What is real property?

The Brazilian Civil Code regulates all dealings with real estate. Real property is property that is immovable or is naturally or artificially fixed to the ground, that by its nature cannot be partly or wholly removed without undoing or destroying it.

Real property includes: the ground and its surface, its fittings and natural environs (such as trees and hanging fruit), the airspace above it and the subsoil below it. Subsoil does not extend to mines, subsoil-derived products and waterfalls which are, for exploration and usage purposes, said to be assets that are separate from the soil. The exploration of mineral resources and hydroelectric power must be authorised or licensed at federal level.

Foreign individuals or companies can acquire real estate in Brazil so long as they are not on frontiers or in national security areas. Rural areas can, subject to some restrictions, be acquired.

To buy real estate, a foreigner needs only a valid passport and an Individual or Corporate Taxpayer’s Registry Number (CPF or CNPJ respectively).

Introduction

The dream of buying real estate in a paradisiacal part of Brazil is more and more attainable. Indeed, the influx of foreigners investing in properties in areas of outstanding natural beauty in Brazil has increased steadily. Before buying that dream property, buyers should carry out a feasibility study to ensure the investment is the right one.

This study will be based on a thorough investigation of the property’s title deeds and searches to see if the property is subject to any pending issues with public bodies. The study should also look at the seller’s financial and legal situation. These searches should guarantee the property and seller are free of any administrative or legal suit that could prejudice the sale of the property.

When a buyer and seller agree on the transfer of the property, they must both sign a contract, normally called a Commitment for the Purchase and Sale of Real Estate. By doing so, the seller undertakes to sell to the buyer the defined real estate at the agreed price and payment terms.

The “Promise to Buy and Sell” contract is one of the most common types of agreement for the acquisition of an independent unit in a condominium. It is also the most common form a buyer closes business directly with the constructor or incorporator.

Tax

Every real estate purchase – or to be more precise – every property transfer, is subject to the Real Estate Transfer Tax or ITBI, of between 0,5% and 6%. Which rate applies depends on the city in which the property is located.

The buyer must also pay Real Estate Registry Office deed and registration fees. The value of these fees is proportionately regressive to the value of the transaction. For example, in São Paulo city a transaction involving R$1,000,000 would cost R$5,327.20 in fees – or 0.53% of the value of the transaction.

Rental

The owner of real estate in Brazil is free to rent that property. Careful tax planning can reduce tax on rental income. For example, by setting up a company especially for this purpose, the tax burden can be reduced to approximately 11,33%.

Visa requirements

Foreigners’ entry to Brazil is guaranteed by the constitution through: transit, tourist, temporary, permanent, honorary, official and diplomatic visas.

Tourist visas are granted to foreigners coming to Brazil for recreation or to visit. The initial visa duration allows tourists to stay for up to 90 days (renewable for a further 90 days).

Foreigners holding a tourist visa may leave the country and return without having to apply for a new visa, if they return before it expires. The maximum annual stay is 180 days.

Some foreigners are exempt from having to apply for a tourist visa to enter into Brazil: through the rules of reciprocity. These foreigners are nationals of countries who do not require tourist visas from Brazilians visiting their countries.

A foreigner’s entitlement to a temporary visa is not dependent on the duration of their stay in Brazil, but on the reason for their stay. People visiting Brazil for cultural visits, study trips, or business travel, may be entitled to temporary visas. So too are artists and athletes and students. This is not an exhaustive list; please contact us for more details.

Temporary visas can be renewed for the same duration as the original.