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Destination & Buyer Guides |
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Buyer Guide | FAQ | Taxes
 Buyer Guide
Overseas buyers can purchase Brazilian residential or commercial property without major restrictions. However, there are a few limitations or fees applicable for some specific areas such as marine land, islands, rural land or areas near Brazil's international borders.
Making an Offer
When you have decided upon a property in Brazil a verbal offer will need to be made through the agent and often some negotiations will follow. At this stage a lawyer should be appointed by you to formalise your final price agreement and to oversee purchase proceedings, including deposit or reservation payments. With off-plan purchases, the price is however, often fixed and dependent upon the current phase of construction.
The buying procedure may vary slightly according to which developer you are purchasing from so when buying on a new development, you will need to ask for specific procedures relating to the development.
Appointing a Lawyer
It is wise to appoint a lawyer who is fluent in your language so that you fully understand all the legalities and proceedings. Our advisors can recommend a good lawyer who will carry out all necessary checks on the property or land in Brazil and fulfill the legal requirements of the sale.
Legal costs are generally between £ 500 and £ 1,000 depending on the value of the property purchased.
Your lawyers will:
- Check the current owners have the correcttitleto the property
- Check for any charges and liabilities still owed on the property
- Check your contract and advise youon the obligations for both parties
- Help you through the payment/funds transfer
- Ensure the propertyis registered in your name
Land Registration
The property registry system in Brazil is well developed and safe and real estate registration in Brazil is carried out by private notary publics. All property is registered at one single registry, which records details of the entire commercial history and the physical identification of each property. It is obviously very important to ensure that any property you buy has a clear title. Access to registry information is available to the public and includes relevant details on ownership, mortgages and other pending debts. In the larger cities, these services may be automated.
 Brazilian CPF
You will need a Brazilian ID called a CPF in order to buy property. To get a CPF: You will need your birth certificate translated into Portuguese by a certified translator and legalized by the Brazilian Consulate in your home country. This will then need to be taken to the Banco Do Brasil with your passport and birth certificate in order to formally apply for a CPF. A small fee is payable and they following day you will receive your assigned CPF number at the Receita Federal. The CPF card will then be posted to you within two months to an address in Brazil.
Costs
Transaction costs, including stamp duty, fees etc. canaverage at between 3% and 8% of the purchase price. These costsmay differaccording to location, type of property and the State you buy in. If it takes a significant amount of work to establish title and ownership, the costs could amount to more.
Breakdown:
- A down-payment for your chosen property of usually about 10,000 $R ($3,500 USD).
- Property transfer fees of approximately 4%-5% of the purchase price.
- Payment can often be made all at once or in installments of 12, 24, 36 or 48 months,
but interest rates can be as high as 35%. If you opt to pay in installments, bear in mind there is also a currency risk: if the value of the Brazilian Real goes down, your property becomes cheaper, and vice versa.
- 1% import tax on the transfer of funds from abroad.
Money Transfer
Funds are sent directly from your own bank to the seller’s bank account in Brazil, via the Central Bank of Brazil. The bank records your funds entering into the country and in order to release the funds, the seller must present the contract to the bank. We strongly recommend you use only this official route, or you may have problems transferring funds out of Brazil when you sell your property in the future.
There are generally no limitations to returning funds overseas provided they were originally registered with the Central Bank at the time of purchase.
Mortgages
The mortgage market is underdeveloped in Brazil and as yet foreigners cannot obtain a mortgage in Brazil. Buyers usually arrange alternative financing in their own countries. In 2005 about 50,000 mortgages were granted to Brazilian nationals but at high rates. However, we expect mortgages to become available in the foreseeable future as interest rates drop and as banks continue to develop their products.
Some developers of new build and off-plan developments offer installment plans over between 12 to 60 months. The charges applicable vary according to developer and repayments are usually index linked.
If you possess property in your own country and would like to borrow against this in an equity release plan, we can introduce you to an independent financial advisor who will help you raise the necessary finance.
FAQ
 Can foreign nationals own property in Brazil?
Yes, if applied to Brazilian nationals or companies. However, for the purchase of property located near the coast or national frontiers, special conditions may apply to foreigners or to foreign-owned companies.
Why should I choose Brazil?
Brazil offers stunning natural features and a rich and vibrant culture that never fails to attract visitors. The conditions for investment in the property in Brazil have never been better. Brazil’s economy is reassuringly stable and the country now boasts unlimited investment possibilities for those who buy property in Brazil now, while prices remain low. Increased investment in tourism sector will ensure that your property purchase is a profitable one in the future.
What is the economic and political situation?
In the year of his election in 2003, President Lula made some valuable reforms and has drastically decreased inflation to a current all-time low of around 5.7%. Banks are beginning to cut their lending rates, making real estate activity an achievable aim many investors. Economic expansion has further boosted the prospects of Brazil as a safe and thriving economy.
Politically, after decades of dictatorship and military control, Brazil was ruled by its first directly elected president in 1992. However, the then president was corrupt and was forced to resign during the same year. Under the new economic programmes put into place by the current president, Brazil's economy is beginning to boom to unprecedented levels.
How do we travel to Brazil?
Air travel to Brazil is well developed from most European airports, while direct flights are currently available from Lisbon, Portugal.
International airports in Brazil are; Rio de Janeiro Galeao Antonio Carlos Jobim, Brasilia and Sao Paulo Guarulhos.
Brazil’s national airlines are TAM (KK), Varig (RG) and VASP (VP). Other airlines serving Brazil include; Aerolineas Argentinas, Air France, Alitalia, American Airlines, British Airways, Continental Airlines, Iberia, Japan Airlines, KLM, LAN-Chile, Lufthansa, Pluna, South African Airways, SAS, SWISS, TAP Air Portugal and United Airlines. British Airways and Varig offer direct flights to Brazil.
What is the direct flying time from UK to Brazil?
Approximately 11 hours (Approximately 3 hours from Lisbon)
Is a visa required to enter Brazil?
Foreigners are allowed 3 month visas, or a maximum stay of 180 days per year. If you wish to apply for a permanent visa, one of the following conditions must be met:
- You are married to a Brazilian.
- You have a child with a Brazilian.
- You invest 250.000 US Dollars or Euros in Brazil.
- You have reached the age of retirement (50 years) with a pension.
There are various other visas required if you are to work in Brazil. You will need to apply to your nearest Embassy.
Taxes
Tax on Rental Income
Tax is charged on worldwide income for residents of Brazil at 15%, although some foreign tax relief and credits can be allowed under specific tax treaties.
Mortgage interest is not deducted when calculating taxable rental income.
Capital Gains Tax
The following are exempt from capital gains tax:
- Gains from the sale of an individual property, provided a similar sale has not taken place in the previous five years and the total value of the sale does not exceed a specified amount (R$ 440,000 in 2004).
- Amounts received from the sale of assets with a sales price of less than R$ 20,000 per month.
- Gains from the sale of securities on the Brazilian public stock exchange, with a sales price of less than R$ 4,143.50 per month.
- Assets sold during a period of Brazilian residency, acquired during a non-resident period.
Non-residents are normally subject to a flat rate of 15% on gains from properties in Brazil.
Note: Various tax treaties could affect the tax rates described above.
VAT
The circulation of merchandise is subject to tax, as are transportation and communication services (ICMS). This is similar to value added taxes in other countries and is set at a rate of 18%, with more specific rates for some goods (for example, 25% on luxury goods).
Inheritance/Wealth Tax
Brazil has no inheritance or wealth taxes. However, some states may impose a death transfer and a donation/gift tax. For example, the state of Sao Paulo adopted an inheritance and gift tax from 1 January 2001.
Stamp Duty
Privately owned offices called Cartórios provide notary services as well as registers of real estate deeds. These cartórios charge from a few cents for simple certified copies to thousands of Realis (R$) for property deeds.
Included in the fees charged for real estate transfers are transfer taxes which vary from 2-4% of the declared value. Cartórios are also responsible for the registration of births, marriages and deaths.
Municipal/Local Tax
Some municipalities may charge a service tax on certain businesses or real estate transfer tax (2% on transfers of real estate). An annual urban real estate tax for property owners is also applicable at approximately 0.6% of the assessed value of the property, but this will vary according to the municipality concerned. |
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