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Start here - Absolute basics of investing in Brazil

Discussion in 'Brazil Property' started by JMBroad, Mar 26, 2009.

  1. JMBroad

    JMBroad New Member

    Ok while the "buying and selling" thread has a lot of good advice, it's hard for new members to sift through the information to find the basics they need to purchase a property in Brazil safely.

    So - everyone feel free to chip in your R$ 2 of advice and I'll try and keep this list updated. We want simple to understand, irrefutable facts about investing in Brazil for a non-resident. Opinions will not be counted and their posts deleted. Contradictory information will be debated until a consensus is reached. Constructive ideas and posts which help this thread be a source of good advice will be kept - anything else will be deleted. So if you are going to discuss something else, such as advice where and what to invest in - do it in another thread or your post WILL dissapear.

    Thanks to everyone for their contributions:

    The List

    1. Once you have decided on a property, you must sign a contract in Portuguese

    2. You should also sign a translation of the contract in your own language - read it!! Keep in mind that in case of conflict the Portuguese contract will prevail - the translation is merely a guideline so that you know what you are signing.

      Note: Both contracts should be signed by both parties and each party should get a copy. The very very basic information which needs to be in the contract is: the buyers name, sellers name, description of what is being sold/purchased, price (at least in BRL), the date, the CPF numbers of each party and the registration number of the property being bought/sold. If purchasing from a Pessoa Física (from an individual not from a company), and if the seller is married the contract should also be signed by spouse. There are 2 exceptions whereby the spouse does not have any rights to the property: A. If marriage regime is "comunhão parcial de bens" and the property was in the sellers possession before the marriage or B. For properties that seller acquired via inheritance (even if after marriage). or C. If the marriage regime is "Separaçao de Bens"

    3. 100% of the money for the purchase of your property in Brazil has to be registered as entering the country from you personally - never pay real estate agencies overseas or the developer anything more than a reservation fee and even then only when they agree to send that reservation fee to Brazil and register the money as coming from you. Make sure you get receipts for your payments proving that the money was sent to the country in your name. There is one exception where the money might be paid outside Brazil. This is possible if both the buyer and the seller are residents outside Brazil. This does not waive the fiscal obligations of the seller should he or she be liable to capital gain tax and the sale has to be registered in Brazil so that the property can be put in the buyers name. The reason for this is unless "Banco Central do Brasil" has the money registered as entering the country from you personally, when you come to sell the property, you won't be allowed to take the money out of Brazil unless you can prove where you got it from. If your money never came into the country to start with, obviously you never bought a house and therefore can't have made money from the sale of a house.

    4. If you are even a little bit unsure - retain legal representation - the cost of having a lawyer help you through the process is, in the long run, much much cheaper than losing your money. Let me say that again: Retain a lawyer to check the documentation! You should look at retaining legal counsel who speak both the language of the country you are buying in and your own language so that they can ensure that the documentation is not only legal but also suits your personal needs.

    5. For you to be able to purchase a property in Brazil, the builder must be able to present you with numerous legal documents. The key document to get for minimal peace of mind is the "Registo de Memorial de Incorporaçao". If you aren't familiar with the documentation yourself and/or don't speak the language, have the documentation checked by legal counsel. Bear in mind that this is only the first step of the legal checks. Unless you speak the language and are familiar with the process, hire legal representation who do speak the language and can check the documents for you.

    6. You need a CPF identification card to purchase property in Brazil. To sign the private purchase contract your passport number will do. However a CPF number is compulsory to sign the public notary deed, to have the property registered in your name in the Public Register and to get utilities bills issued in your name. It is much easier, cheaper and faster to arrange the CPF while you are in Brazil - however it can be done from overseas at a higher cost. The cost in Brazil is minimal. While previously overseas investors needed to file a tax return annually, in 2010 the law changed - overseas investors now only need to file a tax return each year if the value of their properties adds up to more than R$ 300.000,00 (previously it was R$ 80.000,00). http://www.receita.fazenda.gov.br/AutomaticoSRFsinot/2010/02/10/2010_02_10_16_43_45_400407506.html

    7. Even if you can't check the legalities on the development you want to buy on, at least do your own checks on the developer or real estate agent who is selling it to you. Do a google search on the company name, any employees you know that work there and use "google translator" if the webpage results are in a foreign language.

    8. If the person you are purchasing from recommends one law firm and one law firm only, be wary

    9. To be able to sell property in Brazil, you need to be registered as a CRECI agent. Real Estate Agencies which are not based in Brazil are not subject to CRECI requirements and may make reservations on property in Brazil however any agency based in Brazil must have one. Overseas agents should have a CRECI registered agent as a local contact to tour their clients in Brazil if and when needed.

    10. Any marketing material for developments in Brazil must clearly show the CRECI license number of the agent doing the advertising and the registration number of the "Memorial de Registro de Incorporaçao" of the development being advertised provided the marketing material is being published in Brazil. Without these two reference numbers, the property can not be legally advertised in Brazil. Advertisements published outside of Brazil are not subject to these requirements.

    11. Capital Gains Tax in Brazil is not that complicated. Even if you use an accountant (recommended) you can double check to see if he is ripping you off by using a free capital gains tax program available for download from the Receita Federal. The base rate for CGT is 15% but by the time deductions are applied it works out to a bottom line of 5-6%. It shouldn't take you more that 5-10 minutes to plug in the numbers and the program will guide you through the steps. "Programa de Apuração dos Ganhos de Capital - GCAP2008" http://www.receita.fazenda.gov.br/PessoaFisica/GanhoCapital/2009/GCapital/programaGC***2009.htm

    12. Non-residents can not open bank accounts in Brazil - although it is legally possible it is in practice very hard to find a bank who will open a bank account for you without a residency in Brazil.

    13. Tourist can generally stay in Brazil for up to 90 days, renewable for another 90 days - meaning you can stay in Brazil for up to 180 days in any 360 day period - only a return ticket is required, and sufficient funds for the stay can be requested but hardly ever are. Brazil has a reciprocity policy - so if your country makes it hard for Brazilians to enter (US, Canada, Australia for example) then you may need a visa - we suggest you check before planning your trip.

    14. Other ways of obtaining a resident visa in Brazil include work visas, student visas, teaching visas, retirement visas, or if you are married to a Brazilian National or parent of a Brazilian child

    15. You can apply for an investor visa which will allow you to remain as a resident for 3 years. The investor visa, providing you have satisfied the authorities, is usually made permanent after 3 years, and only renewed for a specific period if you are borderline. If it is renewable, the law states that it should be for no more than 9 years and only if all the requirements are met. These requirements are (barring exceptions) invest R$ 150.000,00 or more into Brazil and with this investment create employment for Brazilian residents. The company needs to be set up and the money in Brazil before you can receive the investor visa. During the period in which you have applied but are waiting to receive the visa, the company and the money will have to be controlled by an "Administrador" - a person who is a resident in Brazil. There is currently no way to limit the powers of the "Administrador" so he/she should be chosen wisely. The purchase of residential property is not acceptable as an "operating business" for the investor visa. You need an office which can be subject to random inspections. More details here: http://www.propertyforum.com/forum/brazil-property/11877-brasilian-investment-law.html

    16. The income limit before you need to pay income tax is R$ 17.215,08 per year (February 2010) or R$ 1.434,59 per month
     
  2. jeduardo

    jeduardo New Member

    tidying thread

    Item 6):
    This applies when purchasing from Pessoa Física (individual).
    If the seller is married the contract should also be signed by spouse.
    There are 3 exceptions that I am aware of whereby the spouse does not have any rights to the property:
    A. If marriage regime is "comunhão parcial de bens" and the property was in the sellers possession before the marriage.
    B. If marriage regime is "Separação de Bens".
    C. For properties that seller acquired via inheritance (even if after marriage).

    As always, check with a lawyer.
     
    Last edited: Mar 26, 2009
  3. elma

    elma New Member

    Hi! I have paid a deposit for a property in brazil, in a UK agent, tha company building the property is based in Spain, and the payments should be made in an account in Spain in Euros! Does that mean that I will not be able to sell the property on a later stage and take my money out of Brazil? Thank you for you reply!
     
  4. JMBroad

    JMBroad New Member

    There are a few exceptions where it is okay to pay in Euros but generally speaking it is a really bad idea. I'd suggest you consult a lawyer asap to make sure - basically the sale has to be registered with the central bank of Brazil and very few developers who take money outside of Brazil actually register the sale.

    If you send your reservation for the unit to a bank account in Europe it's ok as long as the money is then sent on your behalf to Brazil and registered against your purchase contract. Normally the safest way to do it is to send the money to Brazil yourself or have your lawyer send it on your behalf. Make sure you get receipts from the agent/developer and when in doubt - check with a lawyer.
     
  5. debzor

    debzor New Member

    Elma - the contract you signed, was it in Portuguese, and written here in Brazil?
     
  6. SusanaSuspenda

    SusanaSuspenda New Member

    Anyone recomend a good lawyer for the Natal & Paraiba areas of Brazil.

    I see that some Spanish firms have offices in Natal but what would they know about Brazil law
     
  7. JMBroad

    JMBroad New Member

    Normally if they have offices in Natal then they probably have them staffed by Brazilian lawyers. I've met several Brazilian lawyers working in London and several Brazilian nationality but English speaking lawyers out in Brazil.

    The challenge is to get one who works in both states because from experience if they are not actually based in the city you are working on, they might as well be on the other side of the globe.

    Although João Pessoa and Natal are only about 3 hours drive apart, if you are hiring a lawyer in Natal to check your investment in João Pessoa, either you'll have to pay expenses or they will subcontract the work to a law firm in João Pessoa. Either way you normally end up paying more. Any time something needs to be signed on your behalf either the lawyer needs to go to the other state or they post it - both mean delays and extra costs (postage means more delays but lower costs, if the lawyer needs to travel it means less delays but higher costs).

    If you want some contact details I can give you some but they are NOT recommendations - I have accumulated some contacts with Brazilian lawyers over the years but although I've worked with several of them I haven't worked with all of them so you'll need to speak to each one individually to determine which one suits you best. For the contact details please PM me.
     
  8. debzor

    debzor New Member

    I can recommend a Brazilian attorney, fluent in English, who works in Joao Pessoa and Recife, but not Natal. Perhaps you need to decide what you want, and where, first?
     
  9. SusanaSuspenda

    SusanaSuspenda New Member

    Thanks for the information if its ok I will PM you once I have decided which direction to go.

    Again thanks
     
  10. SusanaSuspenda

    SusanaSuspenda New Member

    Thanks

    I am leaning to Paraiba

    One other question if anyone knows the answer, what is the situation for Russian passsport holders.
     
  11. debzor

    debzor New Member

    In which way do you mean 'situation'? What are you hoping to achieve?
     
  12. SusanaSuspenda

    SusanaSuspenda New Member

    Are there any restrictions on Russian passport holders buying property in Brazil or any special conditions

    Thanks
     
  13. debzor

    debzor New Member

    No restrictions as far as owning property here. Tourist and other visas rules apply as any other nationality.
     
  14. Terry Coulter

    Terry Coulter New Member

    Thanks for the great information, and a note

    Awesome information, thanks! And for anyone interested, as someone who lived in Brazil for eight months while I was waiting to bring my Brazilian wife to America, I found Brazil to be as a rule, a very friendly country. And I often received deferential treatment as an American.

    I bet I could drop you off at a mall in Brazil, and you would be hard pressed to guess you were in Brazil if not for the signs in Portuguese, and the large number of Brazilians speaking Portuguese in the mall. And you could eat at McDonalds, Subway, or Burger King, and watch a feature movie in English, only with Portuguese captions.

    My atm/credit cards worked virtually everywhere to buy things, or get extra cash when I needed.

    My wife and I plan to return to Brazil, to purchase a small hotel only a block away from a world famous beach, (once we arrange financing), and were wondering where we could find such information as yours.

    Thanks again for the informative and comprehensive post!

    Hope you have a great holiday season and fantabulous 2011!
     
  15. malacaxeta

    malacaxeta New Member

    "Separação de Bens".

    I have always wondered about this because never been asked to prove it one way or the other......and I ask this from a UK perspective (mileage may vary for those of us in the US....).

    If you were to put "Separação de Bens" in the contrato de compra e venda and/or the Escritura, how do they know that is a valid statement ??. Personally, I have had someone put "Separação de Bens" on one of these documents without even asking me if that was true ! Must have been my vibe :) And have never been asked to prove "comunhão" either - although this may because the Brazilians feel that you would never put that if it was true :)

    I believe (don't know) that in the UK at least, unless you write a pre (or post) nuptial, the default is "comunhão". Does anyone know for sure ??
     
  16. tmcarney

    tmcarney New Member

    Thank you for your insight on making an investment in Brazil! I have long thought about investing in property in Rio. I plan on first opening a hostel in Colombia because it is a cheaper, less risky investment, but one day I would love to open a formal hotel in Brazil.

    I really appreciate the advice you offered about obtaining legal representation. Thats always one of the hardest decisions to make when participating in property investment abroad because of the upfront costs associated with obtaining a lawyer. But, like you mentioned, the cost of not obtaining legal representation in the long run can be devastating.

    Another thing I never really considered were the advantages of having a local bank account instead of using the account in the home country. The fact that opening a local bank account in Brazil requires residency adds a whole new twist the game.
     
  17. islandsmag

    islandsmag New Member

    Itamaraca in "Best Islands to Live On" list

    Debzor, I'm putting together a list of "Best Islands to Live On" for a magazine piece and am looking for someone living on Itamaraca who could speak to why it belongs on the list, why they love it, any challenges involved, etc. How hard is it for foreigners, particularly North Americans, to buy property and move to Brazil? What are the requirements?

    Does Itaramaca have a visitor's bureau or tourist board?

    I'm pretty sure I can't send a private message yet, but would appreciate any information.

    Thanks.
     
  18. debzor

    debzor New Member

    Islandsmag - I believe someone else has just passed your email address on to me. I will email you to establish contact...
     
  19. elma

    elma New Member


    Hi is there any difference in the procedure if you ara just buying a plot of land and not a property?

    Thans a lot
     
  20. debzor

    debzor New Member

    In terms of the basic purchasing proceedure, no difference.
     
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