When Do I Pay the Property Transfer Tax?

Buyers pay ITBI (Imposto de Transmissão de Bens Imóveis), a municipal tax, on the transfer of real property in Brazil. We wrote about it before in our articles Taxes and Fees on Real Estate Transactions, Paying the Price for Buying and Selling Real Estate, and How Real Estate Taxes Are Calculated in Brazil. But there’s still more to share on the topic.

Each municipality sets its own ITBI rates and rules. But most use the same factors to determine the property value (valor venal) and apply similar tax rates (usually between 2% and 3%). Also, ITBI rates are generally calculated over the sale price or the property’s assessed value, whichever is higher.

The ITBI payment due date also varies by municipality. Sometimes payment is due before the transaction documents are signed while other times it’s due after the deed is registered.

São Paulo charges 3% before the signing of a public transfer instrument, such as a deed. For private contracts, however, payment is due within 10 days of signature. In Rio, the 3% transfer tax must be paid before signing the agreement. Here, it doesn't matter if it’s done by a public or private instrument.

And when payment isn't made on time, there are penalties. You can generally expect a late payment fee of 0.33% per day, limited to 20%, plus monetary correction and 1% interest per month.

If you're buying real estate in Brazil, remember to check the municipality's rules about the ITBI property transfer tax before you finalize the transaction.