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Brazil Property Tax | Brazil Property Rental Income Tax
By property | November 12, 2008
Brazil Property Tax | Brazil Property Rental Income Tax
INDIVIDUAL TAXATION
Non-residents are liable to tax on Brazilian-sourced income. Married couples are generally taxed jointly but married couples married under the separate property regime can opt for separate taxation. A spouse who is taxed separately may not be considered a dependent for tax purposes.
INCOME TAX (Imposto de Renda de Pessoa Fisica)
Non-residents are subject to tax on their Brazilian-sourced income. Non-residents are generally taxed at flat rates on their gross income. The applicable tax rate depends on the type of income derived and the residency status of the taxpayer.
Rental Income
Non-residents earning rental income from Brazilian property are taxed at a flat rate of 15% on the gross rent. Rental income earned by non-residents who reside in low-tax territories are taxed in Brazil at a special rate of 25%. Low-tax countries are defined as those countries that impose no tax on income or impose a corporate tax rate less than 20%.
CAPITAL GAINS TAX
Capital gains realized by non-residents on sale of real property, are subject to Brazilian tax at a rate of 15%. The taxable gain is computed by deducting the acquisition costs from the gross selling price or market value of the property.
Capital gains realized by non-residents who reside in low-tax territories are taxed in Brazil at a special rate. Low-tax countries are defined as those countries that impose no tax on income or impose a corporate tax rate less than 20%. As of January 2004, capital gains earned by individuals residing in these countries are subject to 25% withholding tax.
However, gains are tax-exempt if you have owned the real estate for 20 or more years, or if the real estate is the sole estate you own, and you have owned it for at least 5 years and the sale price is not over, approximately, BRL582,750 (US$326,133).
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PROPERTY TAX
Real Estate Tax (Imposto sobre a Propriedade Predial e Territorial Urbana or IPTU)
A municipal tax, property taxes are imposed on the market value of urban properties. The tax rates vary from one municipality to the other. Typical rates are around 0.5% to 4% of the property value, as assessed by the municipality, an assessment usually lower than market value.
Rural Property Tax (Imposto sobre a Propriedade Territorial Rural or ITR)
Rural property tax levied on the land located outside the urban zones of the municipality. Unlike the IPTU, this is a federal tax. The tax rates vary from 0.03 to 20% depending on the number of hectares of land and the ratio which the utilized area bears to the total land area. Property owners are liable to pay this tax.
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