Tuesday February 07, 2012 |
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Off Plan Property & New Developments Brazil |
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Off Plan Property & New Developments Brazil |
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The Brazilian Government has opened its arms wide to encourage overseas buyers to invest in Brazil. They have invested millions in infrastructure improvements in key areas along the coasts of Brazil. Natal and Ponta Negra may have been the first cities to receive an injection of investment, but there are now several other areas that garnering national and international interest from both investors and buyers of second residences and holiday homes. Brazil now welcomes international buyers who wish to invest in residential and commercial properties without any restrictions.
The majority of European international investors are buying off plan properties in the North East of Brazil in areas such as Salvador de la Bahia, Fortaleza, Joao Pessoa, Natal and Recife, plus the many smaller locations in between. American and Canadian investors continue to buy pre construction real estate in the southern areas around Rio de Janeiro where prices are far higher. This will no doubt change as they discover newer exciting areas where they will receive much better value for money.
Brazil offers a wonderful blend of extremely friendly people, a fantastic climate that is well to the south of the hurricane areas of the Caribbean, excellent national and local cuisines and of course the absolutely breathtaking landscapes and warm waters which lap against the thousands of mile of virgin beaches.
The interest rates in Brazil have dropped from 42% in 1996 to around 12%, which have in turn created a great deal of property investment by Brazilians let alone with the international investors. Several airports have been given international status with others to follow, which again will open up new areas for investors, as these areas receive investment in infrastructure from the government and regional authorities
These new communities are ideal investments for overseas buyers who wish to buy their own private slice of paradise for their own use, but also utilise as an investment vehicle by renting them out to tourists to assist in paying monthly costs and utilities. Several developers are offering either leaseback options or guaranteed rental schemes to overseas owners, which will not only generate a revenue but also help in keeping the properties occupied throughout the year.
The CPF is a Brazilian identification number that is necessary for you to obtain in order to purchase a property in Brasil. To obtain a CPF you will need a translation of your birth certificate into Portuguese which will need to be legalized by the Brazilian Consulate in your resident country. You will need to pay a nominal fee and then take your passport to the Banco Do Brasil to make an application formally for your CPF. The following day you will be assigned a CPF number which will be ready at the Receita Federal, although the original card will be mailed to your Brazilian address with 8 weeks
You can download the application form for a CPF by clicking here.
We advise that all clients arrange for an independent Brazil based lawyer who speaks your language fluently. Your lawyer will be able to negotiate the necessary legal documents and initialize any searches into the property, its, ownership and the developer that is selling the property.
You lawyer will confirm that the current owners are actually the title holders and once the purchase has been completed, that the property is registered in your name. They will ensure that any charges, liens etc against the property are cleared prior to final contracts being exchanged. The registration of land and property in Brasil is well managed and administered throughout most of the country. All properties are registered at the land registry and contain information regarding the history of ownership of the property plus the physical specifications of the property. If you speak Brazilian/ Portuguese, you can access this information yourself as it is freely available to the public and is even automated in some of the larger cities
You should allow between 5% and 8% of the purchase price when buying properties in Brazil. The variation depends on the type of property - off plan, resale, land, region/area.
Typically you will be asked to pay a percentage of the toal sales price with a minimum of around 10,000 Brazilian Reales ( Approximately 3,500$ US)
Off plan developments in Brazil are often subject to stage payments or instalments throughout the course of the build - 12, 24, 36 and 48 months. As interest rates are relatively high when compared to other countries you may find that finance from the developer may run as high as 35%. Changes in currency values can also make a difference in your final payment as the Real is not 'Fixed' against the Pound Sterling, Dollar or Euro. These currency fluctuations can increase or decrease your total purchase price
It is essential when transferring your funds to send them via the “Central Bank of Brasil as it is here that the funds are registered as entering the country in your name. When the time comes for you to release the funds from the bank you will need to present to the bank a sales contract. The reason that this is important is that you will not have any problematic issues when it is time for you to repatriate your funds having sold your property in Brazil in the future.
Brazil is currently very expensive when mortgaging properties for both national and international buyers there is no bias, Brazil just does not cater favourably to borrowers at the present time - although there are rumoured to be changes in the pipeline, we would advise you to organise your own mortgages in your home country until the mortgage market in Brazil has established itself.
Some developers will offer instalment plans that run through the period of the construction. If you invest at a very early stage this could represent a good option for up to five years. Have your lawyer read the contract carefully to ensure that the interest is not balanced in the favour of the developer
Regardless of whether you are a resident or not, you are liable for any income derived from your property in Brazil.
Cartórios are private companies that provide notary services and arrange registration of title deeds. They can cost anything from a few cents for simple documents to thousands ofBrazilian Realis for arranging property deeds
4% of the declared value of the sale is typical and this is normally included in the fees charged for real estate transfers
Brazilian nationals and residents are due to pay 15% based on their worldwide income. However a good tax advisor will be able to advise you of foreign tax relief and credits that can be permitted under specific tax treaties. Please note that interest on your mortgage is NOT a deductible when calculating your taxable rental income from your property in Brazil
Taxation is subject to alteration depending on individual circumstance and any double taxation treaties in place between Brazil and your country of residence.
