The proposal by the right and center-right presidential candidate initially considers exempting individuals over 65 from paying property tax, and then, as public finances allow, gradually moving toward universal coverage. According to this, the initial group of beneficiaries would be nearly 400,000 people, with a cost of US$170 million per year. This would rise to US$380 million if extended to all. The plan is to submit a bill within the first 90 days of the new government so that by the second half of 2026, senior citizens would no longer pay property taxes.
Read the article in La Tercera-Pulso.
This is one of the campaign promises that has remained most consistent over time. It was even part of the proposal presented by the Republican Party in the Constitutional Council, which was later rejected by voters. However, far from being abandoned, it was adopted by the right and center-right candidate, José Antonio Kast, who promises to implement it if elected president on December 14.
In his program, he states: “Our proposal is clear: eliminate property tax on primary residences. Because the right to housing should not be subject to the whims of the State or tax bureaucracy.”
According to the current analysis by the campaign team, one of the main criticisms of this type of tax is that it results in double taxation, as it taxes assets acquired with resources that have already been subject to non-wealth taxes, such as income tax and/or value-added tax, or other special taxes, such as inheritance, legacy, or gift taxes.
They also point out that, since the tax is not linked to income flows but rather to the “stock” of assets, those who lack sufficient income to pay the tax may be forced to sell their property, as failure to pay the tax when required by the Treasury, by operation of law, results in the property being subject to seizure.
How do they plan to implement it? Member of Kast’s economic team, Tomás Bunster, explains: “The measure contemplates the gradual elimination of property tax on primary residences, starting with homeowners aged 65 and older, and progressively, in a fiscally responsible manner, moving toward the full elimination of property tax on primary residences.”
This measure has certain conditions for its application. First, the elimination of property tax will apply only to residential properties that correspond to the owner’s primary residence. Therefore, it will not apply to residential properties that are rented out, nor to properties used for commercial purposes.
The campaign team explains that this is intended to recognize the effort of families who have achieved homeownership, ensuring they are not effectively paying rent to the State for living in their own home.
Bunster illustrates it as follows: “If I own two properties, the exemption applies only to the one I live in—my primary residence. If the second property is rented out to a third party, that property continues to be subject to property tax.”
Beneficiaries and costs
According to data from the Internal Revenue Service (SII), as of the first half of this year, there are 9,343,051 properties registered in the real estate registry.
Of this total, 5,940,884 are residential properties, of which 77% are exempt from property tax, while 23% are subject to it. Additionally, 2.2 million properties are non-residential, including commercial, industrial, educational, recreational, parking, among others.
Of the total residential properties, 1,540,827 belong to senior citizens, of which 1,144,354 are exempt from property tax, representing 74%. The remaining 26%, equivalent to 396,473 individuals, own properties subject to this tax. This group would therefore be the initial beneficiaries of Kast’s proposal—nearly 400,000 property owners.
Javier Jaque, Managing Partner of CCL Auditores Consultores, agrees that the best approach is to begin by benefiting senior citizens. “It is quite reasonable for it to be gradual, and it is estimated that it will start with senior citizens, recognizing that the existing exemption for them has been insufficient.”
The measure has a downside for those negatively affected: municipalities, which rely on revenues from property tax contributions that flow into the Municipal Common Fund. In fact, during the first half of this year, the Municipal Common Fund accumulated CLP 1,466,010 million, with property tax being its main component, accounting for 54.4% of total contributions.
This is followed by vehicle registration permits, contributing 32.7% (CLP 479,501 million), then business licenses with CLP 134,088 million (9.1%), vehicle transfers contributing 2.5% (CLP 36,583 million), and finally fines, speed cameras, and toll systems, contributing CLP 17,364 million (1.2%).
However, Bunster assures that “the reduction in Municipal Common Fund revenues will be compensated through the National Budget to avoid affecting municipal income.” He adds that the expansion of the measure to all homeowners will depend on increased national revenue: “It is essential that this proposal aligns with our goal of fiscal convergence and sustainability. Any reduction in revenue for the Municipal Common Fund will be fully compensated by central government spending to avoid impacting municipalities.”
The Municipal Common Fund was created to promote greater territorial equity, as although each municipality has its own revenues, existing territorial inequalities required a redistribution mechanism. This role is fulfilled, in part, by the Fund, established in 1979.
It is defined by the Constitution as a “mechanism for the equitable redistribution of municipal revenues across the country.” Additionally, the Organic Constitutional Law of Municipalities assigns it the objective of “ensuring the fulfillment of municipal functions and their proper operation.”
The Fund’s mission is to reduce inter-municipal inequalities and provide additional resources to municipalities with lower fiscal revenues, enabling them to fulfill their essential duties. Within the municipal system, some municipalities are net contributors (when contributions exceed the benefits received), while others are net recipients (when benefits exceed contributions).
The fiscal cost of the measure has been estimated: “Based on data from the Real Estate Registry for the first half of 2025 and information from the CASEN survey, the estimated impact of eliminating property tax on primary residences for owners over 65 amounts to US$170 million annually,” states Bunster. If extended to all primary residences in the country, the cost would rise to US$380 million per year.
As an alternative for municipal financing, Javier Jaque notes that “there is a proposal allowing municipalities, under strict regulation, to invest their allocated funds in low-risk fixed-income financial markets, generating returns and interest. This would help mitigate the impact on municipal funding.”
A contrasting view is offered by Claudio Agostini, academic at UAI, who argues that “eliminating property tax, even if only for primary residences, creates several problems. First, it is a regressive exemption, as currently only 23% of the highest-value properties pay this tax. Second, it reduces funding for municipalities that rely on property tax revenues. Third, it opens up opportunities for tax avoidance and evasion.” However, he adds that if implemented, “the ideal way to compensate for the lost revenue would be through taxes that address negative externalities, such as diesel taxes, or by eliminating special regimes that increase tax avoidance and evasion, such as presumed income regimes.”
Timeline
One of the hurdles this proposal would face if Kast reaches La Moneda is that any tax change must be implemented through legislation. The plan is to submit the bill within the first 90 days of government. “Its effective implementation will depend on the legislative process. We expect support from Congress for a proposal that directly benefits the middle class and senior citizens who, despite having limited income, must continue paying for a home already acquired with effort and previously taxed,” Bunster states.
The internal timeline suggests the bill would become law during the first half of the year, allowing senior citizens to be exempt from paying the second half’s installments. However, Luis Felipe Ocampo, partner at Recabarren & Asociados, raises concerns: “Following the parliamentary elections, it is clear that legislative majorities will not be easily predictable. This makes it quite difficult to advance a substantial reform such as eliminating property tax on primary residences. It is a good initiative, but very difficult to pass,” he warns.