Investors Guide to Land in Brazil

The Purchasing Process

The purchasing process in Brazil is a straight forward transaction, made all the more easier with a legal representative specialising in Brazilian land and real estate purchases. A lawyer will be required to assist with checking through the title deeds of the land, any liabilities or charges on the property and to register the land. When purchasing in Brazil, a CPF number will need to be obtained. The lawyer will also be able to assist with this. A CPF is an identification card required for purchasing in Brazil.

As the cost of the land in Brazil is exceptionally low, the purchasing process will vary between development companies offering the land. In all circumstances, a reservation deposit will need to be paid, and depending upon the developers requirements, the deposit may be required in the local Real currency (BRL). Once the deposit is paid, the lawyer will check through the legal aspects of the transaction and a Private Purchase Contract will be issued.

If the plot is located within a residential development, partial payments may be required at certain stages of the development’s infrastructure, such as electricity and water connections to plots, road constructions. Each stage being several months apart would require a certain percentage of the payment, for example a 20% down payment upon issuing the PPC, 30% upon the connection of water and electricity, 30% upon the roads being laid and 20% upon completion and handover.

Upon hand-over, the associated fees and taxes will be paid. The legal representative may require part of the legal fees to be paid at the deposit stage.

Fees & Taxes

In Brazil, the fees and taxes relating to the purchase of the land can amount up to approximately 8% of the purchase price. While the fees and taxes can vary between states, the general associated buying costs will include:

• Transfer tax – approx. 3%
• Notary fees – approx. 1.33%
• Land registry fees – approx. 0.65%
• Legal fees – approx. 1.5%
• Capital gains tax is 15% in Brazil
• Inheritance tax – approx. 4%
• Urban real estate tax (annual) – from 0.5%

Financing the Property

One of the benefits of investing in Brazilian land is the extremely low cost of the transaction, eliminating the need for obtaining financial assistance in the majority of cases. A bank mortgage in Brazil is not possible for foreigners to obtain at present, as the mortgage market is very new and available to Brazilian residents only. The best option is to apply for a bank loan from the investor’s home country, or to release equity from a currently owned property.

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