Tax Planning Brazil

When investing in Brazil the foreign investor is required to have a tax code (CPF) to be identified for taxation and title purposes.

Applicable taxes when investing in property in Brasil

Transfer Tax - The average tax rate is 3% but varies from one municipality to another. In Rio Grande do Norte (and Natal) the rate is 3% of either the real property value or the appraised property value, whichever is higher.

Urban Real Estate Tax - This is normally a very small annual tax only on urban property which is charged by the municipalities.

Rural Real Estate Tax - Annual tax only on rural property charged by the federal government and which varies from one municipality to another.

Income Tax - Income obtained in Brazil by non residents are subject to a standard withholding tax of 25%.

Capital Gains Tax - Capital gains recognised by individuals on a sale of real estate is subject to Brazilian tax at a rate of 15%.

Inheritance Tax - The maximum in the country is 8% of the appraised value however the average is closer to 4%.

Investing in Brazil is very similar to investing in an overseas property closer to home. Investors need to keep an up to date record with all the papers for the investment and need to comply with local legislation and taxation requirements as described above.

Purchasing costs for real estate investment in Brazil is between 6% and 7% of the purchase price.

If the investors strategy involves selling after completion, there are some ongoing costs which will need to be covered, such as community fees, utility bills etc. These can either be paid by the investors legal representative, by a retained property management company or the investor can choose to open a bank account and handle the payments personally. If the strategy includes rental of the property for a determined amount of time, the investor may chose to work with a local property management company.

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