Property Purchase Process | Property Purchase Costs | Mortgage Finance

Overview

Taxes

• VAT  – for new-build properties
• Transfer tax (ITBI) – for resale properties
• Registration tax
• Import tax - on transfer of funds from abroad

Legal fees

• Lawyer’s fees (for any legal advice or proxy services)
• Notary fees

 Bank charges

• Mortgage arrangement fee
• Currency transfer costs

Currency exchange rate fluctuations

• Risk of cost of your property rising due to exchange rate fluctuations

Moving costs

• Cost of moving (e.g. removals, transport, etc.)
• Expenses relating to changing the names in utility contracts
• Contents and building insurance

Other costs

• Real estate agency fees (only paid by buyer in exceptional circumstance; refer to selling costs for details)
• Surveyor report (if required)

Exact costs will vary by region and by type of property.  However, as a general rule you should allow 3-8% on top of the purchase price to cover additional buying costs.  If it takes a significant amount of work to establish title and ownership, the costs could amount to more.  Oceanfront properties or properties which sit on Brazil’s border will also involve high buying costs as they have to be recorded by the Federal Government.

Taxes:

• Transfer tax (ITBI) – When you buy a resale property in Brazil you must pay transfer tax (Imposto sobre Transmissao de Bens Imoveis or ITBI) to the municipal government.  Transfer tax varies from city to city but is usually charged at 2% of the property’s value.  Transfer tax must be paid within 30 working days of the authentication of the deed or the real estate cannot be entered in the ownership registry.
• VAT – When purchasing new-build property in Brazil, you must pay VAT
• Registration tax – Upon registration of the title deed, the notary public will levy a registration tax of up to 2% of the value of the property
• Import tax – Brazil levies a 1% "import" tax on transfer of funds from abroad

Legal fees:

• Lawyers’ fees – It is important to seek independent legal advice from a lawyer versed in Brazilian property law and preferably bilingual as notaries are neutral and will not protect your interests.  Tax advisory fees will depend on the complication of the transaction.
• Notary fees – By law, a notary (escribao) must be present to witness the signing of the public deed (escritura) and authenticate the deed.  The notary will also organise for the payment of taxes and for funds to be transferred from purchaser to the vendor.

Bank charges:

• Bank charges – Bank charges met by the purchaser will include both the cost of setting up a mortgage (if you go for this option) and the cost of transferring funds across to pay for the purchase.  The purchaser will pay the bank charges involved in the transaction up until the monies reach the vendor’s account.

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