Chapter 6: In This Chapter
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Introduction
Foreign ownership
Financing
Commercial real
estate
• Residential real
estate
• Rental property
• Licensing and
brokerage
Page 141
• Government
• Legal system
• Economy and
business
• Taxes and fees
• What you need to
know
• Beyond the basics
• Key contacts
Map of Brazil
Source: CIA World Factbook
Page 142
Introduction to Brazil
• Portuguese is official language
• Strong economy
– BRIC nation
• Energy
– Diversification necessary
– Non-renewable reserves
– Energy efficiency and renewable energy
Page 142-146
Brazil—The Rich Tapestry
Source: Wikipedia
Page 146
Brazil—The Rich Tapestry
Source: Wikipedia
Page 147
Brazil—The Rich Tapestry
Source: Wikipedia
Page 147
Brazil—The Rich Tapestry
Source: Eyes on Brazil
Page 148
Foreign Ownership of Real Estate
• Restrictions on:
– Borders
– Some coastal lands
– Rural properties
• Additional restrictions on agricultural land in
2010
Page 148-149
Financing
• Expansion of mortgage market
– Increased protections for lenders
– Expanding middle class
– Government subsidies
• Foreign residents may obtain mortgages
but face difficulties
• Cash transactions still common
Page 149-150
Commercial Real Estate
• Strong market
• Lots of construction
• Market drivers:
– Sports events
– Growth Acceleration
Program
Source: FIFA
Source: Rio 2016
Page 150-152
Residential Real Estate
• No official data
• Construction, prices, and
sales up according to
reports
Global Demand for Luxury Second Homes
– Disagreement among
analysts over existence of
bubble
• Second-home market
• Minha Casa, Minha Vida
Page 153-154
Source: Knight Frank and Itacaré Capital
Rental Property
• Pro-landlord
– Varies by state
– Caseload makes evictions lengthy
• Leases
• Professional property management in
demand
Page 154-155
Licensing and Brokerage
• Licensing required
• Listings
• Transaction process
Page 155-156
Realtor.com/international
Page 157-161
What You Should Know About
Government
• Federal presidential democratic republic
with executive, legislative, and judicial
branches
• Current constitution enacted in 1988 to
democratize the country
• Mostly pro-market policies to foster
growth should continue
– Some instances of protectionism, however
Page 162-163
Legal System
• Civil law system
• Contract disputes adjudicated at state
level
• Judge decides all civil cases
Page 163-164
Economy and Business
• Diverse economy
• Some challenges related to declining
demand for commodities
• Sociopolitical pressures to improve living
standards
• “Brazil costs”
• Still one of the top places to invest
• Technology and communications
Page 164-168
Real Estate Taxes and Fees
Real Estate Taxes and Fees
Tax or Fee
Amount
Paid by
Transfer Tax
2-4%
Buyer
Notary Fee
1-2.5%
Buyer
Land Registry Fee
Approx 0.75%
Buyer
Legal Fees
0.5-2%
Buyer
Agent Commission
6%
Seller
Municipal Property Tax
0.3-1.5%
Owner (Buyer)
Federal Rural Property Tax (some
0.03-20%
Owner (Buyer)
properties)
Source: Global Property Guide, International Living, Pathfinder Ltd.
Page 168
Business and Income Taxes
• Individual income tax
– Residents: Progressive up to 27.5% on worldwide income
– Nonresidents: 27.5% on earned income, 15% on other income on Brazilsourced income only
• Business income tax
– Combined rate of various taxes: 34%
• Withholding tax
– Interest: 15% for nonresident corporations
– Royalties: Generally 15%
• Capital gains
– Individual: 15%
– Business: 15% on nonresident corporations on investments registered with
Central Bank
• Value-added tax
– Federal: average of 20%
– State: 7-25%
• Other taxes
Page 168-169
What You Need to Know
• Strong, diverse economy with some challenges
• Mortgage market growing but difficult for foreigners to
obtain financing
• Commercial market drivers
– Sports events
– Growth Acceleration Program
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Residential market on the rise
Professional property management in demand
Licensing and CRECIs
MLSs: RedeSecovi de Imóveis and Redimob
Technology and communications
Mostly pro-market policies but some instances of
protectionism
Page 169-170
Beyond the Basics
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Greetings
Attire
Appointments
Business practices
Business dining
Taboos
Visas
Page 170-173
Key Contacts
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SECOVI-SP
COFECI
Brazilian-American Chamber of Commerce
Brazil-U.S. Business Council
USA Embassy in Brasília
USA Consulate General Rio de Janeiro
USA Consulate General São Paulo
USA Consulate Recife
Brazilian Ministry of Tourism
Page 174-175