Lobo de Rizzo Advogados
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Some restrictions may apply on the (i) acquisition or lease of rural properties by foreign individuals and legal entities and Brazilian companies controlled by foreigners; (ii) acquisition or possession of rural properties located in the border zone (area of 150 km parallel to the boundary line), by foreign individuals or legal entities and Brazilian companies with the majority share held by foreigners; and (iii) acquisition of public coastal properties by foreign individuals or legal entities. Transactions made without compliance with these legal restrictions shall be deemed null and void.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
Creditors may keep the property in case of default of the financing agreement in specific conditions due to recent alteration in property legislation.
Property shall be auctioned and the proceeds sent to pay the creditor. Therefore, there are no restrictions on lending for the purchase of real estate properties by foreign companies.
However, some restrictions may apply on the constitution of (i) guarantees over properties located in the border zone when the foreign company is not a foreign financial institution; and (ii) a fiduciary lien over rural properties by foreign individuals and legal entities and Brazilian companies controlled by foreigners.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
The acquisition of a property triggers the payment of: (a) Property Transfer Tax (usually from 2% to 5% of the purchase amount or the commercial value of the property as defined by the relevant municipality); (b) Notary costs involving the granting of a public deed; and (c) costs related to the registration of the deed with the Real Estate Registry Office (“RERO”). Fees are calculated based on the transaction amount. Costs indicated in items (a), (b), and (c), ranges from 5% to 8% of the transaction.
In case of acquisition of useful domain related to a property directly held by the Federal Government, purchaser shall pay the laudemium fee (5% of the commercial value as defined by the Department of Heritage of the Federal Government (SPU) in case of Federal Government lease - the laudemium is only calculated over the land value, without considering the value of the existing improvements).
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner)?
Property owners shall pay Urban Land Tax (IPTU), and Tax on Rural Property (ITR) annually. The burden of paying such taxes may be contractually assigned to a tenant or an occupier (an occurrence widely verified in market practice in Brazil). However, the property owner remains liable with tax authorities in case of non-payment of such taxes.
In addition, in case of properties directly held by the Federal Government, the holder of the useful domain shall annually pay a specific fee (Occupancy Fee).
Tax Breaks
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
No.
How is the ownership of Real Estate evidenced in your jurisdiction?
The ownership (fee simple absolute) of a real estate property is only granted through the registration of the deed in the relevant RERO.
There are REROs located throughout the Brazilian territory and they are the proper authorities to provide information regarding all the real estate properties located in the country. In case a title is not registered with the RERO, real estate property is not deemed to be duly transferred to the purchaser and the intended owner is not deemed the legal owner until such registration is performed.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
RERO shall disclose all relevant information regarding the property and ownership. All citizens may request the issuance of an enrolment certificate (matrícula), which will make public information regarding the property and the current owner.
However, information of the quotaholders of an investment fund who own properties is not public (except when trading quotas in stock exchange), as well as information about shareholders of a closely held company.
Municipalities also provide public data related to the properties, such as the taxpayer (owner) (this information is confidential in several municipalities), land and built areas, and the registered value of the property.