Zero VAT on new housing: where things stand and why the saving is not 19 per cent

Quick answer: Congress passed the mega reform on 4 August 2026, but it is not yet law: it is waiting for the Constitutional Court to rule on the challenges filed against some of its provisions, and only after that come promulgation and publication. The exemption covers the first sale of new housing, with no cap on value, floor area or number of units, provided the project holds a municipal building permit issued before publication. It runs for twelve months, counted from the first business day of the month after that publication. And the most important point for the buyer: the real saving is not 19 per cent.

That last point is what decides whether the deal is worthwhile, and it is the point that project advertising explains the least. It is worth understanding before signing a promise to purchase.

Where things stand exactly

The practical consequence. Today nobody can sell you a home with zero VAT, because the benefit does not exist yet. If someone offers you the discount as though it were already in force, or asks you to sign quickly to catch it, something does not add up. What you can do now is have the decision fully studied, so you can act the moment the window opens.

Which homes would be covered

• Only the first sale. The exemption applies to the sale made by the construction or property development company, not to resales between private individuals.
• No cap on value, floor area or number of units. This is an important difference from other housing benefits, which do carry caps expressed in unidades de fomento (UF).
• With a municipal building permit issued before the law is published. A full permit or a partial one both qualify. Projects whose permit is obtained afterwards are left out.
• Housing. It does not cover land, or transactions where the value sits mainly in the land itself.

Why the saving is not 19 per cent

This is the part you need to understand before calculating anything, and it comes down to two separate reasons that add together.

First: the land was never subject to VAT. When a built property is sold, VAT does not apply to the value of the land in the same way as it applies to the construction. In projects where the land carries a lot of weight, which is normal in established areas, the base on which that 19 per cent is calculated is considerably lower than the list price.

Second: the developer loses the input tax credit. A developer selling with VAT recovers the VAT it paid on materials, subcontracts and services. If its sale becomes exempt, that credit stops being recoverable and turns into a cost instead. That cost does not disappear: it goes into the price.

Translated into what matters to you. The actual discount ends up being a fraction of 19 per cent, not 19 per cent. The only serious way to know how much it is in your specific case is to compare, in writing and on the same unit, the price you are offered today with the price you are offered under the benefit. Any calculation done by applying 19 per cent to the list price is an overstatement.

What the discount does not fix

It is worth putting the benefit in perspective. A temporary exemption moves the price by a percentage, but the factors that genuinely decide whether a purchase turns out well or badly are the same ones as always, and none of them change because of the law.

Over twenty or thirty years, the interest rate on the loan matters more than a one off saving on the price. If you are going to finance with a state guarantee, the conditions and caps are set out in the FOGAES guide, and there are requirements that must be written into the sale deed so you do not lose the cover.

And the unit's legal status matters even more. A home that reaches signing without final municipal approval, with the project's mortgages not yet lifted, or with differences between what was built and what was approved, cannot be put into a deed or financed, and the buyer is left with the deposit committed and no property. That is the situation we cover in the guide on selling without final approval.

The right way to look at it. Zero VAT is a reason to speed up a decision that had already been made, not to make one that had not. If the project did not convince you last week, a discount that is a fraction of 19 per cent should not convince you this week.

What to check before signing a promise to purchase

If the benefit comes into force and you decide to buy, these are the checks that avoid the problems that later end up in our office:

• That the project has a building permit issued before the law is published. Ask for it by number and date, not just verbally.
• That the price with the benefit applied is written into the promise agreement, along with how it was worked out. A promise agreement that only states the final price gives you nothing to verify afterwards.
• The status of the final municipal approval. A unit without it cannot be put into a deed or financed, and at that point the tax benefit is the least of your problems. We cover this in the guide on selling without final approval.
• The condominium regulations, if it is a condominium or a building. This is the document that will govern your life there, and almost nobody reads it before signing. It is covered in the guide on fines in condominiums.
• The title study for the project, paying particular attention to mortgages and prohibitions that must be lifted by the time of signing.
• The loan conditions. If you are going to use a state guarantee, there are requirements that must appear in the sale deed, and that has to be arranged beforehand, not on signing day. It is covered in the FOGAES guide.

Documents worth requesting from the developer

Beyond the promise agreement itself, there is a set of supporting documents worth requiring in writing before committing a deposit. Asking for them is not a sign of distrust, it is the minimum needed to verify afterwards what you are being offered:

• A copy of the building permit, with its number and date, and of the municipal certificate confirming it.
• A certificate or evidence of the status of the final municipal approval, or of how far the process has progressed if it has not been obtained yet. What each status means and what it costs to complete is explained in the guide on the cost of final municipal approval.
• The price comparison in writing, with and without the benefit, on the same unit and with the same date.
• The certificate of mortgages and charges on the project or the specific unit.
• The current condominium regulations, or the draft if the condominium does not yet have a final approved version.

The order that keeps you from losing the unit or paying too much

• Ask for the price comparison in writing before discussing any other condition. It is the figure that lets you judge whether the deal makes sense.
• Check the building permit by number and date, because that determines whether the project qualifies for the benefit at all.
• Review the status of the final municipal approval and the title study before signing the promise agreement, not afterwards.
• Read the condominium regulations, or ask for the draft if they are not yet finally approved.
• Arrange the loan with the bank before signing, so the conditions of the state guarantee are reflected in the deed.
• Include exit clauses in the promise agreement in case the developer decides not to take up the benefit, or the window never opens.

Common mistakes when assessing this purchase

• Calculating the discount by applying 19 per cent to the list price. As explained, the real saving is a fraction of that, and getting the calculation wrong leads you to commit with the wrong expectations.
• Signing a promise agreement that does not set out the price with the benefit in writing. Without that figure, there is nothing to claim afterwards if the final price does not match what was offered.
• Assuming the benefit applies even if the developer does not opt in. It is not automatic: it depends on the seller choosing to take up the exemption.
• Rushing the purchase just because of the VAT, without checking the final municipal approval or the title study. A legal problem with the unit outweighs any tax discount.

Frequently asked questions

Can I buy now and take up the benefit later?

The exemption applies to the sale, and the sale is completed when it is executed. A purchase made before the window opens does not retroactively become exempt. That is why the promise agreement and its deadlines matter so much: it is the instrument that lets you wait without losing the unit.

Does it apply to a second home or an investment property?

Under the text passed by Congress, the exemption is defined by the transaction, not by what the buyer intends to do with the property, and it does not include any cap on value or number of units. It is worth waiting for the published text before structuring a purchase of several units on this assumption.

I am buying a used house. Does it apply to me?

No. A sale of a used home between private individuals is not subject to VAT in the first place, so there is nothing to exempt. The benefit is for the first sale.

And if the developer decides not to opt in?

It is a real possibility, because for some projects the loss of the input tax credit makes the transaction not worthwhile. That is why what you should ask for is the final price in writing under both scenarios, not a generic promise of a discount.

How much will I actually save?

It depends on how much of the price is land and on how much input tax credit the developer loses. There is no single percentage, and anyone who gives you a figure without seeing the project is guessing. What you can do is require the comparison in writing.

What happens if the Constitutional Court strikes down this part?

The challenges target specific provisions, not necessarily this one. Until there is a ruling and publication, the prudent course is not to base a purchase decision on the benefit, but to have everything reviewed so you can decide quickly once the picture is clear.

If it is a condominium, what should I check in the regulations before signing?

It is worth checking the fines it sets out, the common areas and the use restrictions, because it is the document that will govern life there once you take possession of the unit. If the regulations have not yet been updated, the process and its stages are explained in the guide to updating condominium regulations.

How we work on this

What we do on these purchases is the same as on any other, and it is what the discount does not replace: reviewing the project's title, the mortgages and prohibitions that must be lifted, the status of the final approval, and the condominium regulations before you sign the promise agreement.

On the benefit itself, the useful work is drafting: making sure the price, the condition of opting in, and the consequences of not doing so are written into the promise agreement, with deadlines that let you walk away if the project does not opt in or the window never opens.

If you are also financing with a loan, we coordinate to make sure the conditions the bank needs are reflected in the sale deed, which is where most deals fall through at the last minute.

All of this falls within our title study practice. Send us the promise agreement you were offered and the project's background documents, and we will tell you what to check and what to require in writing before you commit.