Seller's guide · San Salvador
Selling property in El Salvador: the 10% capital gains tax and the 12-month rule
When you sell a house or land in El Salvador, the seller's tax is income tax on the gain: 10% of the net gain if you owned the property for 12 months or more. Sell sooner, and the gain is taxed with your ordinary income. The 3% transfer tax is the buyer's, not yours.
The tax on the gain, in three rules
1. Owned 12 months or more: 10% of the net gain
Article 42 of the Income Tax Law (Ley de Impuesto sobre la Renta) taxes the net gain on the sale at 10%. Example: you bought for $200,000, spent $20,000 on documented improvements and sell for $260,000. The net gain is $40,000, and the tax is $4,000.
2. Owned less than 12 months: ordinary income
If you acquired the property less than 12 months before the sale, the gain is not taxed at 10%. It goes into your ordinary income for that year, at the ordinary rates.
3. Buying and selling as a business: ordinary income
Article 14 of the same law gives the 10% treatment to a person who does not buy and sell property habitually. A developer or a person in the business of buying and selling real estate pays tax on the profit as ordinary income.
What you can deduct — and what you must prove
The net gain is the sale price minus the cost of acquiring the property and the cost of the improvements you made while you owned it. Keep a document for every cost you deduct.
- The deed by which you acquired the property, with its price.
- Invoices for construction and improvements: a new room, a wall, a pool.
- If you inherited the property, the inheritance documents that give its value.
Find these papers before you agree a price. A missing invoice can make the gain on paper larger than the real gain.
The sale, step by step
What the seller prepares, in order.
1. Check your own record at the CNR
Read the property's record at the CNR (Centro Nacional de Registros) before you advertise. The buyer's lawyer will read it too. A mortgage, a lien or a description that does not match the lot stops the sale. Fix it first, not when the buyer finds it. Our fee: red-flag check $199.
2. Get proof that the municipal account has no debt
The buyer will ask for proof that the property owes nothing to the municipality. Ask the municipality for it early.
3. Sign the promise contract
The "promesa de venta" fixes the price, the deposit and the date of the deed. Write what happens to the deposit if either side does not sign. Our explainer on the promise to purchase lists the clauses, from the buyer's side.
4. Sign the deed before a notario
A notario authorises the deed of sale. Here a notario is a licensed attorney, not a U.S.-style notary public. Receive the price against the signed deed: a wire or a bank check, never cash on the day.
5. Report the gain to the Ministerio de Hacienda
The gain goes into your income tax return. Work with a tax adviser for the return, and keep the deed of sale and your cost documents together.
Selling from abroad
You do not have to fly in to sign. Grant a special power of attorney to a person you trust. You can sign it before a Salvadoran consul abroad, and it has the same force as one signed in San Salvador. The power must name the property and give the express faculty to sell it and to receive the price. Our fee: $249. How to sign a power of attorney for El Salvador from abroad.
If you live outside El Salvador, ask the notario before the deed whether the buyer must withhold tax from the price, and how much. Get the answer in writing.
More on powers: legal representation in El Salvador, explained. If you are on the other side of the deal, read buying property in El Salvador as a foreigner.
What it costs: our fee and the State
Our fee — fixed in writing
- Title red-flag check — $199.
- Power of attorney — $249, if you sell without traveling.
- Turn-key closing — $1,500 for prices up to $500,000. Above $500,000: 0.3% of the full price.
The State
- Seller: income tax on the gain (10%, or ordinary rates under 12 months).
- Buyer: transfer tax, 3% of the price above $28,571.43.
Honest answers first
This page does not replace a tax adviser. It gives the rules of the law. Your return depends on your income, your residence and your documents.
We act for one side of the sale. If we act for you as seller, we do not advise the buyer.
Tell us about the property
Send the location, the price you expect and, if you have it, the registry number. You get an answer from a licensed Salvadoran attorney, in English or Spanish.