Sii informs who must declare income from property rentals

Sii informs who must declare income from property rentals
Sii informs who must declare income from property rentals

The Internal Revenue Service (SII) provided a series of details on the use of the Real Estate Lease Assistant during Operation Renta 2024. This wizard, available on their website, was designed to help property owners with three or more DFL-2 rental properties, or with a second non-DFL-2 rental property (over 140 m2), comply with the legal obligation to report income obtained from this concept.

Known Who must declare their rental income

Both natural and legal persons who generate income from the rental of real estate must include the amount obtained for this concept in their annual Income Tax return, in accordance with the characteristics of both themselves and the properties involved.

The IRS noted that it is important to note that:

  • For people who obtain income from the rental of up to two residential properties DFL-2 (with less than 140 m2), they are not required to declare, since the rents of the first two properties covered by this benefit are considered non-income, that is, they are exempt from taxes. However, they have the option of using the assistant voluntarily to report on the use they give to their properties and ensure that they do not need to include this income in their tax return.
  • From the third home eligible for the benefit, it is required to declare the income obtained from rent, regardless of the date of acquisition, to determine the tax, if applicable. This marks a significant change, since previously, DFL-2 homes acquired before 2010 were exempt from this obligation.
  • If the property is not covered by the DFL-2 regime or corresponds to another type of real estate, such as offices, warehouses and/or parking lots, the person is required to always include the amount obtained from this concept in their annual Income Tax return, to calculate the tax payable.
  • People with first-class activities, such as companies and individual entrepreneurs, They are not covered by the DFL-2 benefit and are therefore required to always file.

Declaration of rental income

The SII reported that the use of the Real Estate Lease Assistant reached a high focus this year, with 101,156 taxpayers declaring income subject to the Global Complementary Tax (IGC) for a total of $893,498 million.

“We developed this Assistant as part of our tax compliance facilitation strategy. With the legal change that implied the beginning of the obligation to declare income from rentals from the third property DFL-2 as of this year, we projected that nearly 100 thousand taxpayers would use the Real Estate Rental Assistant to report their income from this concept, which was fulfilled and reveals that the expected level of targeting was achieved,” commented the Deputy Director of Fiscalization of the SII, Carolina Saravia.

In total, the taxpayers who declared rental income in this Income Operation were 116,445, which marks an increase of 356% compared to 2023, when only 25,000 did so.

The 101,279 taxpayers who used the Assistant They represent 87% of the total number of declarants.

In addition, “The total amounts declared by these 116,445 taxpayers increased from $445,726 million in Operation Income 2023 to $1,102,304 million for the same period (USD $1,224 million) this year,” the SII stated.

Of the total number of taxpayers who declared rental income in 2024, 97,886 (84% of the total) were in the bracket subject to the Global Complementary Tax. Without the declaration of these incomes, this figure would decrease to 79,225 taxpayers (68% of the total number of rental income declarants in 2024).

Therefore, the proportion of declarants in the affected bracket grew by 16 percentage points.

Another effect of this rental income statement, According to the SII, “50,845 taxpayers (44% of the total number of income tax returners) increased their Global Complementary Tax (IGC) rate.”

The Deputy Director of Inspection concluded that the direct impact is observed in that, By including rental income, an additional amount of declared tax has been generated reaching $154,707 million (USD $171 million), which demonstrates the importance of the SII’s preventive and facilitating strategy.

Law No. 21,420, which reduces or eliminates tax exemptions, It established that all natural persons who own affordable housing covered by DFL-2 since 1959 (up to 140 m2) must pay taxes on the income generated by these real estate properties from rents starting with the third home, regardless of the date of acquisition of the same.

This Law also eliminated the exemption for all taxpayers who are not natural persons, which means that, as of this Income Tax Operation, legal persons must also pay taxes on this income in any case.

This year, modifications were also implemented to the 1835 Affidavit on leased real estate, in order to update the reporting obligations related to the leasing of real estate, both agricultural and non-agricultural. These amendments expand the transactions that must be reported, allowing for more data to be collected for the control of income tax derived from leases.

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