Brazilian property tax: The current situation
Those buying Brazilian real estate would be wise to learn about all the various taxes that could affect them as well as those they are not required to pay, particularly those surrounding property.
"It’s always worthwhile undertaking your own research with regards to taxation and inheritance laws in whatever country you are investing," said Nick Marr, chief executive officer at Homesgofast.com.
Mr Marr named income tax on property as something that investors should be aware of and it is particularly important for them to know what is exempt from capital gains tax as well. For the latter, this includes amounts received from the sale of assets with a price of less than 20,000 Brazilian real (£6,930) per month.
Also exempt are those gains from the sale of an individual property, Mr Marr continued. This is provided a similar sale has not taken place in the previous five years and the overall value of the transaction does not exceed a specified amount (the level was 440,000 real in 2004), he explained.
Money gained through the sale of securities on the Brazilian public stock exchange, with a price of less than 4,143.50 Brazilian real (£1,436) per month, is also exempt from capital gains tax, as are assets sold during a period of Brazilian residency which were acquired during a non-resident period, Mr Marr explained.
Non-residents are normally subject to a flat rate of 15 per cent on gains from property in Brazil, he also pointed out. As Global Property Guide noted last year, the taxable gain is worked out by deducting the acquisition and transaction costs from the gross selling price or market value of the property.
It also reported that capital gains made by non-residents who live in low-tax countries are taxed at a special rate. These countries are defined as those that impose no tax on income or impose a corporate tax rate of less than 20 per cent.
Brazilian property owners may also want to look out for rural land tax. This is levied on the land situated outside the urban zones of the municipality. The tax rates with this can range from 0.03 per cent to 20 per cent depending on the number of hectares of land and the ratio which the area in question bears to the overall land area, Global Property Guide explained.
There is also a tax on property transmission in Brazil, the rates for which stand at four per cent. In addition, there is an urban building and land tax. This is paid to the municipalities and the rates for this range between 0.3 per cent and three per cent.
Despite these taxes, there is plenty of reason to invest in Brazilian property. As Glauco Chris Fuzinatto, director of UK and Ireland for the Brazilian Tourist Office, notes the entirety of the north-east of Brazil is showing great potential with regard to property
The economy in Brazil is the strongest it has ever been, according to Mr Fuzinatto, but there is more to the nation than this.
"Now with the news of us hosting the World Cup and the Olympic Games, Brazil is getting more and more on people’s minds.
"One thing that attracts people to Brazil is its culture … You have 26 states and one federal district.
"Every state has its own music, gastronomy and culture. It’s a multicultural country really."
