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Brazil Property Buyers Guide
Every international location has rules and regulations regarding the purchase of land or property by foreigners and it is important to be aware of what is expected while doing your investment research. Below is a general guide to the property buying procedure in Brazil.
Overseas buyers can purchase Brazilian residential or commercial property without major restrictions. However, there are a few limitations or fees applicable for some specific areas such as marine land, islands, rural land or areas near Brazil's international borders.
We will gladly guide you through each step of the process to ensure you are fully informed and avoid any potential pitfalls.
Using an Agent
A good agent is essential when you buy a property in Brazil. Propertyshowrooms.com in association with the International Investment Property Network (IPIN) always carefully examine your particular requirements and provide you with a selection of appropriate options from our database. In addition, we can recommend all related professional services you will require to make a safe, reliable purchase. Most of our properties for sale in Brazil are within off-plan developments as they offer the best value for money and represent general demand.
Making an Offer
When you have decided upon a property in Brazil a verbal offer will need to be made through the agent and often some negotiations will follow. At this stage a lawyer should be appointed by you to formalise your final price agreement and to oversee purchase proceedings, including deposit or reservation payments. With off-plan purchases, the price is however, often fixed and dependent upon the current phase of construction.
The buying procedure may vary slightly according to which developer you are purchasing from so when buying on a new development, you will need to ask for specific procedures relating to the development.
Appointing a Lawyer
It is wise to appoint a lawyer who is fluent in your language so that you fully understand all the legalities and proceedings. Our advisors can recommend a good lawyer who will carry out all necessary checks on the property or land in Brazil and fulfill the legal requirements of the sale.
Legal costs are generally between £ 500 and £ 1,000 depending on the value of the property purchased.
Your lawyers will:
- Check the current owners have the correct title to the property
- Check for any charges and liabilities still owed on the property
- Check your contract and advise you on the obligations for both parties
- Help you through the payment/funds transfer
- Ensure the property is registered in your name
The property registry system in Brazil is well developed and safe and real estate registration in Brazil is carried out by private notary publics. All property is registered at one single registry, which records details of the entire commercial history and the physical identification of each property. It is obviously very important to ensure that any property you buy has a clear title.
Access to registry information is available to the public and includes relevant details on ownership, mortgages and other pending debts. In the larger cities, these services may be automated.
You will need a Brazilian ID called a CPF in order to buy property. To get a CPF You will need your birth certificate translated into Portuguese by a certified translator and legalized by the Brazilian Consulate in your home country. This will then need to be taken to the Banco Do Brasil with your passport and birth certificate in order to formally apply for a CPF. A small fee is payable and they following day you will receive your assigned CPF number at the Receita Federal. The CPF card will then be posted to you within two months to an address in Brazil.
Transaction costs, including stamp duty, fees etc. can average at between 3% and 8% of the purchase price. These costs may differ according to location, type of property and the State you buy in. If it takes a significant amount of work to establish title and ownership, the costs could amount to more.
- A down-payment for your chosen property of usually about 10,000 $R ($3,500 USD).
- Property transfer fees of approximately 4%-5% of the purchase price.
- Payment can often be made all at once or in installments of 12, 24, 36 or 48 months, but interest rates can be as high as 35%. If you opt to pay in installments, bear in mind there is also a currency risk: if the value of the Brazilian Real goes down, your property becomes cheaper, and vice versa.
- 1% import tax on the transfer of funds from abroad.
Funds are sent directly from your own bank to the seller’s bank account in Brazil, via the Central Bank of Brazil. The bank records your funds entering into the country and in order to release the funds, the seller must present the contract to the bank. We strongly recommend you use only this official route, or you may have problems transferring funds out of Brazil when you sell your property in the future.
There are generally no limitations to returning funds overseas provided they were originally registered with the Central Bank at the time of purchase.
The mortgage market is underdeveloped in Brazil and as yet foreigners cannot obtain a mortgage in Brazil. Buyers usually arrange alternative financing in their own countries. In 2005 about 50,000 mortgages were granted to Brazilian nationals but at high rates. However, we expect mortgages to become available in the foreseeable future as interest rates drop and as banks continue to develop their products.
Some developers of new build and off-plan developments offer installment plans over between 12to60 months. The charges applicable vary according to developer and repayments are usually index linked.
If you possess property in your own country and would like to borrow against this in an equity release plan, we can introduce you to an independent financial advisor who will help you raise the necessary finance.
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