Property Taxes in Brazil for Foreigners

Nonresidents are generally subject to Brazilian taxation on income arising from Brazilian sources, including income and gains derived from real estate situated in Brazil.

Rental Income Tax

Rental income derived by a nonresident individual from Brazilian real estate is generally subject to Brazilian withholding income tax.

The general withholding rate applicable to qualifying rental income paid or remitted to a nonresident is 15%, subject to the applicable rules governing the taxable base and permitted deductions.

A higher 25% withholding rate may apply where the recipient is resident or domiciled in a jurisdiction classified under Brazilian law as a low-tax or favored-tax jurisdiction.

Corporate Taxation

Brazilian companies are generally subject to Corporate Income Tax (IRPJ) at a basic rate of 15% on taxable profit.

An additional 10% IRPJ surtax applies to the portion of taxable profit exceeding BRL 20,000 per month, equivalent to BRL 240,000 for a full 12-month period.

Companies are also generally subject to the Social Contribution on Net Profit (CSLL). For ordinary non-financial companies, the standard CSLL rate is generally 9%.

Consequently, the combined headline IRPJ and CSLL burden for an ordinary company can reach approximately 34% on taxable profit above the IRPJ surtax threshold.

The precise taxable base depends on the company's applicable tax regime, such as the actual-profit (Lucro Real) or presumed-profit (Lucro Presumido) regime. Rental income and real-estate gains may therefore be taxed differently depending on the company's circumstances and tax regime.

Capital Gains Tax

A nonresident individual disposing of Brazilian real estate is generally subject to Brazilian capital gains tax on the difference between the disposal value and the property's allowable acquisition cost, subject to the applicable adjustment and deduction rules.

Capital gains of up to BRL 5 million are taxed at 15%. The portion of the gain between BRL 5 million and BRL 10 million is taxed at 17.5%, the portion between BRL 10 million and BRL 30 million is taxed at 20%, and the portion exceeding BRL 30 million is taxed at 22.5%.

Property Buying/Selling Taxes and Costs

Property Holding Taxes

Municipal Urban Property Tax (IPTU)

Urban real estate is generally subject to an annual municipal property tax known as IPTU – Imposto sobre a Propriedade Predial e Territorial Urbana.

IPTU is imposed by the municipality in which the property is located. The taxable value, applicable rate, exemptions and progressive-rate structure therefore vary considerably between municipalities.

The tax is generally calculated by reference to the municipality's assessed value of the property rather than necessarily its current market value.

Accordingly, a nationwide IPTU rate such as 0.3%–1.5% should be treated only as an indicative range rather than a uniform Brazilian tax rate.

Federal Rural Property Tax (ITR)

Rural property situated outside an urban area may instead be subject to the federal Rural Territorial Property Tax (ITR).

ITR rates generally range from 0.03% to 20%, depending principally on the size of the taxable area and the degree to which the property is productively utilized.