Guatemala implements zero-rate property tax for residential housing

Guatemala's Congress has approved Decree 18-2026, a reform to the Single Property Tax (IUSI) that establishes a zero rate for properties used for housing, residential use, and mixed use. While the reform aims to reduce the tax burden on homeowners, experts warn of significant uncertainty regarding its impact on municipal finances.

Ricardo Barrientos, executive director of the Central American Institute for Fiscal Studies (ICEFI), noted that the reform lacks sufficient technical studies to determine how much revenue municipalities will lose. In 2025, IUSI collections totaled Q1,876 million, with 76% concentrated in five municipalities: Guatemala, Mixco, Villa Nueva, Santa Catarina Pinula, and San Miguel Petapa. It remains unclear how much of this revenue is derived specifically from residential properties.

The new tax rate is scheduled to take effect on January 8, 2027. Municipalities retain the authority to collect outstanding debts from 2026 and prior years. Additionally, the decree introduces a new limitation preventing local governments from using public services as a mechanism to pressure taxpayers with unpaid IUSI debts.