Considering the significant increases in property taxes (“contribuciones”) in recent years, as well as the recognition of methodological errors and lack of transparency in the process—acknowledged by the Chilean Internal Revenue Service (SII)—it is important to understand which elements the SII considers when determining the assessed value (“avalúo”), and what taxpayers can do to modify or challenge situations in which the tax assessment does not reflect the correct value. These actions could not only reduce the final amount of property taxes due, but in some cases also allow taxpayers to request refunds for overpaid property taxes.
The latest tax bill submitted by the Government includes several proposals regarding property taxes, among them, postponing the general revaluation of non‑agricultural real estate—which covers all residential properties—until 2027. If this is not approved, the process is scheduled to begin on January 1, 2026. This will also trigger the challenge period, which includes the possibility of initiating administrative actions—such as a voluntary administrative reconsideration (“RAV”) or judicial actions within 180 days following the end of the roll‑display period—by filing a tax claim before the Tax and Customs Courts, should the new assessed value fail to properly reflect the characteristics of the property.
According to information from the SII, of the 9.3 million properties listed in the cadaster, approximately 5.9 million are residential and therefore fall within this new revaluation process. Additionally, there is an annual revaluation for undeveloped lots (“sitios no edificados” or “eriazos”), abandoned or deteriorated properties, and gravel pit sites (“pozos lastreros”).
The legal framework governing the Territorial Tax (“Impuesto Territorial”) instructs the SII to consider the following factors when revaluing real estate:
(i) Geographic location;
(ii) The property’s intended use;
(iii) Physical characteristics such as area, materials and construction quality, age, state of conservation, etc.;
(iv) Urban infrastructure in the area, such as proximity to services, transportation, parks, etc.;
(v) Reference market value;
(vi) Urban planning rules such as density, zoning, legal restrictions; and
(vii) Other elements, such as specific decreases in value due to the characteristics of the land or construction site, among others.
Regardless of the specific calendar for the general revaluation process, any taxpayer may, at any time, request a review or modification of the assessed value if the SII has not correctly determined the characteristics of the land or buildings.
This is done through an administrative petition, which may also be challenged. In this scenario, and unlike the general revaluation process, the deadline for a RAV (before the SII) is 30 business days, while judicial actions (before the courts) must be filed within 90 business days from the notification of the resolution rejecting the taxpayer’s modification request.
Tax burden according to economic situation
Another proposal in the Government’s latest tax bill is to adjust property tax payments based on the property owner’s economic situation.
According to our Director of Tax Controversy Resolution, Patricio Casas:
“Chile could implement a territorial tax system of this nature based on taxpayers’ ability to pay. However, if such a change were introduced, special care must be taken to avoid infringing the constitutional principle of equality before tax burdens.
In this sense, if benefits are granted to certain groups according to their economic situation, it is important that they rely on objective and reasonable criteria, and that their ultimate purpose is constitutionally legitimate. Otherwise, granting benefits without objective conditions becomes arbitrary, which not only undermines the legitimacy of the rule but may also generate significant judicial activity from affected taxpayers.
To avoid distorting the exceptional nature of these benefits, they should be limited to properties used exclusively for residential purposes and to those taxpayers who genuinely need them.
Lastly, from an administrative standpoint, it is important to clearly define which instruments or parameters of socioeconomic assessment will be used to apply the system, and which institutions will be involved. This is crucial to ensure that the benefits are implemented objectively and that both the application and subsequent oversight are efficient, reducing costs for both taxpayers and the State.”
We include a link to the Diario Financiero article that provides further detail on this proposal.
For questions on this topic, you may contact our Tax Controversy Resolution team.