[BUYING AND SELLING REAL ESTATE IN BRAZIL]
45
establish deadlines for the public authorities to review approval requests, which creates a significant level of uncertainty in transactions involving rural properties. IMPORTANT PROVISIONS TO BE CONSIDERED AT TIME OF PURCHASE/ACQUISITION OR LEASE OF A REAL PROPERTY Right of first refusal: A provision stipulating that in the event of a sale, sale commitment, assignment, or commitment to the assignment of rights in connection with a leased real property, the tenant has the right of first refusal to acquire the leased real property, and that the landlord must bring the transaction to tenant´s knowledge. Further, in case of joint ownership, members of the condominium also have the right of first refusal. Validity Clause: A type of clause, which if included in a lease agreement and registered at the Real Estate Registry Record, grants the right to a tenant to see out the lease for the entire term should ownership be transferred to a third party. Restraint of mortgage/Non-encumbrance clause: This type of clause prohibits the encumbering of a property with a mortgage; only applied on specific circumstances. Non-communio bonorom clause: This type of provision prevents the property from becoming part of a joint estate due to marriage or union, regardless of the regime governing the union or marriage. Inalienability clause: This clause restricts the owner’s faculty/ability/capacity to dispose of the property. 11. NOTES/OBSERVATIONS ON TAXATION Real property transfer tax varies between municipalities and, therefore, depends on
where the property is located. It is important to note that in case of donation of a real property, Municipal transfer tax shall not be levied, but State Donation and Causa Mortis Tax shall be the payable tax instead. Urban Real Estate Property Tax (“IPTU”). All urban real estate property in Brazil owned by individuals or legal entities as at January 1st of each year, is subject to Urban Real Estate Property Tax payable to the municipality within whose jurisdiction the property is located. IPTU is the main annual tax imposed on urban real estate properties, and the surface area of the real estate property, its location, the value of its constructions etc. are used to calculate such tax. Rural Real Estate Property Tax (“ITR”). All rural real estate property in Brazil owned by individuals or legal entities as at January 1st of each year, is subject to Rural Real Estate Property Tax, payable to the Federal Government. Calculation of ITR is based on information provided by the property owner to the Federal Revenue (information includes the surface area, the purpose of its use, extent of preserved native forest, agricultural production, among several other considerations). Tax on income from property rental, or the sale of property (capital gain tax), pursuant to federal tax provisions, apply on real property leases or sales. Given the frequent amendments to tax legislation, it is highly advisable that all property related taxes are revisited and re-calculated as necessary. 12. NOTES ON THE REAL ESTATE REALTOR ACTIVITIES Under Brazilian law, a Real Estate Realtor must be registered with the relevant agency (“CRECI”). A broker’s participation in a
ILN Real Estate Group – Buying and Selling Real Estate Series
Made with FlippingBook Online newsletter