What’s the true value of real estate in Brazil? Sure, there’s the price that’s negotiated between a buyer and a seller, but transaction value isn’t always the same as the government’s appraisal of market value. In fact, there’s a good chance that it won’t be the same.

Each municipality determines property values in their area. How they reach their number isn’t always clear, but it’s usually based on factors such as size, location and comparables. The assessed value is known as valor venal, and it’s used as the basis for calculating taxes.

There are two taxes related to real estate in Brazil. One is IPTU (property tax) and the other is ITBI (real property transfer tax). These taxes are calculated using the tax rate multiplied by the valor venal, or in the case of ITBI, the sale price if it’s more than the valor venal.

But what if we told you that the valor venal for IPTU might be different from the valor venal for ITBI? Strange, right? It’s not like a property’s value changes just because a different tax is being assessed. Yet, apparently, that’s how it worked in São Paulo.

A recent decision from the Tribunal de Justiça de São Paulo, a state court in São Paulo, held that a municipality’s determination of the valor venal - an amount that’s publicly available - must be the same for purposes of both IPTU and ITBI. It can’t vary from tax to tax.

So at least now you’ll know exactly how much you’ll be paying in taxes.