After advising clients over the past few months, We thought it would be useful to provide the following summary of the key pitfalls to avoid when purchasing property in Brazil. Whether you are looking for a second home, a rental investment, or a long-term relocation, these insights will help you navigate the process securely and successfully.
1. Failing to Verify the Legal Status of the Property
One of the first mistakes foreign buyers make is not ensuring that the property is legally compliant. In Brazil, a property must be registered with the Real Estate Registry Office (Cartório de Registro de Imóveis), which guarantees its legal existence and history.
What to check:
Property Title Certificate (Matrícula Atualizada): Confirms the identity of the owner and the absence of disputes.
Negative Debt Certificate: Ensures the property has no outstanding IPTU (property tax) or other municipal taxes.
Building Permit and Occupancy Certificate: Particularly important for new or under-construction properties.
If a property has irregularities, its registration may be denied, making ownership transfer impossible.
2. Signing a Contract Without Legal Assistance
Real estate transactions in Brazil can be complex and involve specific terms that are not always clear to foreign buyers. A poorly drafted or misunderstood contract can lead to significant financial losses.
Solution:
Hire a lawyer specialized in Brazilian real estate law to avoid any unfair or unfavorable clauses.
Never sign a document in Portuguese without a certified translation.
Ensure the contract includes essential clauses such as: suspensive conditions, penalties for delays, and payment terms.
3. Paying Before Obtaining Legal Guarantees
It is common for sellers to request a down payment or full payment before all legal formalities are finalized. This exposes the buyer to significant risks.
Best Practices:
Never pay in cash or through unofficial channels.
Verify the seller's identity and the legality of the transaction.
4. Underestimating Additional Costs
Many buyers assume that the declared price of the property is the only cost to consider. However, buying real estate in Brazil involves several additional fees:
Mandatory Fees:
Real Estate Transfer Tax (ITBI): 2% to 3% of the property's value, depending on the municipality.
Notary and Registration Fees: Around 1%.
Legal Fees: Variable but necessary for securing the purchase.
Currency Conversion and Bank Fees for foreign investors.
Proper financial planning helps avoid unexpected costs.
For more information, also check out our article on the steps to acquiring a property: https://www.pontesvieiraadvogados.com.br/en/post/guide-steps-to-securely-acquire-real-estate-in-brazil
5. Failing to Anticipate Tax Obligations as a Foreign Owner
Foreign investors must be aware of their tax obligations in Brazil and their home country. Ignoring the rules can lead to penalties or missed tax-saving opportunities.
Key Points:
Taxation on rental income for those who lease their property.
Capital gains tax upon resale.
Consulting a tax expert before purchasing can help optimize your financial situation.
Conclusion
Buying real estate in Brazil is a great opportunity, but it requires careful preparation and professional assistance.
By avoiding these pitfalls and surrounding yourself with qualified experts, foreign investors can make a secure and profitable acquisition.
Do you have a real estate project in Brazil? Contact our firm (iurevieira@pontesvieira.com.br) for a personalized consultation and benefit from tailored legal assistance.
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