax treatment
• Seasonal Factors: Tourist area properties may sell faster and at premium prices during peak seasons
• Personal Financial Goals: Alignment with broader investment objectives and liquidity needs

The most successful investors establish clear performance benchmarks and regularly evaluate their Chilean property investments against these targets rather than making decisions based solely on market timing.

Expert Tip: Chile’s property market has historically been less volatile than many emerging markets, with steady long-term appreciation rather than dramatic boom/bust cycles. This stability often makes a patient, long-term hold strategy particularly effective, especially for properties in prime locations of Santiago, Viña del Mar, or the Lakes District. For vacation properties, consider a minimum 5-7 year investment horizon to maximize returns through both appreciation and rental income.