Brazilian Property: A Buyer’s Guide

property in brazilDue to recent rapid social and economic development, Brazil is becoming increasingly popular with overseas property buyers. A new progressive government coupled with the country hosting both the FIFA World Cup and Olympic Games within the next decade mean that many real estate investors are scrambling to jump on the Brazil property bandwagon.

Rio de Janeiro is probably the most popular area to buy thanks to 45 miles of beautiful beaches making it a tourist hotspot and therefore an ideal place for rentals. Sao Paolo is also popular, being the financial centre for Brazil, however many real estate investors look more to business lettings rather than residential lettings here. Other areas which garner interest are Natal, which boasts the highest quality of life in Brazil, and the resort of Bahia.

Buying Property in Brazil – the Legal Side
Brazil allows foreign property buyers to own both land and property in their own names on a freehold basis. However prior to buying any property or land you must obtain a Cadastro das Pessoas Fisicas (CPF). These are obtained via the Brazilian embassy in your home country for a very small fee.

The CPF is essentially a tax registration number and once obtained means you will be able to open a Brazilian bank account and obtain accounts with local utility companies.

Any properties built in Brazil after 1973 will come with a Matricula. this is a legal document which is similar to title deeds. The Matricula will give a description of the property – this includes the boundaries of the land, any outstanding debts and previous owners amongst other information.

The Brazilian Property Buying Process
Once your offer has been accepted and you have obtained your CPF number (see above), the property buying process is pretty straightforward. However it goes without saying that good advice is crucial – you will need a good lawyer who speaks your native tongue well to ensure that all details are covered and you fully understand the entire process.

The solicitor should firstly run some searches on the property. Once these are complete, you will need to open a Brazilian bank account. All monetary transactions must be registered with the Bank of Brazil as a foreign investment so ensure that this cost is factored into your calculations.

A deposit on the property will now need to be paid. Normally, the minimum deposit that can be put down on a property is ten percent although it sometimes can be as low as five percent or as high as twenty percent.

On completion, the remainder of the funds must be transferred. Currently foreigners are not able to get Brazilian mortgages however with the increasing levels of foreign interest in the Brazilian property market, this is expected to change in the near future. Thus any prospective purchaser should ensure they have the full funds available – perhaps through a mortgage in their home country – before looking to buy.

Fees & Taxes
A rule of thumb is to budget around seven percent of the purchase prices for fees and taxes. Legal fees will be around the two percent mark; Stamp duty is set at two to three percent, dependent on the purchase price; registration fees are two percent. Estate agent fees range from around two to six percent however these costs will be covered by the property vendor.

The CPF costs a negligible sum of money. However if you rent your property out you will be liable for income tax and this will be between 15 and 27.5 percent.

When you sell your Brazilian property you will be liable for Capital Gains Tax (CGT). This will be between 15 and 27.5 percent. However if you are intending to use the profit gained from the sale of your property to buy more Brazilian property you may find that you are exempt from CGT. If this is the case, seek legal advice.

Other articles which may be of interest:
5 Golden Rules For Buying Property In Brazil

Buying Brazilian Farmland

Don’t Buy In Brazil?”

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