Brazilian Property Tax Made Simple

By Nicholas Storey, Contributing Reporter

RIO DE JANEIRO – All land purchased in Brazil is subject to a tax known as ‘Imposto sobre a Transmissão de bens Imóveis Inter-vivos’, ITBI, (title transfer tax on goods and real estate) which is equivalent to two percent of the value of the purchase. In addition, in relation to some oceanfront properties, there is another tax called laudemeo (marine tax), which is five percent of the land value (disregarding the value of the buildings), according to a statutory valuation.

There is additionally an annual local tax levied by the Prefeitura, as in many places, for the provision of local services, such as garbage collection, roads, schools, medical centers, hospitals.

The annual tax depends on the size of the house and varies but is generally not a great deal of money. If you sell the house, there is, for residents, a capital gains tax of fifteen percent, which, however, does not bite on the money if it is re-invested. Personal income tax in Brazil (which applies on worldwide income if you are resident in Brazil) is graduated up to a maximum of twenty-five percent.

There are import duties which range between 0-22.5 percent on certain goods (higher rates apply to such things as automobiles), although there is no duty on importing household goods from storage, provided that you have a right to bring things into the country as a permanent resident. It should be mentioned that you must bring the goods into the country not less than three months and not more than six months after obtaining your visa.

What may or may not be brought into the country is dealt with by any good relocation firm. Shipping by air is not a good idea as shipping anything in this way, except medical supplies for own consumption attracts a tariff of sixty percent on the FOB value (free on board value, or value of goods excluding carriage, freight and insurance) ranging between US$51 and US$3,000.

Personal importation of cigarettes and alcohol is banned. Personal goods, comprising passenger baggage, are exempt from tax. However, the above is subject to the exception that, provided there is permission from the Brazilian Consulate in the country of origin, persons transferring residency to Brazil are exempt from import duties.

When you are buying property in Brazil there are two main problems to note. First, there are estate agents advertising properties on the internet and they often seek to charge the buyer a commission of up to five percent, whereas when buying through a Brazilian agent in Brazil it is only the vendor who pays the commission.

Second, never use an advogado (lawyer) unless they have been personally recommended to you by someone that you know and trust. It is worth noting that I know of at least one property that was advertised for sale fraudulently and unsuspecting foreigners transferred funds to Brazil and the ‘vendor’ run off, leaving no trace and no property or title.