Tax issues if purchasing a properity in Brazil

Apart from the current exchange rate and the fees charged by the currency exchange or bank if bank transfer there is a 0.38% tax (IOF - Imposto sobre operações financeiras).

There are also a number of taxes involved with the purchase of real estate that the purchaser must pay, such as ITBI (Imposto de Transmissão de Bens Imóveis) which differs from state-to-state, generally around 2% of the total value of the purchase.

The other major tax implication is that upon purchasing real estate you must file a DIRPF - Declaração do Imposto de Renda de Pessoa Física with the Receita Federal so for this you must have a CPF number if you don't already have one. While you are not taxed on the purchase of real property you must declare the purchase and value of the transaction. When at some future point you sell then it is subject to a Capital Gains Tax.

While foreigners certainly can purchase real property without much difficulty, there are a vast number of problems that go along with such purchases; problems relating to title that is not clear, squatters, liens against property, unpaid utility bills pass with the property transfer, lacking documents such as Habit-se (which means the property is fit for occupancy) and would prevent anyone from obtaining financing. This would not be a problem if you were purchasing in a single payment transaction, but when it comes time to sell you'd be stuck trying to find a buyer who has the ability to pay the full sale price in a single payment without the need of financing.

I really do not think that purchasing real property is a wise choice for someone who is not physically in Brazil to supervise the transaction up close. There are just too many things that can go wrong and too many pitfalls. The main one being that if you are not physically in the country you have to give a Power of Attorney for someone to sign all the transfer and title documents, this can be very risky indeed.

See the following post for more information:  https://www.expat.com/forum/viewtopic.php?id=125131

Cheers,
William James Woodward, EB Experts Team

William is it possible to call you to discuss

Really I'm not much on real estate issues in Brazil, just passing along what knowledge I picked up when I bought a house here and what is available on the internet. I doubt that I'd be of much help to you. One thing I would suggest if you're going to do a "long distance" purchase is to get a good lawyer to handle it for you, don't just trust any realtor and don't authorize anyone you don't know or isn't a really trustworthy relative to do the transaction for you. This could be disasterous.

Any further information you really need you can ask on the forum or in a private message (once you've posted a few more times and your mailbox gets activated).

I don't give out my phone number for reasons of personal security, hope you'll understand.

Cheers
wjw

no problem thanks William.

I have a property in brasil. I do not live there anymore, nor do I have RNE. I have a CPF though.
Regarding DIRPF - when I declare my property, do I then only list my property, or do I also list my income. I do not pay tax in Brazil anymore.