Knowing about DFL2 properties and its benefits

For a property to be considered DFL2, it must have a maximum floor area of 140 usable square meters. It is as simple as that. If we make the sum of the interior rooms of your property, including portions of terraces and subway, its total should not add up to more than 140 square meters. For this calculation you must exclude swimming pool, garden and parking. However, the DFL2 benefit applies since 2010 only to two dwellings per owner and they must be registered as such in the Real Estate Registry (Conservador de Bienes Raíces). In addition, to access all the tax benefits, the properties must be new or first transfer properties where you are the first owner. If it is purchased in second transfer, that is, if you are the second owner, you keep the benefits corresponding to the discount in the payment of contributions, but you lose the other benefits since they were used in your first transfer.

What are the benefits of the DFL2?

• You pay a 0.2% stamp tax on the first transfer, versus 0.8% for a non-DFL2 property. This tax is obtained in relation to the amount of the mortgage loan.

• 50% reduction of the registration fee at the Real Estate Registry.

• The real estate under the DFL2 provisions must pay taxes, unless its fiscal appraisal is lower than the amount of the housing exempt appraisal.

• The real estate under DFL2 may be exempted from 50% of the taxes, according to the following table:

a) For 20 years, if the built-up area, per housing unit, does not exceed 70 square meters.

b) For 15 years, if the built-up area, per dwelling unit, exceeds 70 meters and does not exceed 100 square meters.

c) For 10 years, if the built-up area, per housing unit, exceeds 100 square meters and does not exceed 140 square meters.

- It is exempt from paying inheritance tax.

- It is exempt from income tax (two units per RUT)

If the property is inherited, it is exempt from paying tax on the transfer, as long as it has been proven in the first transfer, i.e., it must be a new property. To make the benefit effective, the death must occur at least six months after the acquisition or the completion of the construction.

In case of having more than two DFL2 properties with intentions to lease, the third (or more) will have to pay an income tax on the profits received from them.

The DFL2 is not irrevocable

A property can lose DFL2 status in several ways. For example, if the property ceases to be a dwelling and becomes an office or commercial property. It is demolished or expanded to more than 140 square meters. In the latter case, there are many who do not notify their municipality of this change and continue to receive the benefits of DFL2.

* Excerpt from the book: "Los Secretos de la Inversión Inmobiliaria" by Felipe Yaluff.