Investors Guide to Brazil

The Purchasing Process

Buying property in Brazil follows a very straight forward process, with no restrictions to foreigners. As recommended with all overseas property markets, it is advisable to use a solicitor specialising in the region to be purchased. A lawyer who is familiar with property purchasing in Brazil will be able to ensure all of the correct documentation is in place, ensuring a safe purchase.

The buying process in Brazil is similar to other overseas markets, with a holding deposit of approximately £2,000 being used to take the property off the market. The solicitor will then arrange the legal due diligence checks on the property and the developer, ensuring everything is legally satisfactory.

The lawyer will also assist with arranging a CPF number, which is an ID card required for purchasing property in Brazil. It is during this stage that the private purchase contract (PPC) will be created to outline the payment schedule and legal obligations of both the buyer and seller during the course of the construction.

The payment schedule will vary between developers, and also the stage in which the buyer has entered into the purchasing agreement. If buying a property at the later stages of the construction progress, the payments may be a greater amount at each stage, or a larger amount upon completion.

These payments will be agreed in the PPC which will be signed between 2 and 4 weeks of paying the holding deposit. The initial payment upon signing the PPC will normally be between 10% and 30% of the purchase price, minus the holding deposit.

The final payment will be made upon completion when the keys to the property are handed over.

Fees & Taxes

The associated buying costs of property in Brazil amount to approximately 6.5% and can vary in different areas throughout the country. While the fees are considered to be quite moderate, the taxes in Brazil are quite high. As the majority of property investors plan to enter into the buy-to-let market, the taxes on rental income in Brazil is a flat rate of 15%.

• Transfer tax is 2%
• Notary fees are 3%
• Legal fees are around 1.5%
• Capital gains tax is 15%
• Inheritance tax is 4%
• Annual urban real estate tax is from 0.5%
• Rental income tax is 15% flat rate

Financing the Property

The Brazilian mortgage market has been slow to develop over the years, with options available to residents with exceptionally high interest rates. In recent years several changes have occurred in the domestic market with a lowering of interest rates, making mortgages accessible to a greater percentage of the population.

As the financing options were not available, the property prices have remained exceptionally low, enabling foreign investors to access the market with cash. The huge increases in demand for Brazilian property has inevitably lead to a greater demand in financing options expected to open mortgaging availability to non-residents in the near future.

While overseas investors are still not able to obtain Brazilian mortgages, some international mortgage brokers and financial institutions can arrange loans for clients. The terms and conditions of loans obtained from private providers can vary greatly. Many developers in Brazil are assisted with payments by the government incentives for property construction, enabling ideal payment structures for foreign investors. More about overseas property finance

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