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Taxes & Costs

Brazil Real Estate Growth

If you’re thinking about investing in real estate in Brazil, you have probably started your research already. There are many factors which should be taken into consideration. The location of your investment, the cost of housing in the area, and Brazil’s overall economy are probably all factors you’ve been tossing around in your mind. While these are all important factors to consider, your commitment to making a sound investment might cause you to forget one of the most important considerations in property investments. The initial cost of your investment will not only be the price of the actual property. You’ll also need to take taxes and closing costs into consideration, and these differ from the ones you might be used to in the United States.

Taxes & Costs

When you purchase an investment property in Brazil, there are multiple taxes you may be expected to pay.

  • Transfer Taxes – When you complete the purchase of any property in Brazil, you will need to pay 2% transfer tax on the value of the property. This tax is due after the notary verifies the purchase.
  • Municipal Tax – Also called the local property tax, this is a yearly tax based on the value of the property. The amount owed differs between states in Brazil, but it might be anywhere from 0.6% to 2%.
  • Corporate Income Tax – If you are purchasing property in Brazil to house a new business or a branch of your existing business, you will owe a corporate income tax. This tax will be equal to 15% of your profits.
  • Capital Gains Tax – If the value of your investment property increases at any time during the length of your ownership, you will owe a capital gains tax. This tax will be 15% of the new value.
  • Tax on Rental Income – If you invest in a property in Brazil with the intention of renting it out to tenants, you will owe a tax on your rental income. This tax is worth 15% of the rental price.

You might also be expected to pay closing costs when you purchase an investment property in Brazil. The costs of closing on a property will vary from state to state, but it could range anywhere from 6.5% to 7.5% of the property’s value. The closing costs might include anything from attorney fees and recording fees to appraisal fees.

Being Aware of the Costs

Clearly, when you invest in real estate in Brazil, the upfront listed price is not the only thing you should consider. If you do not take other costs into consideration, you could underestimate the price of your investment and find yourself making less of a profit than you originally planned for. When making an investment in Brazilian real estate, make sure you find out which taxes and closing fees might apply.

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