Brazil Counsel Guide:
Buying Real Estate

Americans are increasingly interested in purchasing real estate in Brazil. For individuals, this could be a vacation home, retirement property, or beachfront condo for short-term rentals. For companies, it might be a location for a subsidiary or local office.

Given current economic conditions, now is a prime time to buy. The US dollar is worth more than five times the value of the Brazilian real. This favorable exchange rate makes buying real estate in Brazil an attractive opportunity for foreign investors.

But how do you do it? You’ve never bought a property in Brazil, let alone outside the United States.

Indeed, the entire process can feel overwhelming, particularly if you don’t speak Portuguese and don’t have anyone to help. The good news is that this guide has answers to the most common questions raised by Americans buying real estate in Brazil.

The Brazil Counsel Guide to Buying Real Estate covers what you need to know and what you should consider when purchasing property in Brazil. What follows is detailed information about standard practices and practical tips for addressing the issues and challenges frequently faced by American buyers.

Getting Started

Both foreign individuals and legal entities can buy real estate in Brazil. In fact, Brazil encourages foreign investment in real estate. According to Immigration Resolution 36/2018, you can obtain a visa and become a Brazilian resident by purchasing urban property worth at least BRL$1,000,000, while a purchase in the North and Northeast regions will qualify you for a visa for just BRL$700,000. You can read more about the real estate investment visa in our blog articles Buy Property in Brazil and Get a Visa and Brazil’s Real Estate Investment Visa.

Not every type of real estate is available to foreign buyers though, and in some cases, specific conditions must first be met. For example, beachfront property located within 100 meters of the coastline is off-limits to foreign ownership. The good news, however, is that condo units and apartments are unrestricted, no matter their location. Rural property comes with significant restrictions, including limits on land size and nationality-based purchasing quotas. If you’re considering buying rural property, you’ll want to discuss your options with a lawyer.

Buying Pre-Construction

Purchasing a condo from a developer before it’s been built has its advantages. You’ll get a brand new unit, often featuring the latest styles, a premium location, and modern amenities. Additionally, you may have the opportunity to make custom design choices, like combining two units into one larger unit.

But pre-construction purchases also come with increased risk as you’re paying for something that hasn’t yet been built, and in some cases, may never be built. In Brazil, construction projects can take a long time, and delays are common. For example, it’s not unusual to hear that a permit still needs to be issued, that the developer ran out of money, or that the subcontractors haven’t shown up to finish the work. Environmental lawsuits, which can drag on for years, can even result in the cancellation of a project entirely.

Developers will be quick to have you sign a contract and provide a down payment, or sinal in Portuguese. Most contracts will stipulate that you make regular payments according to a predetermined schedule, with penalties for late payments. Ideally, the timing of payments should be based on project milestones rather than a fixed calendar. However, it’s uncommon to receive a construction schedule, and even when you do, there’s rarely a penalty for the developer if they fall behind schedule. Ultimately, you’ll be stuck making yearly, quarterly, or monthly payments despite any delays or setbacks in the construction process.

Most contracts will also reference Article 43-A of Law No. 4.591. This provision contemplates a 180-day grace period for the delivery of a property under construction from the completion date contemplated in the contract. By law, a buyer can neither terminate the purchase agreement nor obtain any penalty for late delivery during this time period. Yet again, this is reason to set realistic and specific goals and condition payment on progress. A developer will make sure that he’s protected. It’s your job to make sure that you’re protected too.

Finding the Perfect Property

Looking for a property in Brazil is similar to the process in the United States. You need to consider your budget as well as the location and type of property you want. However, it can be challenging if you’ve never been to Brazil or don’t plan on visiting. Not speaking Portuguese adds yet another layer of difficulty. So how do you get started with finding the perfect place?

One option is to begin with online searches. Websites like ImovelWeb, ZAP Imóveis, and Viva Real function similarly to Zillow or Realtor.com and are commonly used by locals to list properties for sale. These platforms offer detailed filters to help you find real estate that matches your criteria. For example, you can search by price, neighborhood, number of rooms, and in some cases, specific features such as a swimming pool or ocean view.

Another good option is to hire a realtor who knows the local market. While Brazil doesn’t have a MLS (Multiple Listing Service) equivalent, a knowledgeable realtor will maintain an updated list of available properties. International companies like Re/Max, Keller Williams, Colliers, and Sotheby’s all have local offices in Brazil to help foreign buyers. An experienced realtor can guide you through the buying process, recommend safe neighborhoods or the most desirable areas, and identify properties that meet your preferences. They can also provide insights into pricing, helping you understand the true value of real estate before you make a purchase.

Realtors in Brazil must be licensed with the Conselho Regional de Corretores de Imóveis. You can verify whether you’re working with a licensed real estate agent by asking for their CRECI registration number and searching with the licensing board. For realtors in São Paulo, the state has a quick and easy online search tool you can use. Rio de Janeiro has a similar website to look up a realtor.

Title Search, Lien Search, and Other Due Diligence

Before you sign a purchase agreement for real estate, it’s critical that you research both the property and the property owners. Unlike in the United States, there’s no title insurance to protect you, so it’s even more important to gather information about the financial and legal standing of the seller and the property.

Brazil lacks a single, central database to search for title and liens. The same is true about background reports on persons and companies. Instead, you’ll want to obtain several certificates from various government offices to discover if there are any risks associated with the parties and assets involved.

For information about the seller, whether an individual or a legal entity, you may want to start with tax certificates. The federal revenue service (Receita Federal) will provide a certificate relating to any outstanding tax debts. The document is available online and free of charge. State and municipal tax authorities offer similar certificates. Below is an example of a “clean” federal tax certificate without any tax debts listed.

At a minimum, you’ll also want to get certificates for civil, criminal, creditor, and labor claims. Most of these are available on the websites for the federal and state courts and will identify pending lawsuits and court judgments. It’s essential to thoroughly review these records to ensure there aren’t any hidden legal issues that could affect the transaction or ownership of the property.

As to the property, it’s important to make sure that it truly exists, it doesn’t have any debts, liens, or other encumbrances on it, and it’s owned by who claims to be the owner. This is accomplished by getting a transfer history certificate (matrícula) and the public deed (escritura) from the notary office, in addition to a property tax certificate from the municipality. If it’s an apartment, getting a declaration from the condo association that confirms payment of all fees is recommended too.

Depending on the property’s location, you may also want to get copies of certain licenses and permits, or other specific certificates, such as those related to environmental matters.

A good example is a foreiro property, which refers to any real estate located near the coastline where the federal, state, or municipal government holds partial ownership. In the city of Rio de Janeiro, it’s common to find apartments where the land is partially owned by the Brazilian Navy or city hall. In such cases, the property owner must pay an annual fee known as foro to the government authority. Additionally, before any transfer of title, the owner must obtain formal authorization and pay a transfer fee known as laudêmio.

Performing due diligence is a necessary step in the buying process. Skip it and you risk a larger headache later on. If you need help, local law firms and service companies can be reliable resources. Also, the Brazil Counsel Real Estate Due Diligence Package provides an all-in-one solution designed to protect US buyers of real estate in Brazil.

The Purchase

Signing a Contract

Most Brazilian real estate transactions start with a Promise to Buy and Sell (Promessa de Compra e Venda). Despite the name, it’s a legally binding purchase agreement. It should identify the parties, the property, and all of the deal terms such as the price and method of payment.

Although the Promise to Buy and Sell isn’t mandatory, having a Promise to Buy and Sell can be beneficial. For instance, in transactions involving properties under construction, you can’t transfer ownership through a public deed until the building is finished, making a private agreement useful. Additionally, in real estate purchases by foreign buyers not physically present in Brazil and paying with US funds, a Promise to Buy and Sell provides some level of assurance to both parties. It helps mitigate risks by establishing in writing how the seller will be paid and when the buyer will receive the property. This becomes even more relevant considering escrow services in Brazil for real estate transactions are not common.

Signing the Deed

Executing a Promise to Buy and Sell isn’t sufficient on its own. It establishes a private, contractual right, but it doesn’t transfer ownership of the property. In Brazil, the transfer of property requires signing a public deed (escritura) at the notary office (Tabelionato de Notas).

Ever since the COVID-19 pandemic, it’s become more common for notary offices to offer remote signing options. If you’re in the United States or you simply can’t be physically present to sign the deed, you might consider either granting a public power of attorney to a trusted representative or using the e-notariado system. For more information about remote signing options, we recommend consulting with the notary office responsible for your deed.

Registering the Transfer

A signed public deed is just one of two requirements for transferring real estate in Brazil. The deed must also be registered in the transfer history certificate (matrícula) filed with the local real estate notary office (Cartório de Registro de Imóveis). Without both signing the deed and registering it in the real estate notary office, title to the property doesn’t legally get transferred to the buyer. In short, an escritura and an updated matrícula are always required. If you don’t have both, you aren’t the owner of the property.

Documents

Below is a list of documents generally requested by notary offices in Brazil from foreign individuals and companies acquiring property. The documents can vary and it’s always advisable to request a complete list of documents from the particular notary office involved in the transaction.

To be valid in Brazil, documents issued abroad must be notarized, apostilled, and, once in Brazil, translated to Portuguese by a certified translator and registered with a notary office (Cartório de Registro de Títulos e Documentos).

• Passport: It’s required in the absence of a Brazilian ID.

• Brazilian Taxpayer ID No.: It’s the CPF for individuals and the CNPJ for legal entities. Foreigners can get a CPF from a Brazilian Consulate in the United States by following the step-by-step provided HERE. Companies can hire a service provider to get a CNPJ as there isn’t an online option available.

• Marital Status Documents: It’s the Birth Certificate if you’re single and were never married. Otherwise, it’s the Marriage Certificate. If married abroad, you may need to first Register Your Marriage in Brazil. If ever divorced, you’ll need to provide your divorce certificate, divorce decree, or marriage certificate updated with an annotation referencing the divorce. This is all relevant information for Brazilian notaries because they need to know whether spouses ever changed names and determine if both spouses must sign the deed based on their marriage regime.

• Corporate Documents: It’s the Articles of Incorporation or the Bylaws in most cases. Specific resolutions or powers of attorney appointing representatives or authorized signatories may also be required. The Brazilian notary ultimately wants to confirm who can sign on behalf of the company and if performance of the real estate transaction is authorized.

• Power of Attorney: It’s the document you grant to a third party to sign the deed on your behalf. The problem is that for real estate transactions, Brazilian law requires a public power of attorney, which is prepared by either a Brazilian notary or a Brazilian consular official. Brazilian Consulates in the United States will only issue public powers of attorney to Brazilian citizens and Brazilian residents.

• ITBI Payment Confirmation: It’s the property transfer tax that buyers must pay to the municipality. Notaries require the payment receipt before signing and registering the public deed. There’s more information about this tax under the section The Purchase - Costs.

Costs

Upon transferring the property…

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

The purchase price agreed upon with the seller should be in any contract you sign and must be in the public deed. The price can be paid upon signature, in installments, or at the time of transfer - whatever the parties negotiate and agree upon. The amount is important as it can be the basis for calculating notary fees and the property transfer tax.

Notaries prepare the public deed (escritura) and issue an updated transfer history certificate (matrícula). The fees associated with these services are usually passed along to the buyer.

On every transfer of property, the respective municipality collects a tax known as Imposto de Transmissão de Bens Imóveis (ITBI). The amount due is calculated over the transaction price or the property’s assessed value, whichever is greater. 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%).

The rules relating to when the ITBI tax must be paid also vary. For example, the municipality of São Paulo charges 3% before the signing of a public transfer instrument, or in the case of a private contract, within 10 days of its signature. On the other hand, in Rio de Janeiro, the 3% transfer tax must be paid before signing the agreement, no matter if it’s done by a public or private instrument.

Penalties apply when payment isn’t made on time. You can generally expect a late payment fee of 0.33% per day of the tax amount due, limited to 20%, plus monetary correction and 1% interest per month.

Buyers also can’t forget to pay their realtors’ fees. Most realtors charge a percentage of the transaction price. The percentage can vary from state to state, but in São Paulo, for example, it generally ranges from 6% to 8% for urban properties.

After transferring the property…

As the legal owner of Brazilian real estate, there are annual post-acquisition costs to keep in mind (and we’re not even considering utilities, maintenance, condo fees, or insurance).

Every year, on each real property owned, the municipality charges property tax - Imposto sobre a Propriedade Predial e Territorial Urbana (IPTU). There are some exemptions, although most foreign investors will find it difficult to meet the requirements.

The IPTU tax rate varies from city to city and depends on the property’s purpose. The amount due is calculated based on the property’s assessed value (valor venal). For example, São Paulo and Rio de Janeiro charge 1% of the assessed value for residential properties. For commercial properties, São Paulo charges 1.5% and Rio de Janeiro charges 2.5%.

In addition to being a tax, in many locations IPTU also refers to a property’s registration number. With the IPTU number, you can search to make sure that all taxes on the property have been paid.

Aside from the IPTU tax, foreiro units require the payment of an annual foro fee to the government authority that has ownership rights over the property.

Payment

If done properly, paying the seller shouldn’t be difficult. Just keep in mind that US dollars will need to be converted into local currency in Brazil if you’re making an international wire transfer.

Assuming the seller’s bank has an exchange desk, they should be able to receive payment directly from your US bank account. Most of the large commercial banks in Brazil offer this service. When the funds arrive, the seller will be responsible for executing the currency exchange contract, as required by the Brazilian Central Bank. Remember, the exchange rate fluctuates constantly, so you’ll want to ensure you send the correct amount.

Alternatively, if you have a bank account in Brazil, you could wire the funds to yourself. If you don’t have a bank account, you could work with an exchange broker. Most exchange brokers can receive the funds, convert them to Brazilian reais, and then transfer them to the seller on your behalf. In either case, expect to pay 0.38% IOF (Imposto sobre Operações Financeiras, a financial transactions tax), along with the exchange provider’s spread, processing fees, and potential intermediary bank fees.

Problems often occur when bank transfers are made from or to the wrong account. If the contract states that Jim is to pay Sally, the funds should originate from Jim’s bank account (not Jim’s cousin’s bank account or Jim’s company’s bank account) and ultimately arrive in Sally’s bank account. You’ll also want to make sure the receiving bank has copies of the transaction documents and that the exchange contract correctly identifies the purpose for the transfer of funds (for example, payment for the purchase of a property).

Since escrow services are not common in Brazil for real estate transactions, you should carefully consider the payment structure to limit your risk. Don’t forget - without the deed (escritura) and the transfer history certificate (matrícula), the property isn’t legally yours, regardless of whether you’ve paid for it.

Wrapping Up

Buying real estate in Brazil as a foreigner isn’t as complicated as it might seem. With a favorable exchange rate for American investors, now might just be the perfect time to buy. If you’re planning to navigate the process on your own, keep this guide handy to ensure you remember all the essential steps and considerations for a successful property acquisition in Brazil.

Whether you’re seeking a vacation home, an investment property, or a permanent residence, taking the time to understand the local market and legal landscape is crucial for your success. And remember, you don’t have to go it alone. There are plenty of resources and services available to help you.

Updated as of 20 August 2024