It’s never been easier to invest in rio de janeiro
OKA Property offers a complete investor support service. Learn more about how to start this journey through our guide.
Due to the beaches, history and culture of the wonderful city, the real estate market in Rio de Janeiro is one of the most coveted in Brazil, especially in certain neighborhoods in the south of the city. Coming out of a period of stagnation of about 7 years, the market was showing signs of warming when the health crisis began.
The country’s exchange rate situation is extremely favorable for investments coming from abroad. In about 18 months, the value of real estate has dropped around 30% for those who buy in foreign currency such as Euros or Dollars. This situation is likely to persist because of a number of factors, such as: interest rate, public debt and political situation in the country.
Both Brazilians and foreigners can buy real estate in Brazil. The difference is in the step before choosing the property, as the foreigner needs to perform some specific procedures. The first thing to be done by the foreigner who wants to buy property in Brazil is to obtain a CPF (Individual Taxpayer Registry) number, which can be requested at any Brazilian embassy or consulate abroad, presenting a certified copy of identification document, used in your country of origin, or passport. If you are married, you will also need to obtain a CPF number for your spouse.
Purchasing a CPF number will also allow you to open a bank account so that you can move, receive your income or simply repatriate your funds if you decide to sell your property in the future.
After obtaining the CPF, the next step is the choice of the property and negotiation for the future acquisition, which step must be accompanied by an experienced professional, as we will see in the next topic. Once the property has been chosen, the acquisition can be made through a power of attorney by public instrument, granting the grantor specific powers to buy the chosen property, sign private contracts and the deed. This power of attorney must be registered with the Brazilian consulate located in the buyer’s country of origin, in addition to being registered and translated in a notary’s office in Brazil.
After the negotiation, the next step is the transfer of values to the seller and registration of the property in the buyer’s name. You will need to open a local bank account, since the purchase funds must be visibly traceable from the buyer’s bank account to the seller. In addition, all monetary transactions will need to be registered as a foreign investment with the bank of Brazil, but this cost must be covered in their legal fees. At this stage, a few more documents from the buyer may be required, such as proof of residence, certificates of the property and some document that proves the lawful origin of the money, for the financial institution to approve the deposit.
The purchase process in Brazil is relatively simple once you have obtained your CPF (Individual Taxpayer Registration). However, it is extremely important that you seek the advice of a specialized attorney. This is even more necessary if you are buying a resale property, that is, a property that has already been owned by an individual or legal entity after its construction and incorporation, since the verification of the factual and legal situation of the property can be a process complicated and careful. In addition to the certificate of real encumbrances, obtained from the Real Estate Registry Office of the region of the property to be acquired, several other certificates must certify that you are buying a property free of legal obstacles or debts, both of the property itself and the sellers. But rest assured, our specialized legal counsel will check all the necessary documentation for the safe purchase of your property.
After checking all the real estate documentation, you will have to pay a deposit of around 10%, varying according to the contract entered into, when you have your offer accepted, what we call arras or signal. The balance is paid upon completion, and the entire process is supervised by a notary and also by our team.
After the deed of purchase and sale made in the Banknote Registry, it must be registered with the Registry of Real Estate, so that the property is effectively transferred. For this purpose, a guide already paid for the transfer tax (ITBI) must be presented, collected by the municipality from the location of the property, in addition to the deed and other pertinent documents.
To date, a foreigner has been unable to acquire property in Brazil through financing through an official bank, unless he has a permanent residence visa or is naturalized.
However, if you are not a resident and wish to finance a property in Brazil, there are still excellent buying opportunities through large construction companies present in the country, which, with their own resources and independent from official banks, approve direct financing.
Count on our team, as we have partnerships with several construction companies that approve direct financing for non-residents. We are able to support you throughout the negotiation.
Fees and taxes
In total, fees and taxes amount to about nine percent of the purchase price. This is basically divided between the transfer tax on immovable property, 3% (ITBI), the land registry fees and registration of the deed of purchase and sale, and the brokerage commission of real estate agents, which varies from 5% to 6% , being paid by the brokerage service contractor, in accordance with the Brazilian Civil Code, however the opposite may be provided, depending on the parties’ wishes.
It is important to note that once you have obtained your CPF number, you will automatically become responsible for tax collection of income tax on the proceeds of your property. Income tax is levied on rentals and subleases, with variable rates ranging from 7.5% to 27.5%, depending on the amount of the transaction, and must be paid monthly.
Another important observation is that if you are not yet a resident, the duty to collect is the attorney or the real estate agent who intermediates the lease, who must pass on the rent deducted from the tax.
In the same way, the income tax is levied at the time of the sale of your property, if the value obtained by the sale is higher than that paid on the purchase. In this case, what we call “real estate profit on capital gain” will occur, which has a 15% rate and is calculated only on the difference earned on the sale, after deducting brokerage commission fees, commissions, if any, and proven reforms with invoices. Remember that if the property was sold for less than the amount purchased, it will be exempt from income tax.
The new immigration legislation has favored foreigners who intend to establish residence in Brazil in a spectacular way. Since 2018, Brazil has allowed residence permits to be granted to foreigners who invest in the purchase of real estate in the national territory. Before 2018, the conditions for granting a residence permit were much more restrictive and foreigners wishing to invest in real estate in Brazil should do so through a legal entity, a much more bureaucratic procedure.
Currently, it is enough for the foreigner to acquire one or more properties with a total value of R $ 1000,000.00 (one million Reais), to be entitled to apply for a residence permit, which will be processed by the Ministry of Justice. After the purchase of the property and the granting of the residence permit, the foreigner may obtain a permanent residence visa if, for 2 (two) years, he remains with the ownership of the property and fulfills the other legal requirements, such as contributing to the local economy , generating jobs and income in Brazil.
It is important to note that foreigners can acquire properties on a joint ownership basis, but it is necessary that each invest the minimum amount mentioned above in order to be entitled to a residence permit.
OKA Property offers a specialized service to search for the best properties. Our multidisciplinary team will be on your side to accompany the entire purchasing process: evaluation by an accredited professional, negotiation, verification of documentation by a specialized lawyer, advice and technical guidance. With 10 years of experience in the Rio de Janeiro market and with the best professionals in Rio de Janeiro, OKA Property is the right choice to make a big deal!