FAQ's for Brazil

What legal restrictions are there to owning property in Brazil? There are no restrictions on non-Brazilians owning freehold title to land and property in Brazil. The only legal requirement for taxation and title purposes is a CPF (Catastro de Pessoa Fiscia), a registration number similar to a National Insurance number, obtainable from the Receita Federal. An application form can be downloaded from here. You do need to be in Brazil when you apply, but it usually only takes a couple of days to come through. Will I need a lawyer? The Brazilian government has sophisticated and well-developed real estate laws designed to protect the property owner whether they are a foreign or local owner, but independent legal assistance should be sought for the entire purchase process to ensure that your rights are properly safeguarded. You should also check that your real estate agent is regulated by the federal body known as COFECI (Conselho Federal de Corretores de Imoveis). What happens once I've found the right property? A small non-refundable deposit is usually paid to the seller, after which a sales contract is drawn up which details the full conditions of the sale and also acts as a receipt for the deposit paid. Assuming you already have the CPF number and notarized copies of your passport etc., the sales contract can be signed either by you in person or by the lawyer acting for you (if they have been given power of attorney). The money and title transfers can take a couple of weeks to be recorded. Title deeds are registered at the Cartorio de Registro Imobiliario. What extra purchase costs should I budget for? You should budget for an additional 7.5 to 8% of the purchase cost to cover: • Land tax or ITBI (Imposto sobre Transmissao de Bens Imoveis) - 2% • Escritura (which notarises the contract) - 1.8% • Registro (which proves all the legal work is done and registers the property) - 2.4% • Transcricao (the public transfer of title and nationwide gazetting) - 1.5% What ongoing costs can I expect to incur? You can expect annual property taxes of 0.2% to 2% of the value of the property as assessed by the local City Hall (not the market value). There will probably also be service and maintenance charges. What is the tax situation on rental income? You will need to fill in a DAA (Declaracao de Ajuste Annual): an annual Brazilian tax return. Rental income from the property will be taxed within the normal personal income tax system which has progressive rates from 10% to 27.5% (as at April 2006). What is the Capital Gains tax situation? Profits on the sale of a property will be taxed at the same rate as income tax, although certain costs (such as the cost of your visit to the property as landlord, for example) can be deductable from the total before tax. Recent legislation provides for Capital Gains tax exemption for private individuals who sell a residential property and buy another within 180 days. Exemption can be claimed once every 5 years and you must be resident in Brazil to qualify. If you are resident in the UK you must declare the sale to the Inland Revenue, and income or Capital Gains tax will be applied. However, you will get credit for tax already paid in Brazil so you won't pay tax twice.