- I’M THINKING OF BUYING BRAZILIAN PROPERTY, BUT WHY SHOULD I INVEST IN THE COUNTRY?
- CAN FOREIGNERS BUY PROPERTY IN BRAZIL AND WHAT RIGHTS DO THEY HAVE?
- DO I NEED TO BE IN BRAZIL TO BUY A PROPERTY?
- WHAT DO I NEED TO BUY A PROPERTY IN BRAZIL?
- WHAT IS A PROOF OF RESIDENCE?
- WHAT IS A CPF NUMBER?
- HOW DO I GET MONEY IN AND OUT OF BRAZIL?
- CAN I HAVE A BANK ACCOUNT IN BRAZIL?
- HOW DO I GET MY MONEY FROM RENT?
- CAN I BUY A PROPERTY WITH MY FRIENDS?
- CAN I BUT A PROPERTY THROUGH MY IRA?
- DO I NEED A VISA TO COME TO BRAZIL?
- WHAT IS THE CURRENCY IN BRAZIL?
- HOW MUCH IS ONE SQUARE METER?
- HOW MUCH IS ONE HECTARE?
- HOW CAN I GET PERMANENT RESIDENCY (a residency VISA)?
- CAN I BRING MY PETS WITH ME TO BRAZIL?
- DO CONDOMINIUMS ACCEPT PETS?
- HOW IS THE TITLE NOTARY SYSTEM IN BRAZIL?
- HOW MUCH DOES NOTARY TITLE COST?
- WHAT ARE THE BUYING (CLOSING) COSTS?
- WHAT ARE THE HOLDING COSTS? ON GOING COSTS?
- WHEN CAN I GET TITLE?
- HOW MUCH OF TAXES DO I HAVE TO PAY IN BRAZIL?
- WHAT IS INFLATION AND HOW DOES IT AFECT ME?
- WHAT IS IGPM?
- WHAT IS INCC?
- HOW DOES DEVELOPER FINANCING WORK?
- CAN I GET A BANK MORTGAGE IN BRAZIL?
I’M THINKING OF BUYING BRAZILIAN PROPERTY, BUT WHY SHOULD I INVEST IN THE COUNTRY?
- Once you have visited and know Brazil well, this question may not be foremost in your mind. Having said this, putting your feelings about the country and culture itself aside for one moment, Brazil has seen progressive economical growth, in particular over the past decade, and people who decided to invest a few years ago are now seeing significant returns on their investment in the form of capital gain and ongoing rental yields. As an example, Brazil has seen stable increases on property prices of up to 25% per annum in some areas for a sustained period.
- The all year round good climate in the North East of Brazil is also worth taking into account because you can visit your property at any time during the year and experience sunshine, meaning that rental yields in Brazil are also potentially high as a consequence.
CAN FOREIGNERS BUY PROPERTY IN BRAZIL AND WHAT RIGHTS DO THEY HAVE?
- Yes, foreigners can buy and own property in Brazil. The Brazilian Government encourages overseas investment, and a foreigner has rights to own properties 100% freehold just like any other Brazilian. There are however some limitations applicable for specific areas such as Islands, agricultural land and areas near Brazil’s International borders.
DO I NEED TO BE IN BRAZIL TO BUY A PROPERTY?
- No, the entire purchase procedure can be done remotely, in fact many of our investor never came to Brazil and have already bought and sold many properties using our services and never had to put their foot in the country. If the purchase is strictly for personal use, we do recommended you find the time to come for a personal visit and inspect the property before you close the deal.
WHAT DO I NEED TO BUY A PROPERTY IN BRAZIL?
- The buying process for foreigners is the same for Brazilians. All you need is a copy of your passport, proof of residence (any utility bill) and you CPF (Brazilian Tax Number).
WHAT IS A PROOF OF RESIDENCE?
- Proof of residence is any official document proving you actually own/occupy the address you gave to be used on the purchase agreement. Can be your driver’s licenses or a utility bills with your name and address printed on it.
WHAT IS A CPF NUMBER?
- CPF is a Brazilian tax number, similar to your social security number if you are a US citizen or your DNI if you are from Spain. This number identifies each person as a contributor to the state. Every property that you own in Brazil will be tied to this number and every time you send money in or out of the country this transfer will be linked to your CPF number in the Banks computers. When you send money out this will facilitate knowing how much taxes you owe. Every person, Brazilian or not, must have one to own any property and once you get it, it´s valid for all your life.
HOW DO I GET MONEY IN AND OUT OF BRAZIL?
- When buying, funds can be sent directly from your bank account to the sellers bank account in Brazil using the usual route for international bank-to-bank wire transfers. Just give your banker the seller´s bank account info and the money will arrive in 2-3 days. There are companies that specialize in making this even easier. We prefer to use Money Corp but there are many others like Western Union, Canadian Forex, etc.
- Every time you make a wire to Brazil, through Money Corp or your regular bank, you will get a receipt. Save this receipt (a scanned copy is enough).
CAN I HAVE A BANK ACCOUNT IN BRAZIL?
- Bank accounts in Brazil can be opened by a foreigner if they have a permanent visa and buying a property doesn’t automatically entitle you to have a permanent visa, although this of course does not stop you from buying your property in Brazil as funds are sent direct from your bank account to the sellers bank account in Brazil using the usual route for international bank-to-bank wire transfers.
HOW DO I GET MY MONEY FROM RENT?
- The same way it got in, via a bank to bank wire transfer from the account of your rental manager to your bank account anywhere in the world. Alternatively, if you are coming to Brazil you can receive it in your hands legally as long as the taxes have been paid.
- Later, when you are taking the money out of the country (using any regular bank or specialized company) you will be asked to show proof of taxes paid. This a document done by an accountant, showing how much money you sent into Brazil to buy the property, and how much money you are taking out from the sale. The difference is your profit and you’ll pay 15% capital gains tax on that.
- If the money you are taking out comes from rentals, the same 15% rate will apply and the same document (proof of taxes paid) will be required, the difference is that Escala Rental Management does it for you.
CAN I BUY A PROPERTY WITH MY FRIENDS?
- Yes, the title (or the preceding private purchase agreement) can hold as many names as you want. And the shares can be different so each buyer can own a different percentage of the property. If there is no mention to percentages owned by each buyer, it means they all hold equal shares.
CAN I BUT A PROPERTY THROUGH MY IRA?
- Yes, we have done this many times.
DO I NEED A VISA TO COME TO BRAZIL?
- If you are an American or Canadian citizen, you will need a tourist visa to come to Brazil. Most Europeans countries don’t. It’s easy and quick to get it. All you’ll need to do is send a few documents to the closest Brazilian embassy or consulate and it wait a while so start the process as soon as possible.
- If you are from another country and you don’t know if you need a visa, click here: http://www.brazilsf.org/visa_by_country.htm
- Once you have the Visa, you can use it unlimited times during a 5 years period but to get a Visa your passport must have at least 6 months left before expiration date.
WHAT IS THE CURRENCY IN BRAZIL?
- The currency is the Brazilian Real. The symbol is R$ or BRL. In our home page you will see a currency conversion tool that will give you the current exchange rate between the BRL and the main currencies of the world.
HOW MUCH IS ONE SQUARE METER?
- 10.76 sq. ft.
HOW MUCH IS ONE HECTARE?
- 2,47 acres.
HOW CAN I GET PERMANENT RESIDENCY (a residency VISA)?
There are many ways like getting invited by a Brazilian company to work here, being a high performance athlete or scientist, a renowned artist, etc…. But let’s focus for now on the four main categories available for every mortal like us:
- This category was planned for those foreigners who wish to invest funds (minimum equivalent of R$150,000 – one hundred and fifty thousand Brazilian Reais) in any kind of productive activity in Brazil (a existing business or a new one). This kind of permanent visa is first issued conditionally for three years and then it can be validated for the rest of your life.
- A retired foreigner, over 50, who will transfer to Brazil the monthly equivalent of at least US$2,000. There is no limit to the number of dependents who may also receive permanent residence visas, but the main applicant must provide proof that they are genuine dependent relatives, as defined in Brazilian law.
- The main applicant must prove he has a pension of at least US$ 2,000 a month. This will entitle him to visas for himself and two dependents. The applicant must demonstrate an additional US$ 1,000/month for each additional dependent, over and above the two already mentioned, and must supply, amongst other things:
- A statement from the foreign agency responsible for paying his retirement pension, informing the total monthly sum;
- A bank declaration authorizing monthly transfer of at least US$ 2,000.
- No need to dwell on the obvious: Marry a Brazilian and you get permanent residency effective immediately.
4. ADOPT A BABY OR MAKE ONE
- Same as the one above.
CAN I BRING MY PETS WITH ME TO BRAZIL?
- If you are thinking of living in Brazil permanently, then you can bring your dog, cat, or birds with you and your family. You will have to present a health certificate issued by a local veterinarian in your home country and then approach the Brazilian Consulate to get the certificate endorsed. The timing of you obtaining this endorsed certificate and you travelling to Brazil needs to be carefully considered, as the certificate is only valid for a 10 day period from when it was endorsed. The only remaining responsibility will be to contact the flight company to arrange suitable transport for your family pets, and ensure that the transport waiting for you at the airport in Brazil is suitable for transporting your pets safely to their final destination. Please note that charter flight operators into Brazil can charge a lot of money for transporting your pets, although options such as TAP Air Portugal who fly from Europe into Brazil offer better prices for pets.
DO CONDOMINIUMS ACCEPT PETS?
- Most condominiums do. This is the standard rule, how they all start out. But, any rule of the condominium can be changed by a two third majority vote in a general assembly of the Home Owners Association and if 2 thirds of the home owners in a building decide they don’t want pets, this will be the new rule until a new vote change it back. If this is important to you, be sure to ask for a copy of the rules of the condominium you are planning to buy before you make the commitment.
HOW IS THE TITLE NOTARY SYSTEM IN BRAZIL?
- Property is registered in Brazil via private notary publics, under justice control. The real estate registry in Brazil is such that each property can only be registered at one registry, which stores the entire transaction history and physical identification of each property. The access to all information of a property is public. Thus many Brazilians buy and sell property without a lawyer. We recommend that you use a lawyer to help you with the purchase.
HOW MUCH DOES NOTARY TITLE COST?
- I always say be prepared to spend 5% for that. You will pay 2% transfer tax (ITBI), +/-1% to draft the notary deed and another +/- 1% to register in the real estate notary registry of the corresponding jurisdiction. The extra 1% is miscellanea, just to be on the safe side but you probably won´t need it.
WHAT ARE THE BUYING (CLOSING) COSTS?
- When buying under a private purchase agreement there are no closings costs (that´s the case for all pre-construction projects)
- After construction is finished, if you choose to keep the apartment for yourself for longer or rent it, you might want to do a notary deed. I always say be prepared to spend 5% for that. You will pay 2% transfer tax (ITBI), +/-1% to draft the notary deed and another +/- 1% to register in the real estate notary registry of the corresponding jurisdiction. The extra 1% is miscellanea, just to be on the safe side but you probably won´t need it.
- If you decide to sell your condo before its delivered by the developer (assign your contract over), you will never have to pay any of these notary fees or transfer tax.
WHAT ARE THE HOLDING COSTS? ON GOING COSTS?
- Holdings costs in Fortaleza and most of Brazil are so low that border on the ridiculous. They´re base on a escalating percentage based on total price of your property as assessed by the city. Well, in years in this business we never saw anything be assessed in more than 60 or 70% of its real value and since the percentages are pretty low too we currently pay (Feb/12) around R$ 700 per year for each of the R$ 400,000 condos we rent. That’s paying about 400 dollars per year on a $ 250 thousand dollars ocean view condo.
- Condominium payments for apartments/condos vary depending on the type of building, but average between R$200 and R$350 per month. The minimum monthly wage in Brazil is R$565 (approx. 330 US Dollars), so if you need workers to maintain your property for example then this can be a viable option.
WHEN CAN I GET TITLE?
- If you are buying land or a finished condo or house, you can get title immediately.
- But when buying pre-construction things work differently because the notary registry doesn’t issue a title until the property is finished building. During the construction period you will have a private purchase agreement with the developer. After the construction is done you can transfer title immediately.
- Once the construction is finished and the whole price is paid you can choose to have your property deed made at the notary house and registered in the notary registry just like any other property.
HOW MUCH OF TAXES DO I HAVE TO PAY IN BRAZIL?
- As a non-resident all you will pay is a flat rate 15% of your profits as capital gains or NET rental income. These may be offset against US and Canadian Taxes, and in some European countries too. Check with your local CPA (accountant.) to make sure.
WHAT IS INFLATION AND HOW DOES IT AFECT ME?
- Inflation is the loss of buying power of any currency. In our case, the Brazilian real. It can be measured by how much prices of the same items grow over a certain period of time. If last year this same product cost R$ 100 and now it costs R$ 105 it means we had a 5% inflation on these last 12 months. So the Brazilian real lost 5% of its buying power in this time. Inflation usually acts on the currency exchange rates at the same rates as in products for the same exact reason. If the real loses 5% buying power against products it´ll logically lose the same buying power against any foreign currency because it wasn´t the product´s price that went up but the Real values that went down. For that reason, the value of your installment in foreign currency should remain stable. Because every time your installments goes up 5% in Reals, the Real will lose the same 5% against our home currency too.
- In Brazil we have inflation indexes using different sets of products and/or services as parameters for measuring price increases and loss of buying power of our currency and readjusting prices in specific areas.
WHAT IS IGPM?
- IGPM stands for General Index of Average prices and it is the most general of inflation indexes. it´s measured monthly and includes every household item such as food, gas, clothes, rent, transportation, services, etc.
- The IGPM inflation is be used to readjust pre-construction installment values post-completion.
WHAT IS INCC?
- INCC stands for National Index of Civil Construction and it is an inflation index measuring the price increase on the construction sector only. It includes construction workers salaries, materials, and some services specific to civil construction.
HOW DOES DEVELOPER FINANCING WORK?
- A lot of developers in Brazil offer developer financing. Usually during pre-construction but sometimes even after completion you can still find some developers offering direct financing.
- Most of the times, when buying pre-construction the length of your financing terms is much longer than the time of the construction. Usually you get the building finished in 3 years from start date while it is common to finance the buyer in up to 100 monthly installments. (8 years and 4 months). So, in this example, you would pay the 3 first years , get the key to your new condo and still have 5 years and 4 months to pay. and you could even get it rented and use the money to pay those monthly installments.
- Developer financing come with interest free during the construction. The installments will be updated monthly by the INCC inflation.
- After completion, the inflation index changes to the IGPM and the developer charges a monthly interest of 1%
CAN I GET A BANK MORTGAGE IN BRAZIL?
- You can gat a bank mortgage but only if you get a residency visa in Brazil. Without residency you can get developer financing. No credit checks, no medical exams. You don’t even have to visit the country to qualify for that.