Foreign Citizens

It is important for the real estate purchaser to be assisted by professionals who are qualified to offer the correct guidance regarding the purchase and sale or real estate properties. This assistance shall be composed of an attorney, an accountant and a real estate broker, duly skilled and in good standing to provide such assistance.

In Brazil, all issues related to the acquisition of assets are basically disciplined by the Brazilian Civil Code, which classifies the assets into two general categories:

1. Movable assets: those that may be removes by an external force or those that have their own means of locomotion, without causing harm or devaluation to the asset.

b) Real Estate Properties: those which, due to their immovable conditions or fixation to the soil, either natural or artificial, cannot be entirely or partially removed without being destroyed or damaged.

The real estate category of assets includes the soil, its surface and its natural annexes or accessories (such as the trees and fruits), the air space and the underground, except for the mines, the products derived from the sub-soil and the water resources, which are considered assets separated from the soil for the purposes of use and exploration.

Both foreign individuals and corporations are allowed to acquire properties and rights related to real estate urban properties under the same conditions as the nationals, provided the properties are not located on the coastline, on the frontiers or in areas defined as national security zones. The rural properties may be acquired upon compliance with certain restrictions.

The investor must be registered as a taxpayer before the Ministry of Treasury (CPF number), since it is mandatory for any Brazilian or foreigner who owns assets in Brazil or rights subject to public registration, including real estate properties, vehicles, boats, airplanes, share quotas, bank accounts, investments in the financial market or in stock exchange. The CPF is used by the Ministry of Treasury for taxation. If the purchaser is married, he must also present his certificate of marriage.

The investor must be registered as a taxpayer before the Ministry of Treasury (CNPJ number), since it is mandatory for any Brazilian or foreign company that owns assets in Brazil or rights subject to public registration, including real estate properties, vehicles, boats, airplanes, share quotas, bank accounts, investments in the financial market or in stock exchange. The CNPJ is used by the Ministry of Treasury for taxation.

In addition to the price of the acquired asset, in Brazil, the following expenses are levied upon the operation, therefore requiring the relevant reserves:

1.      Real Estate Transfer Tax (Imposto sobre transmissão de bens imobiliários - ITBI) which is paid to the city hall where the urban property is located.
2.      Real estate property registration, private agreement and public deed registration before a Real Estate Registration Office.
3.      Real estate deed fees to be paid to the Registration Office of Deeds and Documents responsible for issuing the Purchase and Sale Deed.
4.       Marine’s Laudemium – Charged by the Federal Government only on transactions that involve real estate properties located on the seashore, and up to 80m away from the sea.
5.      City Laudemium – certain municipalities also charge the laudemium on real estate properties located in certain areas of its territory.
6.       Bank Fees – if the real estate property is acquired by means of bank loans, the purchaser shall also be prepared for fees charged by the banking institution, such as property evaluation fees, administrative fees, credit line fees, property and life insurances, etc.;
7.      Urban Property Tax (IPTU – Imposto Predial and Territorial Urbano), a city tax collected annually from proprietors of urban buildings and terrains;
8. Residue Collection Fee (TCR – Taxa of Coleta of Resíduo) – A city fee charged annually along with the IPTU (see above).
9.       Legal and accounting advice fees.

In a purchase and sale agreement, the following shall mandatorily be included:

1.      Purchaser’s and seller’s personal information, such as: full name, RG/RNE or Passport number, CPF or CNPJ number, nationality, marital status and residential address), total area of the property with the corresponding registration numbers at the Real Estate Registration Office;
2.      Characteristics of the real estate property (dimensions, location, usage areas, purpose, etc).
3.      Total price of the purchase and sale transaction, and terms of payment.
4.      If the seller is married under community property ruling, the spouse’s signature is also mandatory.

In accordance with Act 4.591, of 1964, only after registration does the actual right of property over the real estate asset exist, whereas the purchaser is liable for the transfer expenses of the property, such as: i) Issuance of the deed written by the notary public; ii) Transfer tax (ITBI); iii) Registration of the deed issued by the notary public in the Real Estate Registration Office. The expenses regarding brokerage and certificates in general are borne to the seller.

In order to open a bank account in Brazilian banks, the foreign citizen shall have CPF and present his passport with a permanent visa and an evidence of residence in Brazil.

To transfer money from abroad into Brazil, there are several different situations:

i) If the foreign citizen already has an account in a Brazilian bank, all it takes is to request from the bank of origin to transfer the money, by providing the information about the bank of destination, such as: name and number of the bank, agency and account numbers, SWIFT code corresponding to the foreign bank, and the IBAN – International Bank Account Number.

ii) If the foreigner does not have a bank account in Brazil, the maximum amount allowed to be transferred from abroad to himself is that of approximately U$ 5,000.00 (five thousand US Dollars), to be withdrawn in cash in a defined bank agency. However, he will be allowed to transfer any amount to an existing bank account in Brazil (even in favor of someone else);

iii) If the transfer is meant for the payment of assets acquired in Brazil, the foreigner may remit the money directly into the seller’s account.

The SWIF code is the number used in the financial world that allows the identification of a Bank, and shall be obtained at the foreign beneficiary bank.

The code is composed of up to 11 characters, and at least 8, whereas the three last digits are optional. The first four characters identify the bank, the next two characters identify the country, and the other two identify the location. The last three characters (optional) identify the agency.

The IBAN – International Bank Account Number identifies the number of a client’s account in the international context, validating the country, the bank where the beneficiary holds his account, facilitating tracking and allowing better effectiveness of the international banking transfer system.

In the Bank options, select NIB/IBAN

There are three different Dollar rates to convert into Reals:

Commercial Dollar Rate – used by the Central Bank of Brazil in transfers coming from abroad and for services and commodities export/import operations.

Tourist Dollar Rate – used by some bank agencies to exchange dollars from foreign tourists.

Parallel Dollar Rate – used by private exchange providers to change dollars into reals and vice-versa.  In real estate transactions, the parallel dollar rate is usually adopted.

Although in principle the Brazilian Federal Constitution does not differ between the acquisition of real estate properties by Brazilian or foreign citizens, there are certain limitations imposed by the law, among which, the limitations regarding the acquisition of real estate properties located in marine areas, rural areas and national security areas.

The real estate properties located in the Marine area are those that lie along the sea shores or river shores, lakes and islands, up to a distance of 33 meters. These properties belong to the State, which may transfer the public domain to foreign parties, freely or upon payment of a price, and it is possible to require authorization from the Union’s Equity Bureau, in some cases. The holder of the useful dominion is obliged to pay an annual fee, called venue fee.

The rural properties may only be acquired by foreign corporations for development of agricultural projects, livestock raising, industry or colonization, and they depend on the project’s approval by the Ministry of Agriculture.

Acquisition by an individual, in its turn, is limited pursuant to the size of the property. The real estate properties with an area of less than three modules (a measure defined by the Instituto National da Colonização e Reforma Agrária - INCRA, according to the country’s region) do not depend on authorization to be purchased. In properties of sizes between 3 and 50 modules, it is necessary to obtain an authorization from INCRA and, if the property occupies more than 20 modules, the acquisition furthermore depends on the project’s approval by the Ministry of Agriculture. Real estate properties of more than 50 modules cannot be acquired by foreign individuals.

Rural properties purchase ad sale requires issuance of a public deed, and the mere private instrument of purchase and sale executed between the parties is not sufficient. Next, the public deed must be submitted to a Real Estate Registration Office for registration, once only this measure will allow the transfer of the property.