Buyers Guide to Buying a Property in Brazil
Buying property in Brazil can be a
complicated process...
As such, investors may find the following purchase guide to Brazil's standard purchase
process useful...
Below is the standard property purchase process for buying property in Brazil:
Ownership of land and property by foreigners is permitted, and all property is freehold.
Non-residents may invest in property through direct ownership from abroad, or through
vehicles (resident companies, partnerships or investment funds). With regards to
rural property, there can be some restrictions regarding the size of the area to
be acquired.
A purchaser requires a Catastro de Pessao Fisica (CPF), a tax registration number,
which can be obtained from overseas through the Embassy, or in Brazil through a
lawyer.
The cost of the purchase must be brought into Brazil through an international wire
transfer to the Banco Central do Brasil, which allows the Government to record all
investment into the country from overseas.
Once a buyer has found a suitable investment property, it is necessary to apply
for a certificate known as Certidao de Onus Reais. (This is not required if you
are buying an off-plan property).
For off-plan purchases it is advisable to carry out all due diligence with regards
to checking building licenses are in place, the land is properly registered and
has ‘copia da escritura publica’ and a certificate from the notary.
Once the purchaser receives this for the chosen property and has negotiated an agreed
price with the vendor, a small non-refundable deposit is usually paid to the seller.
A sales contract is then drawn up which details the full conditions of the sale
and also acts as a receipt for the deposit paid.
Finally, it is important to draw up the property’s sales deed completion (‘escritura’)
normally carried out at the notary. Once this has been acquired, it should then
be taken to the Real Estate Registry Office to effect registry.
Costs of a standard property purchase in Brazil
- Stamp duty (or purchase tax) at 3% of the purchase price.
- Government purchase tax of between 2% and 7% of the purchase price.
- Property transfer tax (ITBI) of 2%, payable at the city hall.
- Local tax varies between regions, but is normally around 0.6% of the purchase price.
- Brazilian Income Tax is a federal tax levied on income, and proceeds of any nature,
received by individuals
or corporations.
- Capital gains received by individuals on the sale of real estate will be subject
to Brazilian withholding income
tax at 15%, applicable to foreign investors who
are not domiciled in a tax haven. The gain is determined as
the difference between
the sales price and the acquisition
cost duly reported on the seller’s annual
income tax return.
- Foreign investors who are not domiciled in a tax haven can receive tax benefits
by applying for ‘Resolution
BACEN 2689’. Benefits are as follows:
(i) Withholding Income Tax (WHT) rates could vary from 10% to 25%
rate, depending
on the nature of the revenue and origin of the resources (tax havens are exposed
to the higher
rates); (ii) Capital gains could be exempted; and (iii) Earnings
from
Investment Participation Funds (FIP) could be exempted under certain circumstances
(source: PricewaterhouseCoopers).
Useful facts
- Cost of residential property in
Brazil is a third of that in Spain (Global Property Guide March 07).
- Cost of living in Natal is 20% of that in the UK .
- Foreign tourism is expected to grow by 4.3% a year between 2007 and 2014 (World
Tourism and Travel Council).
- The Brazilian Real is the local currency however investment in Estrela do Atlantico
will be in Euros only
Source: Obelisk International
Property Abroad always recommends using a
Solicitor or Lawyer
