Optional 5% tax on DFL 2 rentals: what the pending reform proposes from the third home onward

Updated as of September 23, 2026.

A DFL 2 apartment rented at CLP 550,000 a month produces CLP 6,600,000 a year. If it is your third “vivienda económica” (the affordable housing category created by DFL 2), that income has no tax benefit today: it is taxed under the general rules. The tax reform now moving through the legislative process proposes another, optional route: a single 5% income tax on the contract amount, with no deductions. In this example, CLP 330,000 a year.

The proposal is in article 3 of the tax reform bill (Bill No. 18.216-05). It affects many people: owners of several small units and those who keep their books.

Here is what the text says, who it would apply to, how the option would be exercised and what happens with the VAT refund under article 27 bis. At each point we separate what the bill says from what is our own analysis.

Key takeaways

• It is a bill, not a law: from the third affordable housing unit of up to 90 m², rent charged to unrelated tenants could be taxed, if the owner so elects, at a single 5% on gross rental income.
• It could also reach units you already own (our reading) and would start on January 1, 2027, if the law is published before then and article 3 does not change.
• Through a company (article 24 ter) it is stricter: exclusive business purpose, an exit with no way back and no VAT refund under article 27 bis.

First: it is not law yet

As of September 22, 2026, according to the Senate’s bill tracking system, Bill No. 18.216-05 is not law. Congress approved it on August 4, 2026, and it is now at the Constitutional Court stage; the Court sent its ruling on August 31 and September 7. It has no law number and has not been published in the Official Gazette (Diario Oficial).

We have not verified whether that ruling, or any other stage after the bill was passed, altered article 3. Everything that follows is based on the text approved by Congress, and none of it is in force today.

What does it propose?

What the text says. Article 3 adds to Decree with Force of Law No. 2 of 1959 (DFL 2, on the Housing Plan) a Title II bis, “On the single income tax for ‘Small Affordable Housing Units’”, with two articles: 24 bis, for individuals, and 24 ter, for legal entities and for individuals who have assigned their units to their sole proprietorship (empresa individual).

In both, the rate is 5% on the gross amount of the rental income, “determined according to the respective contract, with no deduction whatsoever”. It is elective: both articles say owners “may opt”.

It also amends article 1 of DFL 2: it keeps the tax benefit only for the two affordable housing units acquired earliest and adds that from the third one onward you could elect article 24 bis, without the other DFL 2 benefits for those units.

In pesos: how much would be paid

Assumptions: a 12-month contract, third unit onward, up to 90 m², unrelated tenant. Expenses, property tax and interest are not deducted.

Our reading. The 5% is not compared against zero, but against what that income pays today under the general rules, according to your marginal rate (the highest bracket of your personal income tax that the income reaches). In a sole proprietorship, the general regime allows mortgage interest to be deducted as an expense from the First Category (corporate) tax base, if the loan was also assigned to the business (article 31 No. 1 of the Income Tax Law; SII Ruling No. 1017 of May 23, 2024). It has to be calculated case by case.

Who would it apply to?

1. From the third affordable housing unit. The two oldest keep the DFL 2 benefit. Under 24 ter, this rule is required of an individual with a sole proprietorship; for a legal entity, the text does not repeat it.
2. Up to 90 m² of built area per unit.
3. Unrelated tenant (No. 8 of article 17 of the Income Tax Law).
4. Parking spaces and storage units are included even if they have a separate property roll number, provided they are at the same address and in the same contract. Their area does not count toward the cap.

Does it apply to the units I already own?

Our reading. Under 24 bis, probably yes: the text does not require an acquisition date; what matters is how many affordable housing units you own and which two are the oldest. Under 24 ter, by contrast, someone who has already filed their start-of-activities notice with the SII has no clear moment to make the election.

From when?

What the text says. Transitory article nine, No. 1, sets the entry into force of article 3 at January 1, 2027.

Our reading. That date assumes the law is published before then and that article 3 does not change.

The window for new units: up to 140 m²

What the text says. Transitory article nineteen allows anyone who, within twelve months of publication, buys new affordable housing units of up to 140 m² to elect the single tax on the income from renting them:

• A new unit is one that meets article 1 of DFL 2 and has had no transfer of ownership before that purchase.
• The purchase must be between unrelated parties.
• The income would be taxed from January 1, 2027.

Our reading. The text does not say whether the “from the third one onward” requirement also applies to these purchases: it only refers back to article 3 “in everything that does not contravene it”. We will have to see how the SII (Chile’s tax authority) interprets it.

Individual or company: how the election would work

Article 24 bis: individuals

The text allows the election, but does not say how it is exercised or how the tax is filed; the SII can be expected to issue instructions. It does not apply to units assigned to a sole proprietorship.

Article 24 ter: legal entities or sole proprietorships

According to the text, it is more demanding:

• The election is communicated in the start-of-activities notice.
• Exclusive business purpose: renting affordable housing units that meet the requirements, except for investments strictly necessary to preserve cash flows, whose income goes to the general regime.
• Other income takes you out: that income and the rental income move to the general rules from the year in which they are generated or received, with no possibility of returning.
• Not eligible: those with another active line of business or who, having ended it, do not hold the certificate under article 69 of the Tax Code.
• All units go in if they meet the requirements; they are not chosen one by one.
• You can leave, but not come back. The exit is communicated in the manner the SII sets by resolution.
• Selling does not forfeit the regime.
• Annual return (article 65 of the Income Tax Law) and monthly provisional payments at a rate equivalent to dividing the 5% by 12 (around 0.42% a month).

The gap: those who have already filed a start-of-activities notice

Our reading. The 24 ter election is communicated in the start-of-activities notice, and in the articles we reviewed (article 3 and transitory articles nine and nineteen) there is no rule for those who have already filed it. So a company or sole proprietorship that is already renting has, in those texts, no clear moment to elect. It is not advisable to restructure before knowing how the SII addresses this.

And the VAT refund under article 27 bis?

What the text says. The last paragraph of 24 ter bars those who elect the regime from accessing the refund under article 27 bis of Decree Law No. 825, the VAT law (the mechanism for recovering the VAT paid when buying a fixed asset, such as real estate, used in a VAT-taxable activity). Article 24 bis does not carry that sentence. Neither addresses VAT on the rent itself; 24 ter only excludes the refund.

What the SII says today. According to Rulings No. 1017 of 2024 and No. 2506 of December 3, 2025, article 27 bis does not apply to affordable housing units that meet the requirements and limits of DFL 2, because they are fixed assets not used in a VAT-taxable activity. In Ruling No. 3760 of December 28, 2021, on offices, the SII drew a distinction: without sufficient furnishings, the rental is exempt and the VAT on the purchase gives no tax credit; furnished, it is taxed and that VAT does give a credit.

The opposing view. In a claim before the Tax and Customs Court of Arica y Parinacota (case RIT GR-01-00018-2024, judgment of May 29, 2025), on furnished rental of DFL 2 units, it was argued that article 15 of DFL 2 speaks of “exempt” income and not of non-income receipts (those the law does not even treat as income), and that only the latter are free of VAT under No. 7 of letter E of article 12 of the VAT law. The excerpt we reviewed records that argument, not what the court decided: it shows that the SII’s position is being contested, not that it has changed.

Our analysis. Assigning units you already own to your sole proprietorship does not generate a VAT credit, because an assignment is not a purchase with VAT charged (article 23 of the VAT law). It does make you lose 24 bis and, if you bought the unit with a mortgage, also the benefit of article 55 bis of the Income Tax Law (the deduction of mortgage interest in your personal return) for that unit (Ruling No. 1017).

If you are considering buying from the third unit onward and renting furnished through a company, 24 ter forces a choice between the 5% and the possibility of requesting the 27 bis refund, if you meet its requirements. See our guide to recovering VAT on real estate.

What to do now

1. Take inventory of your units by acquisition date and built area, with their roll number, parking spaces and storage units.
2. Review your tenants: make sure none is a related party and that the contracts include what you want to bring under the regime.
3. Compare individual and company with numbers: gross rental income, marginal rate, mortgage and whether a 27 bis refund is at stake.
4. Wait for the SII’s instructions before assigning or restructuring.
5. If you plan to buy new units, the twelve-month window would run from publication, not from today.

Caution

• The bill is not law yet. It has no number and has not been published in the Official Gazette.
• The Constitutional Court has already sent its ruling, but we have not verified whether it touched article 3. The text could change.
• Some pieces are unresolved, such as how to make the election under 24 bis.

If the law is published with this text, the regime would start on January 1, 2027. Choosing between individual and company is a structural decision, and the inventory, the contract review and the scenario comparison take weeks. It is worth having them done before that date, and deciding once the law is published and the SII has issued its instructions.

If you own several DFL 2 units or keep the books for someone who does, let’s talk before the bill becomes law. We track its status on our 2026 Tax Reform page.

This content is for information only and is not advice for any particular case. It is based on the text of Bill No. 18.216-05 approved by Congress on August 4, 2026; the final text will be the one published in the Official Gazette.

Frequently asked questions

Can I already elect the 5%?

No. As of September 22, 2026, the bill is not law: it has no number and has not been published in the Official Gazette.

Would my two oldest DFL 2 units start paying the 5%?

No. According to the text approved by Congress, they would keep the traditional DFL 2 benefit.

Could I bring in only some units?

It depends. According to the bill, not under 24 ter: all units that meet the requirements go in. Under 24 bis, the text does not say.

Could I pay the 5% and request the 27 bis refund?

In practice, no. Under 24 ter the bill expressly prohibits it in its last paragraph. Under 24 bis the text does not say so, but the result is the same: article 27 bis requires the property to be part of the fixed assets of someone carrying out VAT-taxable operations (Ruling No. 374 of 2024), which for an individual means assigning it to their sole proprietorship, and 24 bis does not apply to assigned units. In addition, the SII currently denies 27 bis to affordable housing units that meet the requirements and limits of DFL 2 (Rulings No. 1017 of 2024 and No. 2506 of 2025).