Taxes and Fees for Buying Real Estate in Salvador
Brazil’s first capital city is currently the third most populated in the country. This article will show which taxes will be faced by those looking for a property in Salvador.
Acquiring Real Estate requires financial planning. Buyers must pay attention to all the extra costs that could arise from a transaction like this, since fees can substantially increase the final figure.
The taxes and diverse costs that need to be considered when buying a property are, basically:
- Imposto Sobre Transmissão Intervivos - ITIV
- Real Estate register
- Public deed
- Imposto Sobre a Propriedade e Território Urbano - IPTU
- Imposto Sobre Operações Financeiras - IOF
Imposto Sobre Transmissão Intervivos - ITIV
This tax is charged for the property transfer, and is considered the largest additional expense faced by Real Estate buyers. This fee is a percentage, charged on top of the property’s value, and is variable depending on the state where the property is located.
In the city of Salvador, ITIV is equal to 3% of the price of the property. The only exceptions are where a residential property has these specifications:
- Has a total of 39.56 square meters of built area
- Has a market value of BRL 44,996.73 or less
Real Estate Register
This register basically states that the property now officially belongs to the buyer. This fee does not come in the form of a percentage, like ITIV. Instead, the price is set according to the market value of the property.
Below are just some of the approximate examples of Real Estate register costs for Salvador in 2014.
- Properties worth BRL 31,320 to 46,990 - BRL 418.16
- Properties worth BRL 78,310 to 156,630 - BRL 583.01
- Properties worth BRL 234,940 to 352,400 - BRL 1,415.84
- Properties worth BRL 792,920 to 1,189,380 - BRL 4,782.51
- Properties worth BRL 2,676,100 to 4,014,150 - BRL 9,699.07
- Above BRL 4,014,150, a fixed fee of BRL 12,608.85 is charged
This document may be needed, at some point, to prove that the buyer owns the property. The price of this fee is set based on the property’s value, and it varies from state to state.
The public deed costs for Salvador in 2014 follow the same model seen with the Real Estate register. This means that, if a property is worth BRL 300,000, a total of BRL 1,415.84 will be charged for the Real Estate register and also for the public deed, as seen above.
Imposto Sobre a Propriedade e Território Urbano - IPTU
IPTU is not a privilege for those buying a property, since this tax must be paid every year, but, it must also be considered by a buyer who is interested in a certain property. The tax rate is based on the property’s market value, but, it is also variable from state to state.
Just like in Rio de Janeiro, the IPTU charges in Salvador follow a formula and varies according to the characteristics of the property. This leads to situations where residential properties with similar sizes are charged differently.
The factors that are considered for the calculation of the IPTU in Salvador are:
- Market value of the property
- Property size
- Constructed area size
- Location of the property
- Type of property (residential, commercial, industry)
Imposto Sobre Operações Financeiras - IOF
This tax is not related directly to Real Estate sales. IOF is charged on top of financial transactions involving currency exchange, insurance operations, loans, and securities.
People coming to Brazil must bear in mind that IOF tax needs to be paid whenever foreigners bring money into the country. Since this is a federal tax, the rate does not vary from state to state. Some aliquots examples are:
- IOF in credit operations - maximum of 1.5% per day, but, it usually consists of a variable percentage plus an additional rate of 0.38%
- IOF in foreign trade operations - maximum of 25%, but, it is usually reduced; for the payment of import services, for example, the rate is 0.38%
- IOF in securities and Real Estate titles - maximum of 1.5% per day, but, in some cases, it may be reduced