Taxes and Fees for Buying Real Estate in São Paulo
Costs to buy Real Estate are not restricted to the price of the property itself. Taxes in Brazil can make an initially good deal pricey, especially in São Paulo. Find out in this article what you will also pay for when acquiring property in the biggest Brazilian city.
Acquiring Real Estate requires financial planning. Buyers must pay attention to all the extra costs involved in a transaction like this, since fees can substantially raise the amount to be paid.
The taxes and diverse costs that need to be considered when buying a property are basically:
- Imposto Sobre Transmissão de Bens Móveis - ITBI
- Real Estate register
- Public deed
- Imposto Sobre a Propriedade e Território Urbano - IPTU
- Imposto Sobre Operações Financeiras - IOF
Imposto Sobre Transmissão de Bens Móveis - ITBI
This tax is charged over 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 what state the property is located.
For those located in the state of São Paulo, ITBI equals to 3% of the house or apartment price, as a general rule.
Real Estate Register
This register basically states that the property now belongs officially to the buyer. This fee does not come in the form of a percentage, like ITBI. Instead, the price is set according to the market value of the house or apartment.
Below are some approximate examples of Real Estate register costs for São Paulo properties, in 2014.
- Properties worth BRL 60,000 to 100,000 - BRL 967.54
- Properties worth BRL 201,000 to 402,000 - BRL 1,671.44
- Properties worth BRL 805,000 to 1 million - BRL 2,549.54
The price of this fee is also set based on the property’s value, and it varies from state to state. This document might be needed at some point to prove that the buyer owns the house or apartment.
Below are some approximate examples of public deed costs for São Paulo, in 2014.
- Properties worth BRL 80,500 to 100,700 - BRL 1,527.69
- Properties worth from BRL 173,000 to 201,400 - BRL 2,457.47
- Properties worth from BRL 805,600 to 1.22 million - BRL 3,710.94
Imposto Sobre a Propriedade e Território Urbano - IPTU
IPTU is not a privilege of those buying a property, since this tax must be paid every year, but, it must also be considered by a buyer who's studying a certain property. The tax rate is based on the property’s market value, but, it is also variable from municipality to municipality.
In São Paulo, IPTU rate for residential properties is 1% and for non-residential properties it is at 1.5%. This aliquot may suffer increases or decreases — e.g., a property with an estimated value of more than BRL 654,000 will have a tax rate increase of 0.6%.
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 have in mind that IOF tax will need to be paid whenever foreigners bring money into the country. Since this is a federal tax, the rate does not vary from place to place. Some aliquot examples are:
- IOF in foreign direct investments - 0.38%
- IOF in credit operations - maximum of 1.5% / day, but 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%/day, but reduced in some cases