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Brazilian CPF
Before buying property in Brazil you will need a Brazilian ID number called a CPF. It is the Brazilian equivalent of a national insurance number or a social security number and can be obtained fairly simply. This number is also a legal requirement as it enables the property buyer to be uniquely identified for taxation and title purposes. Generally they are 2 methods of obtaining a CPF.
In person, in Brazil is the easiest and fastest way. In either a ’Corrieos‘ office or the Bank of Brazil you can make the application for the CPF with just your passport and pay a processing fee of just R$5.50. This application is then processed to the Receita Federal and normally just 2 days later you can go to the Receita Federal office in person with your identification to be issued you with your CPF number. Your CPF card will also later be needed to be delivered to an address in Brazil which needs to be given when making the application, your lawyers address or an agent’s address is normally done for ease.
Make the application for a CPF number from your own residential country, via the Brazilian Consulate in that country. You will need a small processing fee (currently 4 pounds in the UK) to be paid by postal order to the consulate and the process takes approx 2 months. To make the application you can download the application form here. With this form completed and a copy, you can go in person or post your passport and a photo copy of your passport to the address of your nearest Brazilian consulate in your own residential country. Here is the link to the London Brazilian consulate website, CPF section
Legal Assistance
Many Brazilians here do not use lawyers when purchasing property in Brazil. They do this because as they are Brazilian residents, they have certain protection when using a CRECI registered real estate companies, who are certified to know the buying process in Brazil. So many Brazilian prefer to save on those extra legal costs by not hiring a lawyer for their purchase. But as a foreigner you do not have those same protections by using a certified real estate company and so would be open to many dangers as a far away investor, especially if you cannot speak the Portuguese language.
Due to this I advise that you to use a trusted lawyer when purchasing property in Brazil as the same as you would when purchasing property in Europe or North America. From my experience I know that it is important to choose a lawyer that is totally independent from the seller or developer, who will ensure only your interests are protected. I also recommend that you use a Brazilian Lawyer who is registered with the OAB (Ordem Dos Advogados Do Brasil) which is the equivalent to the Bar in the UK and of cause who is fluent in your language so that you fully understand all the legalities and proceedings.
Your lawyer, as well as a good agent also, will carry out all necessary checks on the property or land in Brazil and fulfill the legal requirements of the purchase. I can help you with finding a lawyer to act on your behalf, by sending you a list of recommended OAB English speaking lawyers for you to choose from!
- A good lawyer service will include:
- Check the current owners have the correct title to the property
- Check for any charges and liabilities still owed on the property
- Check your contract and advise you on the obligations for both parties
- Help you through the payment/funds transfer
- Ensure the property is registered in your name
Property Brazil Registration
The Brazilian authorities encourage foreign investment, as such there are no major restrictions for foreigners to buy and sell residential or commercial property in Brazil. Brazil is perhaps one of the few emerging markets that allow s foreign buyers to own both land and property in their own names on a 100 per cent freehold basis – making the buying process relatively straightforward.
The property registry system in Brazil is well developed and safe. Brazil real estate registration is carried out by private notary publics, under justice control. If you are buying a home that was built after 1973 it should come with a legal document know as a Matrícula. This document lists a detailed property description, all previous owners, the boundary details, any outstanding debts and all legal, financial and judicial transactions relating to the property. All land and property is registered at one single registry, and access to all information of a property is public. It is obviously very important to ensure that any land or property you buy has a clear title and your lawyer as well as a good agent also will ensure this is the case.
Payment for Brazil real estate
A sales contract is prepared by the selling broker and contains all required information of the buyer and the seller, location and specifications of the Brazil real estate and the conditions of the payment. The contract is then signed by both parties, or in the case of a notarized copy of the buyers passport and a Power Of Attorney being given by the buyer, another person can sign the contract on the behalf of the buyer. A down payment deposit (anything between 10% and 30%) is then normally paid to the seller to prevent the property from being sold to anyone else.
The taxes and registration fees (between 4.5% and 10% of the agreed declared purchase value) are also sent by the buyer to either the lawyer or acting agent. From this point the agent will arrange and pay the registration of the property into the authenticated buyers name via cartorio, in which can take up to a few weeks. All taxes are paid also in during this time. Here is the breakdown of all fees;
- Property transfer fees (ITBI) is 2% of the purchase value declared (payable at the City Hall)
- The Public Deed and notary fees usually come between 1% - 1.5% of the purchase value declared
- The land registry (The Matricula) is 2% of the purchase declared value
- Legal fees are typically 1% - 2% of the purchase price, which can depend on the value of the property.
- An extra Marine tax can be due if a front line beach, between 2% - 5% of the purchase value declared.
- There is an annual property tax (IPTU) of approximately 0.6% per year of the assessed value
With the registry completed and taxes paid, the full payment will need to be achieved by the buyer in the conditions of the authenticated contract. It will be held by the receiving bank in Brazil (automatically been registered by the central bank as all international movements of over R$10,000), the receiving bank by law will then only release the money to the sellers account when the contact and change of title has been proved.
Money Transfers for Brazil real estate
It is imperative when buying Brazil real estate that the funds are sent directly from your own bank account to the seller’s bank account in Brazil, so this been registered with the Central Bank of Brazil who will provide an official receipt of funds into the country. The seller is then required to present the purchase agreement contract to the Bank to release the funds.
This also enables that the government has recorded your investment into the country to ensure that there are no problems if/when transferring funds out of Brazil if you later sell your property in the future. There are generally no limitations to returning funds overseas provided they were originally registered with the Central Bank at the time of purchase.
Your bank will not be able to offer an exchange rate at the time of transfer as the money is crystallized when it reaches Brazil (approx 5 days transfer time). There will usually be a shortfall or overpayment, we will help you manage any transfers and liaise with your banks to ensure that the process works smoothly.
Capital Gains Tax
If you come to sell your property in Brazil, then Capital Gains tax is generally set at 15% for both Brazilians and foreigners. If you have bought your property in your personal name (rather than in a company name) then they are tax advantages that you can take advantage of!
- You are exempt from the gain on disposal of capital earned, if it is the only property that the owner has, for sale whose value is up to R$ 440,000 provided they have not done any other alienation of property in the past five years. (Law No. 9,250, 1995, art. 23, RIR/1999, art. 39, III; IN SRF No 84, 2001, art. 29, I)
- Regardless of when you sell or the amount of sale, if you reinvest in property within 6 months, the full amount can be claimed back on all of your capital gains tax from your previous sale. If you reinvest within the 6months but under your previous declared sale price then you can claim back some of your capital gains tax as it would be offset against your new investment
- You can also claim back 4% a year on your declared purchased value for de- appreciation for every year you have owned the property against any capital gains tax.
- Property improvements and furnishing (if sold with furnished in a sales contract) receipts can be also off-set against capital gains.
Brazilian Investment Visa
If a real estate agent or a developer tells you that if you buy their property in Brazil that is purchased priced higher than a value of $50,000USD and that you will qualify for a 5 year investment permanent visa, then they are simply lying to you or very much misinformed!
The minimum investment value was actually revised and increased to a value now in the Brazilian Reais of R$150,000 in February 2009, and with the addition of a review of your investment after only 3 years rather than the previous 5 years. But in any case you CANNOT, and never could simply buy a property over a minimal value and then qualify for an investment visa. Many have being misled by this fact in the past.
Let me explain how you can qualify for the investment Visa in Brazil. First of all you need to open a limited business with a business account or invest into an existing company. To open a new company this process often takes about 20 days and an accountant can do this for you for around R$600, although a Lawyer will charge a lot more for this service. For a limited (Ltda) company it is required to have a minimum of 2 partners, which can be of any percentage i.e. 99.5% - 0.5%. The chosen partner does NOT need to be a Brazilian which many people seem to believe (including some Lawyers in Brazil). What is required though, where much of the confusion comes from, is the need of a business administrator who is Brazilian or a foreigner holding a RNE (someone who is a permanent resident), to administrate the company until you the owner receives the permanent visa (then have the RNE). You can then take over the full administration of the company yourself.
This bit is even more important, you need to really TRUST your chosen administrator! The administrator will automatically have powers and access to your bank account. Things that you can do, to help your case is to initiate a authenticated contract to put certain restrictions on your chosen administrator, so that it would be crime for the administrator to withdraw money from the account. This would not prevent an administrator having access to the business account, but if the administrator did steal money from the business account at least the law would be on your side. You can also make the administrator temporary so that you would administrate your own company after residency had being gained.
With your new company and business account open and ready, you can then
- Invest a minimum of R$150,000 into your company from your own personal foreign bank account.
- Invest a minimum of R$150,000 into an existing company. If taking this route please take extensive due diligence into the company as many may have hidden personal debts onto the company.
- You can invest less than the minimum R$150,000 and still qualify for an investment permanent visa, but with this option you need to convince with a in depth business plan to the Ministry of Labor & Employment and the Council of Immigration on how you are going to produce a minimum of 10 new jobs for local Brazilians and how your company would affect the local economy. You will then later need to keep proofing on how you are achieving or achieved this requirement. This option is by far the most difficult to obtain.
With your money invested into a business you can then apply to the Nation Council of Immigration for your visa. A Lawyer will do this for you for around R$3,000 to R$6,000 or a full package of first opening a business for you for around R$5,000 to R$10,000. Applying for the visa to gaining the approval can take 2-4 months.
Your business, depending on what type of activity your business was registered to trade in, can then buy property. But be warned; (i) for the first 3 years your company can be under review at any time causing your visa not to be renewed after the 3 year period. It comes to the Department of the Federal Police to review, who can make steps on the spot, for establishing the physical existence of the company and the activities that it is acting. (ii) Property that is company owned (by business tax registration CNPJ) does not have the Capital Gains advantages of which could be taken of a property that is in a normal personal ownership (CPF), and the company ownership will have other taxes to pay on selling Brazil real estate depending on which tax strategy was taken for the business activity. |
