Buying Guide Real Estate in Brazil
Daniela Quiros, Saturday, 4 January 2014
This article is part of a series of 8 articles about buying property in Brazil. The other articles in the series cover the following topics:
A question that normally arises before any investor starts assessing the conditions of acquiring property in a foreign country is, "can I, as a foreigner, invest in this country?"
As far as Brazil is concerned, the answer is definitely, yes. Not only foreigners can invest in Brazil, but they are also welcomed and encouraged by the Brazilian government to invest in the country's economy, and to buy Brazilian property. The Brazilian government is clearly manifesting its interest in foreign investments by facilitating the process of obtaining visas and signing international treaties to avoid double taxation.
Furthermore, foreigners are not restricted in their buying opportunities in Brazil: urban land, houses, condos and beachfront properties are open for sale to foreigners. Foreigners enjoy the same proprietary rights in Brazil as the Brazilians do, and in most cases even residency is not required. Nevertheless, acquisition of large hectares of rural land for agricultural purposes imposes additional requirements on the buyer, as much as beachfront property within the 180 meters from the seashore, or national borderline. Still, foreigners looking to participate in export, tourism, real estate, or environmental markets are very much welcomed by the Brazilian authorities, as well as the hospitable Brazilian people.
Brazilian hospitality is by far not the only reason for a foreigner to want to reside in ; its dazzling, pure white sand beaches stretch for hundreds of miles, hosting numerous picturesque villages, towns, large cities, and secluded gated communities offering a great variety of real estate opportunities to match any budget. Brazil boasts of a stable year-round temperature of its clear tropical waters. A lot of cities have their own in-city beaches, not to mention Brazil's sizzling nightlife, with its carnivals, nightclubs, and a notorious tolerant attitude to people of all races, religions, and sexual orientations.
It should be noted that the minimum wage in Brazil is around $300, so the American and European expats will be able to afford to hire a full-time housekeeper, or a professional nurse.
Price Trends
“Don't wait to buy property in Brazil; buy property in Brazil, and wait.”
Brazil has been experiencing a very strong upward real estate price trend within the past few years. Despite the widespread rumors that may exceed the buying capabilities of its customers, many Brazilian cities are steadily gaining in popularity among foreign buyers, and local middle-class buyers. Rio de Janeiro has seen the strongest price movements, with apartment prices rise over the average of $3500 per square meter to $5000 per square meter. Fortaleza, Sao Paolo, Tambau and Antiplano are some of the most popular destinations for foreigners looking to buy real estate in Brazil.
Buying Process
The first thing a foreigner has to do is obtain a number, an individual taxpayer registration issued by the local Internal Revenue Office.
Among required when buying property in urban areas are CPF, passport, birth or marriage certificate and proof of financial solvency if the purchase involves financing. All documents must be properly translated in Portuguese and certified.
When buying property in rural areas, a foreign citizen needs to have CPF, passport, proof of residence, and the plan of implementation of the land.
You can get CPF number following one of the two ways: a) you can apply for a CPF from your home country by sending your birth certificate translated into Portuguese and certified by the Brazilian consulate in your country to your lawyer in Brazil. This may be quite a lengthy process; b) the fastest and most secure way to obtain a CPF in Brazil is to apply for it when you are physically in the country. You will need to bring your birth and marriage certificate with you, if you are married. This procedure in Brazil usually takes no more than a week. For a detailed overview of the buying process, please refer to the description of the .
Hiring an experienced legal representative is the key to smooth and flawless title transfer in Brazil. Your lawyer will be responsible for researching the title, its owners, liens and encumbrances associated with the property. will draft the deed and accompany you during the signing of it at the Notary Public’s office. Your lawyer will be responsible for registering you as a new owner of the property. , on the other hand, can help you find some of the most attractive seller financing offers on the market.
Can A Foreigner Buy Property In Brazil With His Associates?
If you consider buying real estate in Brazil with your friends or business associates, this is a viable solution because up to 10 individual names can be registered on the title deed. This means that fractional ownership applies in this case, providing a practical alternative to the global credit crisis.
Leasehold Property
There is no limit on how long a foreigner or a resident can own the leased property in Brazil. As long as you pay the ground rent, or foro, there is very little discrepancy between freehold ownership and leasehold. If you fail to pay the ground rent, or the property tax, the result is very much the same as with the failure to pay the property tax on freehold property – foreclosure.
Zoning Codes, Land Use, Building Restrictions
In Brazil, there exists the concept of ecological – economic zoning, ZEE. Each municipality has its building codes established by regional Councils of Engineering, Architecture and Agronomy, CREA. Before construction, any company, or private individual has to comply with their rules, regulations, and obtain their permission.
Closing Costs and Fees
and taxes on buying real estate in Brazil differ depending on the location of your property because every municipality has its own system of rules and regulations. This is not the most transparent system, but the Brazilian authorities work hard to facilitate the process. Overall, be prepared to pay the approximately 7.5% of the total value of the property in expenses:
In average, monthly community fees in Brazil range from $80 to $300 and depend on the size and type of property. The annual , IPTU, varies depending on municipality the property is located with. Chiefly, the real estate tax ranges between 0.5% – 1% of the assessed value of the property.
Mortgage
As of now, foreigners without Brazilian residency cannot obtain a in Brazilian banks. Nevertheless, Brazilian construction companies offer a wide variety of developers financing on very worthwhile conditions. Brazilian government encourages national banks to widen the assortment of mortgage instruments available on the market both for national borrowers and foreigners.
Brazil is expecting further increase in real estate prices due to a massive construction associated with the 2014 World Soccer Championship and several multi-billion industrial projects. The trend in real estate prices is still upward, so today may just be the right moment to invest.
This article is part of a series of 8 articles about buying property in Brazil. The other articles in the series cover the following topics:
A question that normally arises before any investor starts assessing the conditions of acquiring property in a foreign country is, "can I, as a foreigner, invest in this country?"
As far as Brazil is concerned, the answer is definitely, yes. Not only foreigners can invest in Brazil, but they are also welcomed and encouraged by the Brazilian government to invest in the country's economy, and to buy Brazilian property. The Brazilian government is clearly manifesting its interest in foreign investments by facilitating the process of obtaining visas and signing international treaties to avoid double taxation.
Furthermore, foreigners are not restricted in their buying opportunities in Brazil: urban land, houses, condos and beachfront properties are open for sale to foreigners. Foreigners enjoy the same proprietary rights in Brazil as the Brazilians do, and in most cases even residency is not required. Nevertheless, acquisition of large hectares of rural land for agricultural purposes imposes additional requirements on the buyer, as much as beachfront property within the 180 meters from the seashore, or national borderline. Still, foreigners looking to participate in export, tourism, real estate, or environmental markets are very much welcomed by the Brazilian authorities, as well as the hospitable Brazilian people.
Brazilian hospitality is by far not the only reason for a foreigner to want to reside in ; its dazzling, pure white sand beaches stretch for hundreds of miles, hosting numerous picturesque villages, towns, large cities, and secluded gated communities offering a great variety of real estate opportunities to match any budget. Brazil boasts of a stable year-round temperature of its clear tropical waters. A lot of cities have their own in-city beaches, not to mention Brazil's sizzling nightlife, with its carnivals, nightclubs, and a notorious tolerant attitude to people of all races, religions, and sexual orientations.
It should be noted that the minimum wage in Brazil is around $300, so the American and European expats will be able to afford to hire a full-time housekeeper, or a professional nurse.
Price Trends
“Don't wait to buy property in Brazil; buy property in Brazil, and wait.”
Brazil has been experiencing a very strong upward real estate price trend within the past few years. Despite the widespread rumors that may exceed the buying capabilities of its customers, many Brazilian cities are steadily gaining in popularity among foreign buyers, and local middle-class buyers. Rio de Janeiro has seen the strongest price movements, with apartment prices rise over the average of $3500 per square meter to $5000 per square meter. Fortaleza, Sao Paolo, Tambau and Antiplano are some of the most popular destinations for foreigners looking to buy real estate in Brazil.
Buying Process
The first thing a foreigner has to do is obtain a number, an individual taxpayer registration issued by the local Internal Revenue Office.
Among required when buying property in urban areas are CPF, passport, birth or marriage certificate and proof of financial solvency if the purchase involves financing. All documents must be properly translated in Portuguese and certified.
When buying property in rural areas, a foreign citizen needs to have CPF, passport, proof of residence, and the plan of implementation of the land.
You can get CPF number following one of the two ways: a) you can apply for a CPF from your home country by sending your birth certificate translated into Portuguese and certified by the Brazilian consulate in your country to your lawyer in Brazil. This may be quite a lengthy process; b) the fastest and most secure way to obtain a CPF in Brazil is to apply for it when you are physically in the country. You will need to bring your birth and marriage certificate with you, if you are married. This procedure in Brazil usually takes no more than a week. For a detailed overview of the buying process, please refer to the description of the .
Hiring an experienced legal representative is the key to smooth and flawless title transfer in Brazil. Your lawyer will be responsible for researching the title, its owners, liens and encumbrances associated with the property. will draft the deed and accompany you during the signing of it at the Notary Public’s office. Your lawyer will be responsible for registering you as a new owner of the property. , on the other hand, can help you find some of the most attractive seller financing offers on the market.
Can A Foreigner Buy Property In Brazil With His Associates?
If you consider buying real estate in Brazil with your friends or business associates, this is a viable solution because up to 10 individual names can be registered on the title deed. This means that fractional ownership applies in this case, providing a practical alternative to the global credit crisis.
Leasehold Property
There is no limit on how long a foreigner or a resident can own the leased property in Brazil. As long as you pay the ground rent, or foro, there is very little discrepancy between freehold ownership and leasehold. If you fail to pay the ground rent, or the property tax, the result is very much the same as with the failure to pay the property tax on freehold property – foreclosure.
Zoning Codes, Land Use, Building Restrictions
In Brazil, there exists the concept of ecological – economic zoning, ZEE. Each municipality has its building codes established by regional Councils of Engineering, Architecture and Agronomy, CREA. Before construction, any company, or private individual has to comply with their rules, regulations, and obtain their permission.
Closing Costs and Fees
and taxes on buying real estate in Brazil differ depending on the location of your property because every municipality has its own system of rules and regulations. This is not the most transparent system, but the Brazilian authorities work hard to facilitate the process. Overall, be prepared to pay the approximately 7.5% of the total value of the property in expenses:
- Transfer tax of approximately 2 – 4%.
- Notary fees of approximately 1.25%.
- Registration costs approximately 0.75%.
- Legal fees of approximately 2%.
- Navy alienation fee of approximately 5%, if the property is within the maritime zone.
In average, monthly community fees in Brazil range from $80 to $300 and depend on the size and type of property. The annual , IPTU, varies depending on municipality the property is located with. Chiefly, the real estate tax ranges between 0.5% – 1% of the assessed value of the property.
Mortgage
As of now, foreigners without Brazilian residency cannot obtain a in Brazilian banks. Nevertheless, Brazilian construction companies offer a wide variety of developers financing on very worthwhile conditions. Brazilian government encourages national banks to widen the assortment of mortgage instruments available on the market both for national borrowers and foreigners.
Brazil is expecting further increase in real estate prices due to a massive construction associated with the 2014 World Soccer Championship and several multi-billion industrial projects. The trend in real estate prices is still upward, so today may just be the right moment to invest.
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