Property Ownership Taxes at a Glance
Paraguay property tax questions for foreign owners usually include annual property tax, rental income tax, capital gains, and transfer taxes. This guide covers the main Paraguay real estate taxes to understand before you buy or rent out a property.
Verify all rates before relying on them
| Tax | Rate | Tax Base | Notes |
|---|---|---|---|
| Annual property tax (impuesto inmobiliario) | Verify with municipality | Fiscal/cadastral value | Usually much lower than market value |
| Rental income tax (resident) | Verify with DNIT | Paraguayan-source rental income | Territorial system - only PY-sourced |
| Rental income tax (non-resident) | Verify with DNIT | Gross or net rental income | Withholding mechanism may apply |
| Capital gains on sale | Verify with DNIT | Gain on sale | Treatment varies by residency |
| Tax on transfer (IVA on enajenación) | Verify with DNIT | Verify | Due at closing |
| Wealth tax | None | - | No wealth tax in Paraguay |
| Inheritance tax | None | - | No inheritance tax |
| Gift tax | None | - | No gift tax |
Annual Property Tax (Impuesto Inmobiliario)
Property tax Paraguay owners pay is levied by municipal governments, not the national government. Impuesto inmobiliario Paraguay rules use fiscal/cadastral value as the base - this is usually significantly lower than market value. The rate varies by municipality (verify current rates for Asunción and other cities).
Payment schedule: typically annual, some municipalities allow quarterly installments. Unpaid property taxes accumulate and attach to the property - the buyer inherits the debt.
How to check: request the tax clearance certificate (certificado de solvencia municipal) through your escribano.
Fiscal Value vs Market Value
The tax base is the fiscal/cadastral value assigned by the municipality, not the market price you paid. Fiscal values are often 30–50% of market value (this is a general estimate, not a rule - verify locally). Municipalities periodically reassess fiscal values, especially in developing areas.
You cannot negotiate fiscal value at purchase - it is set by the municipality.
Rental Income Tax
Rental income tax Paraguay owners need to consider starts from a simple rule: rental income from Paraguayan property is Paraguayan-source income, taxable in Paraguay regardless of where the owner lives.
Resident owners: taxed under personal income tax (IRP) on Paraguayan-source income. See the Tax Guide for details.
Non-resident owners: withholding tax applies. Verify the current rate with DNIT before relying on any figure - sources conflict on whether it is 7.5%, 10%, or 15%.
If you plan to rent out property, register for a RUC (tax ID). See RUC Registration. VAT (IVA) may apply to lease agreements - verify with a local tax advisor.
Capital Gains Tax on Property Sales in Paraguay
Capital gains from selling Paraguayan property are Paraguayan-source income. Treatment varies by owner's residency status and tax structure. Verify current rates and calculation method with DNIT.
Do not assume Paraguay's territorial tax system exempts capital gains on local property - it does not.
Tax on Real Estate Transfer (IVA on Enajenación de Inmuebles)
Property transfers are subject to IVA treatment per DNIT Ley 6380/19. DNIT materials point to a 5% rate applied to a 30% base, which would effectively be approximately 1.5% in many cases. However, this figure has not been independently verified against current DNIT publications. Verify the applicable rate and base with DNIT before relying on it for a specific transaction. Do not use competitor "ITI 1-3%" figures without verification.
This is a closing cost, not an annual cost - covered in the closing-cost breakdown on the buying guide. Verify current treatment with DNIT before publishing any rate.
Property Insurance
Not mandatory but recommended. Coverage typically includes fire, theft, natural events, and liability. Annual premiums vary - verify current ranges with local insurers. If renting out, confirm coverage includes tenant-caused damage.
International insurance companies operate in Paraguay; local options also exist.
Property Management for Absentee Owners
If you live outside Paraguay, consider professional property management. Typical services: tenant screening, rent collection, maintenance coordination, periodic inspections.
Fee structure varies - verify current market rates with local providers. Some management companies also handle tax filings and utility payments.
Property management is an unregulated industry in Paraguay - vet providers through references and written contracts.
Short-Term Rentals (Airbnb)
Short-term rentals are generally legal in Paraguay, but building or condo rules may restrict them. Check the reglamento de copropiedad before purchasing an apartment if you plan to do short-term rentals.
Tax implications: short-term rental income is Paraguayan-source income and taxable. If you use platforms like Airbnb, they may collect and remit taxes directly - verify current treatment with a local tax advisor. Register for a RUC regardless. See RUC Registration.
Municipal restrictions may apply in some areas. Verify local rules before committing to a short-term rental strategy. Property management for short-term rentals is more involved than long-term - factor in cleaning, guest communication, and dynamic pricing if self-managing, or management company fees if outsourcing.
Budgeting for Ongoing Costs
- Annual property tax (based on fiscal value, usually modest)
- Insurance (if purchased)
- Property management fees (if absentee owner)
- Maintenance reserve (budget 1–2% of property value annually as a general planning figure)
- Utility costs (see the Housing Guide for detail)
- Rental income tax (if renting out)
For full budgeting context, see Cost of Living in Paraguay and the Tax Guide.