Chile implements housing relief through VAT exemptions and mortgage subsidies

Chile is implementing measures to address a challenging housing market characterized by high prices and declining homeownership rates. The Chilean Congress has approved a temporary 12-month VAT exemption on the first sale of new properties that have received final municipal approval. While this does not reduce prices by the full 19% tax rate, experts estimate the benefit to buyers will range between 2% and 4% due to land costs and construction margins.

In addition to the tax relief, the government has fast-tracked an expansion of the mortgage rate subsidy. This initiative increases available slots from 50,000 to 80,000 and raises the eligibility cap for properties from 4,000 to 6,000 UF. The measure also aims to reduce the required down payment from 20% to 10% to assist younger generations who face significant barriers to entry.

These developments follow a period of decline in homeownership, which fell from 63% in 2017 to 52% in 2024. Data indicates that younger citizens, particularly those under 30, are increasingly reliant on renting due to restrictive credit conditions and rising costs.