Real Estate Taxation in Paraguay: Taxes, Rental Income, and Resale

Documents, a calculator, and a computer used to analyze the tax implications and profitability of a real estate investment in Paraguay.

Taxation in Paraguay: What International Investors Need to Know

Real estate taxation in Paraguay depends on the owner’s status, the form of ownership, and the specific transaction involved. Rental income, property ownership, and resale are therefore not taxed in the same way.

This page outlines the key rules you should be aware of before buying or renting an apartment in Asunción. In particular, it distinguishes between resident individuals, non-residents, and corporations.

This information is general in nature and is not a substitute for the analysis provided by an accountant or tax advisor in Paraguay. The situation must be verified based on your residence, your acquisition structure, and your country of origin.

Real Estate Taxation in Paraguay: Key Rules for 2026

The Paraguayan tax system is often summarized as “10/10/10.” This breakdown helps illustrate that the main tax rates remain relatively moderate. However, it is not sufficient to accurately calculate the tax implications of a real estate investment in Paraguay.

In practice, the applicable real estate tax in Paraguay depends, among other things, on the owner’s tax status, the manner in which the property is held, its use, and the nature of the income received. The rules therefore differ for an individual resident in Paraguay, a nonresident owner, and a Paraguayan corporation.

Documents, calculator, and keys used to manage the tax aspects of a real estate investment in Paraguay

Taxation of Rental Income for a Landlord Residing in Paraguay

When real estate in Paraguay is owned by an individual who is a tax resident of Paraguay, rental income is generally subject to personal income tax applicable to income and capital gains. The property tax rate in Paraguay is set at 8 %, but it does not automatically apply to the entire amount of rent collected.

Landlords can choose between two methods for determining their taxable base in Paraguay. The first involves deducting a flat rate of 50 % from the amount of rent received. In this case, the tax effectively amounts to 4 % of the gross rent.

The second method involves calculating the actual net rental income. Certain expenses that have actually been paid and are properly documented may then be deducted, including property tax in Paraguay, as well as maintenance, management, and administrative costs. The rate of 8 % is then applied to the resulting net income.

Rental income and certain capital gains on real estate may be subject toParaguayan personal income tax, known as IRP

Taxation of Rental Income for Non-Resident Landlords

When real estate is owned by an individual who is a tax resident of Paraguay, rental income is generally subject to personal income tax applicable to income and capital gains. The tax rate is set at 8 %, but it does not automatically apply to the entire amount of rental income received.

The property owner may choose between two methods for determining his or her taxable base. The first involves deducting a flat rate of 50 % from the amount of rent received. In this case, the tax effectively amounts to 4 % of the gross rent.

The second method involves calculating the actual net rental income. Certain expenses that have actually been paid and are properly documented may then be deducted, including property taxes, maintenance costs, and management and administrative fees. The rate of 8 % is then applied to the resulting net income.

VAT Applicable to the Rental of Real Estate in Paraguay

A person who owns an apartment in Paraguay but is not a Paraguayan tax resident is generally subject to the nonresident income tax, known as INR. This tax regime applies to income generated in Paraguay by an owner who is based in another country.

For the rental of real estate located in Paraguay, the taxable base is 50 % of the gross rent received. The INR rate, set at 15 %, is then applied to this flat-rate taxable base.

The effective tax rate is therefore generally 7.5 % of the gross rent, before taking into account any applicable VAT. Payment is normally made through the withholding or collection mechanisms established by the Paraguayan tax authorities, depending on the landlord’s circumstances.

Tax Treatment of Resale for a Resident Individual

When an individual resident in Paraguay sells real estate, the gain realized generally falls under the category of income and capital gains subject to personal income tax. The rate applicable to the taxable base is set at 8 %.

This base is the lower of 30 % of the property’s sale price and the documented actual capital gain. The latter is calculated based on the purchase price and any justifiable selling expenses.

When the flat-rate basis of 30 % is used, the maximum tax amounts to 2.4 % of the sale price. To claim the actual capital gain, the owner must provide valid supporting documentation. In particular, the deed recorded in the public registry can establish the property’s acquisition cost.

Taxes on the Resale of Property for a Non-Resident Owner

When a nonresident owner sells real estate located in Paraguay, the transaction is generally subject to the Nonresident Income Tax (INR). This tax regime applies when the seller does not have tax residency in Paraguay.

The taxable base is set at a flat rate of 30 % of the total sale price. The official INR rate, which is 15 %, is then applied only to that portion of the real estate transaction amount.

The effective tax rate therefore generally amounts to 4.5 % of the property’s sale price. It is important to distinguish this effective rate from the statutory rate of 15 %, since the latter does not apply to the entire price, but only to the taxable base representing 30 % of the sale.

Tax Treatment of a Real Estate Investment Held by a Corporation

When a nonresident owner sells real estate located in Paraguay, the transaction is generally subject to the Nonresident Income Tax (INR). This tax regime applies when the seller does not have tax residency in Paraguay.

The taxable base is set at a flat rate of 30 % of the total sale price. The official INR rate, which is 15 %, is then applied only to that portion of the real estate transaction amount.

The effective tax rate therefore generally amounts to 4.5 % of the property’s sale price. It is important to distinguish this effective rate from the statutory rate of 15 %, since the latter does not apply to the entire price, but only to the taxable base representing 30 % of the sale.

Key points:

When real estate is owned by a Paraguayan company subject to the general tax regime, rental income and capital gains realized upon its resale are included in the company’s taxable income. They are then subject to corporate income tax, known as IRE.

The IRE rate is set at 10 % of taxable net income. The company may deduct the costs and expenses necessary for its business operations provided they are actual, properly documented, and recognized for tax purposes by the tax authorities.

However, the total tax burden is not always limited to 10 %. When profits are distributed, the IDU may also apply, at a rate of 8 % for a resident beneficiary and 15 % for a non-resident. The choice of structure therefore depends on the wealth management strategy.
Calculating Rental Income and Real Estate Taxes in Paraguay

How is rental income taxed in Paraguay?

Rental income from a property located in Paraguay is considered income from a Paraguayan source. Its tax treatment in Paraguay depends, in particular, on whether the owner is a resident or a non-resident.

Taxation of Rental Income for an Individual Resident in Paraguay

For a resident individual subject to the IRP-RGC, the taxable base can be determined using two methods.

The first one retains 50 % of the total rent amount. The second method deducts from the rent the property tax in Paraguay and actual, properly documented maintenance, management, and administrative expenses.

The taxable base is the lower of the two amounts. The IRP-RGC tax rate is then 8 %.

Taxation of Rental Income for Non-Resident Landlords

For a nonresident owner, the INR is applied to a deemed basis equal to 50 % of the gross rental amount. The INR level is 15 %.

The calculation therefore results in a tax equivalent to 7.5 % of the gross rent, before VAT and any other obligations. This effective rate is obtained by multiplying the base amount of 50 % by the rate of 15 %.

The procedures for withholding, reporting, and payment must be confirmed with a Paraguayan accountant.

What VAT rate applies to real estate rentals in Paraguay?

Income tax in Paraguay and the VAT are two separate obligations.

According to the Official tax information from the DNIT, the VAT rate applicable to the rental of a property used exclusively for residential purposes is 5 %.

On the other hand, rental property used for commercial purposes is generally subject to the tax rate in Paraguay 10 %.

For short-term rentals—whether furnished or service-based—the exact terms must be verified based on the services actually provided and the operational structure.

What expenses can be deducted from rental income in Paraguay?

Under the IRP-RGC, certain rental-related expenses may reduce the taxable base.

The law specifically mentions property taxes as well as maintenance, management, and administrative expenses. However, these must represent actual expenses and be properly documented.

Requirements for Deducting an Expense from Income in Paraguay

An expense does not automatically become deductible simply because it relates to a rented apartment.

To be considered, it must, in particular:

  • be directly related to the property or its management
  • to have actually been paid
  • be accompanied by a certified copy
  • be registered in the name of the person or organization in question
  • comply with the tax rules applicable to the owner's tax status

Rental management fees, certain maintenance expenses, and administrative costs may thus be included when they meet these conditions. However, personal or undocumented expenses must not be included in the calculation.

The Aura Capital team assisting an investor during the signing of a real estate project in Asunción, Paraguay, with a model of the residential complex and sales documents.

Example of How to Calculate the IRP on Rental Income

Let's take the simplified example of a resident individual who receives $18,000 in annual rent.

His actual, documented expenses total 3,000 USD.

Method 1: Flat-Rate Basis

50 % of 18,000 USD = 9,000 USD

Method 2: Result After Expenses

18,000 USD – 3,000 USD = 15,000 USD

The weakest base is therefore 9,000 USD.

8 % of 9,000 USD = 720 USD in IRP-RGC

A couple accompanied by a financial advisor during the presentation of a mortgage payment plan in Asunción, Paraguay.

In this example, the tax on rental income would therefore be $720 in monetary terms, before taking into account VAT and any other potential fees.

This example is for educational purposes only. The declaration and payment are made in accordance with the rules and in the currency specified by the Paraguayan government. The method used complies with the rules for determining the tax base and the rate of 8 % as provided by law.

How much is the property tax in Paraguay?

A tax of 1 % calculated on the assessed value

Ownership of real estate in Paraguay requires the annual payment of the Impuesto Inmobiliario.

Its general rate is set at 1 % of the property's tax value. This tax value is an official figure. It does not necessarily correspond to the price paid by the buyer or to the resale value of the property in accordance with official information on property tax published by the DNIT.

Since the recent cadastral reform, the DNIT has been determining the assessed values used as the tax base. This information is then forwarded to the municipalities, which are responsible for collecting property taxes.

The exact amount must therefore be verified using the cadastral record and the property's tax assessment.

A couple calculating the rental income and expenses for a real estate investment in Paraguay

What is the real estate capital gains tax in Paraguay?

Resale by a resident individual

For a resident individual, the resale of a building may be subject to personal income tax on income and capital gains.

The rate is 8 %. The taxable base is the lower of:

  • 30 % of the selling price;
  • the net gain calculated based on the sale price, the acquisition cost, and the allowable and documented selling expenses.

When the 30 % tax base is used, the tax amounts to 2.4 % of the selling price.

The VAT applicable to the sale of real estate must be considered separately. The notary generally verifies the withholding procedures and supporting documents at the time the deed is executed.

Discussion on the Tax Treatment of a Real Estate Investment in Paraguay
An investor analyzing the rental income and expenses for his or her property in Paraguay

Resale by a Nonresident Owner

For a non-resident owner, the INR is set at 15 % based on a presumed value equal to 30 % of the sale price excluding IVA.

Income tax thus accounts for 4.5 % of the sale amount, excluding VAT. VAT may also be withheld separately at the time of the transaction. The notary handling the deed plays a central role in applying these withholdings.

The tax implications of a resale must therefore be calculated before the purchase. They can influence the choice between a long-term wealth management strategy, a resale after delivery, or a buy-and-resell transaction.

Resale of Property Owned by a Corporation

When a building is owned by a corporation, the sale is generally subject to corporate income tax.

However, the calculation depends on how the asset is recorded in the books, the company’s business activities, and whether it is classified as an asset held for the long term or for resale.

A corporate structure must therefore be determined before the purchase. It is rarely the best approach to form a company after the acquisition solely to alter future tax treatment.
Tax documents, calculator, and keys for a property in Paraguay

Real Estate Taxation in Paraguay: How Is Foreign Income Taxed?

Paraguay primarily operates a tax system based on the principle of territoriality. This means that taxation depends primarily on the source of the income, and not solely on the place of residence of the person receiving it.

Income from Foreign Sources Earned by an Individual

Paraguay applies the territoriality principle for personal income tax. This principle applies to income of Paraguayan source, including income derived from activities carried out in the country, from property located there, or from rights exercised there.

An individual’s actual income from foreign sources is therefore generally outside the scope of Paraguay’s personal income tax.

However, it is more accurate to refer to income excluded from the scope of the survey than to report a general rate of 0.%. This is because the classification of an income source depends on the nature of the activity, the location where it is carried out, and the entity that receives it.

Tax residency must be assessed in both countries

Obtaining Residency in Paraguay does not automatically mean that you cease to be a tax resident of your previous country.

Tax residency in Paraguay may depend on several factors:

  • the time spent in each country;
  • the location of the outbreak;
  • the center of economic interests;
  • professional activity;
  • the internal rules of each jurisdiction;
  • whether a tax treaty exists.

To understand Why Invest in Real Estate in Paraguay You can visit our dedicated page and be sure not to miss out on some great opportunities.

Understanding Real Estate Taxes in Paraguay Before Buying a Property

Real estate taxes in Paraguay must be factored into the plan before reserving the property. They affect the actual net income, the annual cost of ownership, and the profit realized upon resale.

Before investing, it's a good idea to check:

  • the future owner's tax status;
  • the form of ownership of the property;
  • the type of lease being considered;
  • the applicable VAT;
  • expenses that can be documented;
  • the annual property tax;
  • the tax treatment upon exit;
  • bonds held in the country of residence.

Aura Capital can incorporate these factors into the economic analysis of your investment and put you in touch with the relevant local professionals. However, the firm does not serve as a substitute for an accountant, tax advisor, or notary.

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FAQ – Taxation in Paraguay

The Paraguayan tax system is often summarized by the rule of 10 / 10 / 10. Generally speaking, taxable income is taxed at 10 %, VAT (IVA) is generally 10 %, and many types of income from Paraguayan sources are also subject to a 10 % tax. This structure contributes to the simplicity and transparency of the country’s tax system.

Yes. Income generated by real estate located in Paraguay is taxable in Paraguay.

However, the tax is not calculated based on the gross amount of rent received. It is calculated based on the profit earned after deducting eligible expenses related to the operation of the property.

This approach results in a tax system that is more consistent with the actual return on investment.

return.

Yes.

Expenses directly related to the operation of the property may generally be taken into account when calculating taxable income.

Depending on the owner’s circumstances and the chosen structure, this may include rental management fees, certain administrative costs, maintenance expenses, certain repairs, or accounting fees.

Tax is therefore calculated based on net income, not on gross rental revenue.

Paraguay levies an annual property tax called Property Tax.

The rate is generally 1 % of the property's tax value.

Since this tax value is often lower than the property's market value, the annual cost of ownership generally remains low for property owners.

No.

Paraguay does not have a system equivalent to the former French housing tax. For real estate investors, this helps limit the recurring costs associated with owning a property.

Yes.

When a property is sold at a profit, that profit may be subject to tax depending on the owner’s status, tax residence, and the structure used to hold the asset.

In most cases, the applicable tax rates remain competitive and generally range between 8 % and 10 % depending on the plan in question.

Yes.

Paraguay operates under the principle of tax territoriality.

Income earned in Paraguay is taxable in Paraguay.

Conversely, income derived from sources outside Paraguay is generally not subject to local taxation for individuals who have become Paraguayan tax residents.

This is one of the most attractive features of the Paraguayan tax system.

Generally speaking, no.

When a Paraguayan tax resident receives only income from foreign sources, that income is generally not taxed in Paraguay.

This is particularly true for many entrepreneurs, consultants, investors, and executives whose business activities are conducted outside Paraguayan territory.

However, each situation must be analyzed on a case-by-case basis to take into account the applicable rules in the other relevant jurisdictions.

Yes.

Purchasing real estate in Paraguay does not require you to become a tax resident of the country.

Many international investors purchase real estate in Asunción or the Greater Asunción area while maintaining their tax residency in their home country.

Not necessarily.

Local property taxes already apply to investments made in Paraguay.

The issue of tax residency is part of a broader consideration that depends on your personal circumstances, your activities, your assets, and your long-term goals.

Paraguay is attracting an increasing number of investors thanks to a combination of factors that are rarely found together: a competitive tax system, a simple tax code, low property taxes, attractive local tax rates, low holding costs, and a real estate market that remains affordable, particularly in Asunción.

No.

Favorable tax treatment can improve the profitability of an investment, but it is never a substitute for the quality of an asset.

Location, rental demand, appreciation potential, and the quality of the real estate market remain the most important criteria in a long-term wealth management strategy.

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