The transfer tax: 3%, but not of the price

The formula

Subtract $28,571.43 from the price and apply 3% to the remainder. Anything at or below that figure is exempt.

Written out: (price − $28,571.43) × 0.03.

The difference is not small. On a $60,000 house the wrong method gives $1,800 and the right one gives $942.86 — almost double the error, always against the person saving to close.

Worked examples

• $28,000 → exempt, $0
• $40,000 → $342.86
• $60,000 → $942.86
• $80,000 → $1,542.86
• $180,000 → $4,542.86
• $380,000 → $10,542.86
• $500,000 → $14,142.86

You can check any of these in the closing calculator, which also adds the CNR duties and the legal fees.

A threshold frozen since 1993

The $28,571.43 has not moved in over thirty years. When it was set it covered a good part of the housing market; today it excludes almost any urban purchase. In practice the tax became general, even though the law still writes it as an exemption.

Which value it applies to

The value stated in the deed, which is what gets registered. Here a familiar temptation appears: declaring less than you paid to lower the tax.

It is a bad idea for a practical reason rather than a moral one. The registered value is what your property is “worth” to a bank, to a future buyer and to the tax authority when you sell. Saving a few hundred today leaves you with a title that declares less than you put in, and that gap reappears when it matters most.

What else is paid

The tax does not travel alone. Add the CNR registry duties ($0.63 per $100, capped at $5,400) and the legal fees: legal due diligence is about $800 plus VAT and expenses, and the deed and its registration about 0.95% of the price.

And after buying: there is no annual property tax in El Salvador. Municipal dues remain and depend on the municipality.

Frequently asked

Does the $28,571.43 exemption apply per property or per buyer?

Per operation. Each transfer is calculated separately with its own threshold, no matter how many properties you own.

Do inheritances and gifts pay transfer tax?

They are transfers with their own treatment and do not always follow the same rule as a sale. It is one of the things worth raising with the attorney before the deed is drafted, because the cost changes with how it is structured.

Who files and pays the tax?

Normally the notary authorising the deed handles it, with the buyer's funds, and the receipt belongs in your file. If nobody hands you that receipt, ask for it: it is the evidence the process moved.