You Don’t Need to Pay Property Tax

You might not need to pay property taxes on your real estate in Brazil. Municipalities charge IPTU (Imposto sobre a Propriedade Predial e Territorial Urbana) on urban properties every year. However, there are ways to get out of it.

According to the Brazilian Constitution, certain properties aren’t subject to taxes. For instance, some organizations, such as churches, political parties, labor unions, and non-profits, are exempt. If a church owns a building that’s used for religious ceremonies, then that property would be free from paying IPTU. In this case, the municipality can’t charge the tax.

Sometimes, a municipality can legally charge a tax but chooses not to. For example, the city of Rio de Janeiro has a local law that exempts IPTU for individuals with disabilities and retirees over the age of 60. Similar exemptions exist for areas of São Paulo and municipalities in other states. However, there are usually additional restrictions that apply, including caps on income and size limits on homes.

Exempt status isn’t automatic though. If you qualify for an exemption, you must file an administrative process with the municipality. In Rio, the taxpayer must submit a form with supporting documents, including a copy of their ID, proof of address, and the property’s transfer history certificate (matricula).

Most foreign investors will find it difficult to meet the requirements for an IPTU exemption. Investment properties don’t generally qualify. But it’s certainly something worth exploring with a tax advisor. After all, it could end up saving you a pretty penny.