Tax exemptions when selling a home in Peru

Selling a property in Peru generates, as a rule, second-category Income Tax of 5 % on the gain. But the law recognizes a key exemption for the main residence: the taxpayer's sole home. Properly applied, this exemption allows selling without paying IR; mishandled, it opens years of audits. This article explains what the Income Tax Law (LIR) says, when it applies and what other legal routes exist.

The exemption in Article 2 of the LIR

Article 2, paragraph b), of the Income Tax Law states that the sale of property does not constitute a capital gain when the following conditions are met:

1. The property is the seller's primary residence.
2. The seller has owned it for at least two years before the sale.
3. The sale is not made by a person habitually engaged in selling real estate ("habituality" is triggered, under the regulation, from the third sale in a tax year).

When the three requirements are met, the operation is non-taxable: the 5 % is not paid. SUNAT validates compliance when registering the transfer.

SUNAT's definition of "primary residence"

The LIR regulation defines a primary residence as a property that:

• Has been owned by the seller for at least two years.
• Is not exclusively allocated to commerce, industry, office, warehouse or garage.

If the taxpayer owns a single home, that one is clearly the primary residence. If they have two or more, the primary residence is the most recently acquired, unless the taxpayer expressly chooses another at the time of sale.

Documents to have ready

Although the exemption operates by law, in practice the notary and SUNAT verify:

• Title of ownership recorded at SUNARP older than two years.
• Utility bills (Sedapal, Luz del Sur/Enel, Sedalib, Calidda) in the seller's name with the property's address.
• Identity document with matching address.
• Sworn statement of sole home or, if there are several, express designation.
• Self-appraisal at the municipal SAT for recent years.

If the exemption does not apply

When the sale pays IR, the calculation is:

2nd-category IR = (Sale price − Deductible cost) × 5 %

The deductible cost includes:

• Original acquisition price.
• CPI adjustment between acquisition and sale dates (Supreme Decree 122-94-EF), provided the purchase predated the tax year of the sale.
• Improvements supported by payment vouchers.
• Alcabala and other taxes paid on acquisition.
• Notary and SUNARP fees for the original procedure.

The CPI adjustment factor is one of the seller's great allies: on properties bought 10–25 years ago it can reduce the taxable gain to a fraction.

Other legal routes to reduce the tax

Inheritance

Transmission by inheritance is not subject to Income Tax or Alcabala (Alcabala only applies to onerous or gratuitous inter vivos transfers). The heir receives the property with a deductible cost equal to the self-appraisal value or the value agreed in the succession, per SUNAT criteria.

Advance of inheritance

An advance of inheritance between parents and children is a donation; it is subject to Alcabala (3 % over the excess of 10 UIT of the self-appraisal value) but does not generate income because it is not a transfer for value.

Contribution to an EIRL or company

Contributing the property to one's own EIRL or SAC is a transfer and generally generates IR. It is only worth it for medium-term planning tied to development or sustained rental, with specialized tax advice.

What you should not do

• Selling below market value to reduce the gain. SUNAT and the municipality cross the price with the self-appraisal and REPEV appraisals. If the declared price is clearly lower, they adjust the basis.
• "Donating" to a non-relative third party so they can later sell. It triggers double Alcabala and, if SUNAT detects the simulation, retroactive IR plus penalties.
• Waiting "exactly two years" without inhabiting the property. The exemption requires effective use as a residence, not just formal ownership.

Real case

A professional in Lima bought an apartment in San Borja in 2014 for S/ 320,000. He has lived there since. In 2026 he sells it for S/ 540,000.

• More than two years of ownership and use as a residence.
• It is his sole home.
• The operation is not subject to second-category IR.
• Saving compared to a habitual seller: ~S/ 11,000.

Step-by-step procedure

1. Get the SUNARP CRI and the no-debt certificate from the municipal SAT.
2. Gather utility bills and DNI tied to the property.
3. Ask the notary for a prior IR calculation with and without exemption.
4. Sign a sworn statement of primary residence before the notary.
5. Keep the tax file for at least five years in case SUNAT requests verification.
6. The buyer pays the Alcabala at the municipal SAT (or SATCH/SATA depending on the city).

Final recommendations

• If you have two properties and plan to sell the older one, it is best to document its status as primary residence in writing.
• Selling in installments does not change the regime, but distributes the cash flow and helps planning.
• If habituality is near, selling in different tax years avoids triggering the third-category regime.

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