Buying a House in Brazil
BUYING A HOUSE IN BRAZIL
Know the legal issues. Brazil is perhaps one of the few emerging markets that allows foreign buyers to own both land and property in their own names on a 100 per cent freehold basis – making the buying process relatively straightforward. However, before you can buy a property in Brazil, you must obtain a CPF (Cadastro das Pessoas Físicas) number, which can be acquired via the Brazilian embassy in the USA for a small fee or in Sao Paulo within the local authority called Receita Federal with a local proof of address in hands, that may be a declaration/statement from a local friend/contact in Portuguese with a local proof of address on his/her name. Once issued, this tax registration number will enable you to open a bank account and apply for utilities, although, perhaps its main aim is to register the amount of capital that you are planning on bringing into Brazil. It also allows you to repatriate your funds should you decide to sell your property.
If you are buying a home that was built after 1973, it will come with a legal document know as a matrícula (property’s ‘ID’ number). Similar to title deeds, this document lists a detailed property description, all previous owners, the boundary details, any outstanding debts and all legal, financial and judicial transactions relating to the property.
Understand the property buying process in Brazil. The purchase process in Brazil is relatively simple once you have obtained your CPF (taxpayer identification) number, however it is crucial that you seek the advice of a good, independent lawyer. This is especially true if you are buying a resale home, as checking for clean title (in case it is an used or not new property specially) can be a complicated and painstaking process. Once all of the relevant searches have taken place you will need to open a local bank account, as the purchase funds must be visibly traceable from the buyer’s bank account into the vendor’s one. In addition, all monetary transactions will need to be registered as a foreign investment with the bank of Brazil, but this cost should be covered in your legal fees.
You will be required to pay a deposit of around ten per cent when you have had your offer accepted – although this figure can range from five to 20 per cent. The balance is paid on completion or within 24 up 30 months in the case of a floor plant building flat (construction period) and the entire process is overseen by a notary within the legal department of the seller incorporation. Even though all contracts are processed in Portuguese, it is advisable to hire a translator to have an official translation of your contract or bring your translator with you during the contract signature process. if your solicitor isn’t fluent in both languages, specially.
Finance your property in Brazil. Currently it isn’t possible to get a Brazilian mortgage, therefore the most common way to raise finance is to remortgage or other country property in order to release equity. However, the domestic mortgage market in Brazil is reforming and developing, and with the levels of foreign interest in property purchases in recent years, it is entirely possible that finance for foreigners will become available at some point in the future.
Be across the fees and taxes. In total, fees and taxes come in at around seven per cent of the purchase price. This is broken down into legal fees of two per cent, stamp duty of two to three per cent (depending on the price of the property) and registration fees of two per cent. Estate agent fees of up to six per cent are paid by the vendor. Once you have obtained your CPF number, you will automatically become liable for income tax if you rent your property out – this operates on a sliding scale of 15 to 27.5 per cent.
When you come to sell your Brazilian home, you will need to pay capital gains tax – again this works on a sliding scale of 15 to 27.5 per cent. This is calculated on the difference between the final selling price and the registered buying price – less any maintenance fees and travel costs. Be aware that the registered buying price is set by City Hall, and therefore may not be a true reflection on what you actually paid. However, if you are planning on reinvesting the profit back into a Brazilian property, then you will generally be exempt from CGT.
Have the right visas, residency and work permits. If you wish to obtain a permanent residence permit you will need to prove that you have funds in excess of US$50,000 (£32,300), but even so this visa is only issued on a five-year conditional basis. In order to re-validate your visa you must show the Federal Police how you have invested in, and therefore improved, the local economy. However, if you are planning on employing Brazilian staff, whether in the home or workplace, then this initial investment figure may be reduced.
Meanwhile, if you are thinking of retiring to Brazil then you must be over 50 and receive a monthly pension of over $2,000 (£1,292) per calendar month. Of course, if you are only planning to stay in Brazil for short periods of time, then a tourist visa will suffice. Tourist visas forbid you from working, and you are only allowed to stay in the country for up to 90 days. You will also need to produce a return ticket on arrival.
Consider whether to new-build or buy a resale property. The new-build versus resale argument in Brazil really boils down to the traditional mantra of location, location, location. If you are after a city above then a resale property is likely to work well – simply because all of the good plots were snapped up years ago. Serviced apartments are proving popular in the urban areas as buyers – and their tenants – can then benefit from hotel services coupled with the privacy of their own home. If buying in city however, ensure that your property is located in a safe and reputable area.
Meanwhile, new-build homes are far more prevalent on the coast, where two-thirds of the country’s population reside. These modern developments complement the existing hotel complexes, and local facilities and amenities, that come hand in hand with beach life – making such a purchase suitable for short-term lets. If you are willing to look further inland however, you may find building your own home an attractive option, as both land and labor are reasonably priced.
Be knowledgeable about Brazil's health, education and transport facilities. Brazil’s Joint Health System is one of the largest public health networks in the world, however health care varies dramatically from region to region. As in any county, most of the cities have enough doctors per head, but once in the rural areas this figure can decrease dramatically. In total, Brazil has over 200,000 physicians and around 16,000 hospitals and medical centres. Despite this, it is recommended that you take out comprehensive medical insurance before travelling. Many Brazilians themselves opt to take out private health insurance, and there are many policies to choose from – including BUPA.
Education is divided into three levels, with several grades in each. The first educational level, known as fundamental education, is free for everyone (including adults), and mandatory for children between the ages of six and 14. Intermediate education is also free, but isn’t compulsory. The Ministry of Education has ultimate control over virtually all of higher education, which is free at public universities, however all students need to pass an entrance examination before they are accepted.
Transport. As you would expect from a popular tourist destination, transport in Brazil is of a good standard. The government’s commitment to opening up the country to tourism has resulted in the upgrading of several new airports, and there has been further investment into new roads and general infrastructure.
Although, if you are determined to stay on the ground, there are a number of options available to you. Despite lacking serious investment, the train services in Brazil boast some truly scenic journeys, which can prove a popular choice if time is on your side. For shorter distances it is feasible to hire a car, however be aware that this may not be the safest option available to you. Tourists are generally advised to carry plenty of water and a detailed map – and not to stop at red lights if you can help it.