Uruguay's Rental Tax Credit: How Tenants Deduct 8% of Rent From Their IRPF

INGAR · · Rentals

Uruguay's Rental Tax Credit: How Tenants Deduct 8% of Rent From Their IRPF

If you rent a primary residence and pay IRPF (Uruguay's personal income tax) on employment income, you can claim a tax credit worth 8% of the rent actually paid and accrued over the year.

On rent of $ 30.000 a month paid for all twelve months, the theoretical credit works out to:

$ 30.000 × 12 × 8 % = $ 28.800

Here's the distinction people get wrong most often: this is not a deduction that lowers your taxable base. It is a credit subtracted straight from the tax itself. There is a ceiling, though — it cannot exceed the IRPF you generated on employment income.

How much you can claim

Monthly rentPaid over twelve months8% tax credit
$ 20.000$ 240.000$ 19.200
$ 25.000$ 300.000$ 24.000
$ 30.000$ 360.000$ 28.800
$ 40.000$ 480.000$ 38.400
$ 50.000$ 600.000$ 48.000

These examples assume the same rent across all twelve months. If your lease covered only part of the year, the credit is calculated on what was actually paid and accrued during that tax year.

One detail that settles a lot of arguments: common charges, utilities and other incidental amounts are not part of the rental price for these purposes. The 8% applies to the rent itself, not to the full amount you wire over each month.

A tax credit and a deduction are not the same thing

A deduction reduces the amount your tax is calculated on, so what you save depends on the rate that follows. The rental credit works differently: it comes off the tax already assessed.

Article 51 of Title 7 of the Texto Ordenado 2023 (Uruguay's consolidated tax code) allows up to 8% of the rental price to be applied against your IRPF bill.

In practice: if you generated $ 40.000 in IRPF and hold a rental credit of $ 28.800, your tax drops to $ 11.200.

The limit: how much IRPF you generated

The 8% sets the theoretical credit. You can only use it up to the amount of IRPF generated on employment income — not a peso more.

Take a year with $ 200.000 in rent paid:

  • Theoretical credit: $ 16.000.
  • IRPF generated: $ 11.600.
  • Usable credit: $ 11.600.

The remaining $ 4.400 is neither refunded nor carried forward to future years.

Be careful not to read that as "the credit never produces a refund" — it certainly can. If IRPF was withheld from your paychecks during the year, the credit can leave a balance in your favor. What you cannot recover is the portion of the credit that exceeds the tax generated.

If you also collect a retirement or survivor pension subject to IASS (Uruguay's tax on pension income), the credit is applied first against IRPF, and any leftover may go toward the IASS. DGI (Uruguay's tax authority) publishes worked examples of these combinations.

Requirements: meet them all, or there's no credit

  1. You generated IRPF on employment income during the tax year.
  2. You are a named party on the lease.
  3. The property is used as a primary residence.
  4. The lease is in writing.
  5. Its term is one year or longer.
  6. The landlord can be identified.
  7. You actually paid the rent for that year.

Two useful clarifications: the lease may already have expired by the time you file your return, and it does not need to be registered to qualify for the benefit.

The credit does not apply to commercial premises or to seasonal rentals.

What your lease needs to spell out

The landlord's identity has to be evident from the lease itself. Before signing, check that it includes:

  • The landlord's name or company name.
  • Cédula de identidad (national ID number), NIE or RUC (taxpayer ID) number.
  • Full address.
  • The department and locality where the property sits.
  • Padrón (land registry parcel number) and unit number, where applicable.

If the owner has appointed a brokerage or another party to act on their behalf, that representative may need to be identified too — provided the lease names them as such.

Hold on to the lease and your payment receipts. A year later, when filing season arrives, they are the only things anyone will question.

When there are two or more tenants

Only people who are named parties on the lease can use the credit.

Where there are two or more co-tenants, they can agree on how to split it; absent an agreement, it is divided equally.

In other words: each tenant does not walk away with 8% of the total rent. Between them, they cannot exceed the credit generated by the rent actually paid.

How to claim it

You claim the benefit when you file your annual IRPF return, using form 1102 or 1103, whichever applies.

You will need to report:

  • The rent paid and accrued during the tax year.
  • The property details.
  • The landlord's identifying information.
  • Each tenant's share of the credit, if there are co-tenants.

DGI then works out how the credit affects both your tax bill and the amounts withheld during the year.

When the 8% took effect

The credit used to be 6%; Ley 20.124 raised it to 8%.

The new rate applies from the 2023 tax year, not from 2024. The statutory wording — "taxable events occurring on or after December 31, 2023" — caused confusion, because for annual IRPF the taxable event crystallizes at the close of business on December 31. Resolución DGI 1132/024 settled the point explicitly.

That's why you will still find pages — official ones included — that quote 6%. For current filings, the rate is 8%.

What about the landlord? The IRPF owed on rental income

When the owner is a resident individual, rental income is generally taxed under IRPF as income from real-estate capital.

The standard regime applies 12% to computable income. To arrive at that figure, the following can be deducted where applicable and documented:

  • Bad debts allowed under the regulations.
  • The property manager's commission.
  • Professional fees for drawing up or renewing the lease.
  • VAT on those commissions and fees.
  • Contribución Inmobiliaria (the municipal property tax).
  • Impuesto de Enseñanza Primaria (the national primary-education property levy).
  • In a sublease, the rent paid by the sublessor.

What does not qualify on its own: general maintenance, upkeep or repair costs on the property. This is one of the more expensive misconceptions among owners who build their yield projections assuming "every expense is deductible."

When a brokerage or other withholding agent is involved, 10.5% of gross accrued income is typically withheld. Without a withholding agent, the taxpayer may have to make advance payments at the same rate.

The owner can elect to treat those withholdings or advances as final, or instead file an annual return at 12% on computable income.

All of this concerns IRPF for resident individuals: nonresidents and companies are taxed under different regimes.

An exemption for owners with modest rental income

A resident individual can apply for an IRPF exemption on rental income if all of the following hold:

  • Total rental income does not exceed 40 BPC per year (BPC is Uruguay's benefits-and-contributions base unit, reset annually).
  • Other taxable capital income does not exceed 3 BPC per year.
  • The owner expressly authorizes a waiver of bank secrecy.
  • The owner obtains a certificate of exemption from DGI.

With the 2026 BPC set at $ 6.864:

LimitBPC2026 value
Annual rental income40$ 274.560
Other taxable capital income3$ 20.592

For reference, those 40 BPC correspond to average rent of $ 22.880 a month over twelve months. But note: the limit is measured across all of the taxpayer's rental income for the year, not property by property. An owner with two small apartments can fall outside the threshold even if each unit, on its own, sits well below it.

The process uses form 5500 for the application and form 5600 for the bank-secrecy waiver.

And some reassurance for tenants: the owner's exemption does not wipe out your credit. These are separate regimes, applying to separate taxpayers.

Frequently asked questions

Can I claim the rent if I don't pay IRPF?

No. The credit needs a tax to be applied against. With no IRPF on employment income — and no applicable IASS — there is nothing to offset.

Does the lease have to be registered?

Not for this credit: it just has to be in writing and run for a year or more. Registration does matter elsewhere; leases under the no-guarantee regime of the LUC (Ley 19.889, Uruguay's 2020 urgent-considerations law) are only enforceable against third parties once recorded in the registry.

Does a verbal agreement count?

No. The regulations require a written lease.

Can I use the credit if the lease has already expired?

Yes, as long as it was in writing, ran for a year or more, and the other requirements are met.

Do I always get 8% of my rent back?

Not necessarily. The 8% is the theoretical credit; the final outcome depends on the IRPF you generated and on what was already withheld from you.

What if the landlord is exempt?

You lose nothing. The two benefits are independent of each other.

Before you sign the lease

To keep the benefit within reach, confirm that:

  • You appear as a named party on the lease.
  • The stated use is primary residence.
  • The lease is written and runs at least one year.
  • The landlord is properly identified.
  • The padrón and unit number are recorded correctly.
  • You are keeping your payment receipts as you go.

At INGAR we draft leases with the parties and the property properly identified, and we keep documented records of the payments we administer. Beyond keeping the owner-tenant relationship orderly, that paper trail is exactly what allows each side to claim the tax benefits it's entitled to.

If you're adding up what renting really costs you, weigh this credit against the price of your rental guarantee: the guarantee calculator compares the options side by side. And if a move is on the horizon, browse our current listings.

Keep reading

Sources

General information current as of August 1, 2026. It is not a substitute for accounting advice tailored to your situation.

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