Chile Tax Agency Clarifies Taxation of Bank’s Income From Sale of Previously Mortgaged Real Estate

The Chilean Internal Revenue Service July 14 issued Letter No. 2140, clarifying the taxation of a bank’s income from the sale of a previously mortgaged real estate. A Chilean bank sought clarification as to the taxation of the income generated from writing-off a debt and selling previously mortgaged real estate at its market value. The tax agency clarified that: 1) the bank must reverse the mortgage expense and recognize the sale proceeds from the real estate when calculating its net taxable income; and 2) the bank must pay taxes on the surplus income obtained from the sale by deducting the ...