Paying the Price for Buying and Selling Real Estate

In real estate transactions in Brazil, both buyers and sellers have to pay.

Buyers pay the purchase price, notary fees, transfer tax, and property tax.

The purchase price should be in the contract and may be due upon signature, in installments, or at the time of transfer. The amount is important as it can be the basis for calculating notary fees and the transfer tax.

Real estate notary offices prepare the escritura (deed) and issue an updated matrícula. For these services, they charge fees.

The transfer tax, or Imposto de Transmissão de Bens Imóveis (ITBI), is paid to the municipality in every transfer. The rate generally varies between 2% and 3% and is calculated over the transaction price or the property’s assessed value, whichever is greater.

The property tax (Imposto sobre a Propriedade Predial e Territorial Urbana) must be paid every year. The rate varies, but it’s always calculated over the property’s assessed value. São Paulo and Rio, for example, charge 1% for residential properties.

Sellers pay realtor fees and capital gains taxes.

Realtors normally get a percentage of the transaction price. It varies from state to state, but in São Paulo, it generally ranges from 6% to 8% for urban and industrial properties.

The federal capital gains tax is due if profit is earned on the sale. Rates start at 15% for gains up to BRL$5,000,000 and reach 22.5% for profits higher than BRL$30,000,000.

For real estate transactions in Brazil, retain legal counsel to help you fulfill your end of the bargain.