Guatemala Signs Decree Ending IUSI Property Tax on Homes

Guatemala · TAX

The IUSI property tax most Guatemalan homeowners paid to their town hall is on its way out, and the town halls are not pleased.

Guatemala’s official gazette published Decreto 18-2026 on 28 August 2026, a day after President Bernardo Arévalo signed it. The decree drops the IUSI property tax to zero on residential and mixed-use buildings.

What Guatemala’s decree actually changes

Guatemala’s Congress approved Decreto 18-2026 on 29 July 2026, amending Decreto 15-98, the Ley del Impuesto Único Sobre Inmuebles. President Bernardo Arévalo signed it on the night of 27 August 2026.

The official gazette, the Diario de Centro América, carried the text on 28 August 2026. That publication started every clock in the IUSI property tax reform.

IUSI stands for Impuesto Único Sobre Inmuebles, the single tax on real estate that Guatemalan municipalities collect. The decree sets its rate at zero for residential and mixed-use property.

Mixed use means a home with a small business attached, a common arrangement across the country. Commercial buildings keep paying, on a three-step scale written into article 11.

The rates that survive

Commercial property worth up to Q500,000 (US$65,580) pays three per thousand of assessed value. The next band, running to Q1 million (US$131,161), pays six per thousand.

Anything above Q1 million (US$131,161) pays nine per thousand, the top rate in the table. Homes pay nothing at all, whatever they are worth.

A proposal for a flat three per thousand on everything was defeated, drawing only 27 votes. The final text then passed with 120 votes.

Two further reliefs travel with the package. Individuals selling a property are exempted from the 10 percent tax on the capital gain.

Municipalities are also barred from cutting water, rubbish collection or street lighting over unpaid tax. That prohibition removes a common enforcement tool.

The timetable now running

The gazette text gives 60 days before the amended provisions take effect. Prensa Libre, counting the working days the decree specifies, places that first milestone in late November 2026.

The new commercial rate table follows 90 days after publication, which the paper puts in early January 2027. The income tax and stamp duty changes are dated 1 January 2027.

Inside that window four bodies must rebuild their systems. They are the municipalities, the Ministerio de Finanzas Públicas, the SAT and the cadastre directorate.

SAT is the Superintendencia de Administración Tributaria, Guatemala’s national tax agency. The cadastre body is the Dirección de Catastro y Avalúo de Bienes Inmuebles, known as Dicabi.

What town halls stand to lose

Jonathan Menkos, the finance minister, put the loss to municipalities at about Q1.2 billion (US$157.4 million) a year. He said the constitutional transfer formula cannot be reopened to replace it.

Conversions here use the Banco de Guatemala reference rate of Q7.62422 per US dollar for 29 August 2026. Menkos called the IUSI property tax the way local services get funded, not an abuse.

He also argued that most Guatemalans own no property, so the relief flows upward. Higher-income owners of the largest homes gain the most.

To soften the blow, the decree routes a 3 percent stamp duty to municipalities. It applies to second and subsequent property transfers, and is passed on through the SAT.

A very thin tax base

Guatemala collected 11.63 percent of gross domestic product in central government tax revenue in 2024. That is World Bank data, and it is low by regional standards.

Costa Rica took 13.46 percent that year and Mexico 14.82 percent. El Salvador reached 21.8 percent, close to double the Guatemalan figure.

Among Central American neighbours only Panama sat lower, at 7.18 percent. Removing a levy in that setting is an unusual move.

The IUSI property tax was never a large earner in national terms. Its weight is local, which is exactly why the loss lands on town halls.

Winners and losers among 340 municipalities

Guatemala has 340 municipalities, and they do not administer the tax equally. An Instituto Centroamericano de Estudios Fiscales analysis found 45 collected nothing at all in 2025.

Forty of those never ran the levy, while five ran it and booked zero. For them the stamp duty share is a gain rather than a loss.

The institute, known as Icefi, reckons roughly 300 of the 340 come out ahead. At least 16 lose, and five lose heavily.

Those five are Guatemala City, Mixco, Villa Nueva, Santa Catarina Pinula and San Miguel Petapa. All sit in or beside the capital, where property values are highest.

Objections, and a case already at the court

ANAM, the Asociación Nacional de Municipalidades, warned that local finances are at risk. It said member councils use the money for roads, drainage and other infrastructure.

Its president, Sebastián Siero, is also mayor of Santa Catarina Pinula. Asked about legal action, he told Prensa Libre there would be no statements.

Ricardo Barrientos, who directs Icefi, called the law technically flawed and an act of fiscal populism. He noted it passed without opinions from the finance ministry or the SAT.

Barrientos stressed that the levy was not abolished outright. A zero rate for homes still leaves registration duties with municipalities in place.

Juan Carlos Zapata of Fundación para el Desarrollo de Guatemala said the decree could be unconstitutional. He pointed to the different treatment of residential and commercial property.

A case already at the Constitutional Court

A separate challenge is already filed at the Corte de Constitucionalidad. The Cabal caucus lodged it on 12 May 2026, against the original law rather than this decree.

Caucus leader Luis Aguirre argued that the statute had lost its validity. The filing says ownership alone should not be presumed to prove ability to pay.

No separate action against Decreto 18-2026 itself has been reported. The older case runs against the statute that the decree amends.

What owners and investors should watch

Foreign owners of Guatemalan homes will stop paying the IUSI property tax once the change takes effect. Registration with the municipality does not disappear with the bill.

Commercial landlords face the opposite direction of travel, with a sharper top rate. Nine per thousand applies above Q1 million (US$131,161) of assessed value.

The valuation base itself is untouched, which matters for what comes next. Guatemala’s separate cadastre agency, the Registro de Información Catastral, is not part of the reform.

The RIC surveys land nationwide to firm up title, and no coverage figure was published with the decree. Its work continues independently of this change.

No International Monetary Fund or World Bank comment on this specific decree has been published. The fiscal question it raises will outlast the 2026 calendar.

Frequently Asked Questions

Sources

• dca.gob.gt
• dca.gob.gt
• dca.gob.gt
• dca.gob.gt
• www.prensalibre.com
• www.prensalibre.com
• www.prensalibre.com
• www.prensalibre.com
• www.banguat.gob.gt
• api.worldbank.org

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error