Buying property in Brazil is a complex undertaking even for locals, so if you’re planning to buy make sure you do your homework thoroughly.
In Brazil, property purchase has long been considered as a safe investment, relatively unaffected by the transitory economic instability so typical of Latin America. You may be looking to live in the property yourself, rent it out, or resell it at a later stage for profit. In any case the most profitable way to purchase real estate is generally when the property is still in the planning or building stages: the value will typically increase by up to 50 percent once building is completed.
All foreigners can purchase real estate in Brazil without restriction with the exception of rural areas, were the purchaser will need to be a resident of Brazil. Foreigners may also not purchase land on the coast or within 150 Km of international borders without special governmental authorisation. Foreign real estate investors need to be in possession of the following:
You do not necessarily have to be physically in the country to purchase property in Brazil; this can be handled by a third party to whom you have given power of attorney (procuração) .
Only estate agents are authorised to participate in real estate transactions in Brazil. The profession has been recognised and regulated by national legislation since the 1960’s and it is the Regional Real Estate Brokers Councils (Conselhos Regionais de Corretores de Imóveis - CRECI) and the Federal Council of Real Estate Brokers (Conselho Federal de Corretores de Imóveis - COFECI) that establish and oversee rules and standards. The CRECI furthermore issues official estate agents with a professional ID card: you must ensure that anyone claiming to be an estate agent is able to produce this. Cofeci/Crecis offer a free estate agent identity check service in Sao Paulo:Creci São Paulo
Therefore the first step in finding a suitable property to buy is to find an estate agent. Agents can easily be found online and many provide English-language services. It is quite normal to negotiate the price and payment conditions of purchase. There is no typical offer, it will depend on what the seller is willing to accept, but you could offer to pay 25 percent initially, for instance, then the remaining 75 percent in three payments every two months following the transfer of deeds.
Expect to pay about 5 percent of the house's market value as a commission.
Note that once an offer has been accepted it is for you the buyer to check the legality of the property purchase. There are estate agents, estate agencies and lawyers who specialise in determining the legal status of a property. Important areas for consideration are:
If the property has not yet been constructed you should check the legal status of the construction company with the City Hall, Regional Engineering and Architecture Council, and Environmental Secretariat. Once again your estate agent can help you with this. There is no title insurance in Brazil although some foreign insurance companies offer this.
If everything checks out the next stage is to guarantee the sale agreement (contrato de compra e venda) by payment of part of the total price, called the sinal (earnest money), which is generally between 10 percent and 25 percent of the total property price. The sinal does not bind the parties to a sale, but both parties are now obliged to comply with the terms of the agreement. Payment is normally made in Brazilian currency, in cash or by wire transfer. In most cases, two weeks after the offer has been accepted, the public deed of sale and purchase can be signed by both seller and buyer, a transaction overseen by a notary.
The deed of sale and purchase should stipulate the price of the real estate, the construction conditions and deadlines if applicable, and the deadline for delivery of the real estate unit. The Real Estate Registry Notary's Office receives a copy of the deed and the seller is now under an obligation to transfer the title of the property to the purchaser.
Once the purchase of the property is complete any taxes must now be paid. The seller is responsible for paying the real estate brokerage fees (normally between 5 and 10 percent of the market value of the property). The buyer usually pays the Imposto de Transmissão de Bens Imóveis (a municipal tax), the Imposto Sobre Transmissão Causa Mortis e Doação where applicable (a state tax on transfers of goods on death-related inventories or donations of real estate), the costs of executing and registering the deed (between R$700 and R$800 for real estate valued between R$100,000 and R$150,000), the Real Estate Accounting Tax (approximately R$800 for real estate valued between R$100,000 and R$150,000), and the Navy Alienation Fee for property located on the coast (five percent of the total real estate value). The property purchaser may also have to pay for fees charged by financial institutions, real estate evaluation taxes, administrative taxes, credit-opening taxes, real estate insurance and life insurance.
Only foreigners who are permanent residents and have a proven income/salary can apply for a mortgage in Brazil (Hipoteca). The main Brazilian mortgage lender is the government-owned Caixa Economical Federal http://www.caixa.com.br. Private banks such as Bradesco, Santander, Banco Itaú and HSBC also offer mortgages, but rates vary greatly.
If you’re having a property built for you, construction companies usually offer up to 60 months of financing during the construction phase. Since there are no middle men in such a case, there are more possibilities for negotiating the deal.