Daily Archives: 13 July, 2010

Tax Information For Brazil

An expert tax advisor will help you negotiate the tax system when investing in property in Brazil. Find out the basics below.

Tax on Rental Income

Tax is charged on worldwide income for residents of Brazil at 15%, although some foreign tax relief and credits can be allowed under specific tax treaties.

Mortgage interest is not deducted when calculating taxable rental income.

Income Tax

The fiscal year runs from 1st January to 31st December.

The rate runs on a three bracket scale covering 0 to 27.5%:

Monthly income: % Rate:
Lower than 12,696 BRL 0
12,696 – 25,380 BRL 15.0%
Over 25,380 BRL 27.5%

Corporate Tax

The Corporate Tax rate for resident companies is 15%, plus an additional tax of 10% on profits exceeding 240,000 BRL.

The Social Contribution Tax is another federal tax calculated on net income. This rate is 9% and levied on an annual or quarterly basis. The tax rate can therefore reach up to 34% to include social contribution and income surtax. Companies can benefit from reductions or exemptions when they are located in trade-zones.

Capital Gains Tax

The following are exempt from capital gains tax:

  • Gains from the sale of an individual property, provided a similar sale has not taken place in the previous five years and the total value of the sale does not exceed a specified amount (R$ 440,000 in 2004).
  • Amounts received from the sale of assets with a sales price of less than R$ 20,000 per month.
  • Gains from the sale of securities on the Brazilian public stock exchange, with a sales price of less than R$ 4,143.50 per month.
  • Assets sold during a period of Brazilian residency, acquired during a non-resident period.

Non-residents are normally subject to a flat rate of 15% on gains from property in brazil.

Note: Various tax treaties could affect the tax rates described above.

VAT

The circulation of merchandise is subject to tax, as are transportation and communication services (ICMS). This is similar to value added taxes in other countries and is set at an average rate of 17%, with more specific rates for some goods (for example, 25% on luxury goods).

Inheritance/Wealth Tax

Brazil has no inheritance or wealth taxes. However, some states may impose a death transfer and a donation/gift tax. For example, the state of Sao Paulo adopted an inheritance and gift tax from 1 January 2001.

Stamp Duty

Privately owned offices called Cartórios provide notary services as well as registers of real estate deeds. These cartórios charge from a few cents for simple certified copies to thousands of Realis (R$) for property deeds.

Included in the fees charged for real estate transfers are transfer taxes which vary from 2-4% of the declared value. Cartórios are also responsible for the registration of births, marriages and deaths.

Municipal/Local Tax

Some municipalities may charge a service tax on certain businesses or real estate transfer tax (2% on transfers of real estate). An annual urban real estate tax for property owners is also applicable at approximately 0.6% of the assessed value of the property, but this will vary according to the municipality concerned.

If you want to invest in Argentina, Uruguay, Chile or Brazil contact us at:

felipegonzalezvergara@gmail.com

Why Invest in Brazil?

Brazil has been clearly identified as an emerging market amongst worldwide property investors. Returns on investment are excellent and investors have become aware of the high growth potential of Brazil as a stable new investment market.

Natural and Cultural Factors

  • Year-round sunshine, with average summer temperatures of 21°C.
  • Great natural beauty with fantastic scenery and 7,000km of beaches.
  • Friendly nature of the Brazilian people.
  • Vibrant cities with carnivals and music.
  • Low international risk of war, terrorism or SARS in Brazil.
  • Easy access via direct flights from many international airports

Economic Factors

  • Property price returns of 20% per annum in some locations.
  • Good currency exchange rates, making it cheap for foreign investors.
  • President Lula’s progressive policies have brought many improvements to Brazil, including a decrease in inflation to an all-time low at 5.7%. Active encouragement and incentives for foreign investment – you can own 100% of land and property.
  • Cost of living at only 20% of that in the UK/Europe, while property maintenance costs are extremely low.
  • Increase of thriving manufacturing industries relocated to Brazil and boosting the economy.
  • Expected to be self sufficient in oil reserves within the next year.
  • Brazil is believed by some economists to be amongst the leaders of the future, along with Russia, India and China.

Land for Development/Project Sourcing

The International Property Investment Network (IPIN) and propertyshowrooms.com offer members a comprehensive source of information regarding the newest land investment deals available in Brazil. IPIN always endeavours to find you the earliest and best investment property in Brazil before they become general knowledge.

Members will be offered valuable assistance and contacts in the setting up of joint ventures within our network of carefully vetted developers or partners. Due to a recent increase in worldwide property investment, IPIN and propertyshowrooms.com constantly make contact with a growing number of large-scale individual investors and  investment consortiums who are constantly on the lookout for the best land investment options in Brazil.

If you want to invest in Argentina, Uruguay, Chile or Brazil contact us at: felipegonzalezvergara@gmail.com 

Brazil Investment Growth

There are several reasons why Brazil has great potential as an emerging property market today. Below you will find out why Brazilian property offers you a such a promising new investment vehicle.

Investment property in Brazil is establishing itself firmly as a viable opportunity worldwide and recent years have seen an encouraging annual property price growth rate of 20% in some areas.

Since President Lula’s progressive economic policies, Brazil has fast developed into a sound economy with a fiscal and political environment conducive to growth. Today the climate for investment property in Brazil has never been more promising.

Property in Brazil is already making a name for itself amongst the world’s investors, while there has recently been much media coverage on the merits of this emerging market. Brazil’s new property developments are generally accepted to be of high quality and competitive prices mean that Brazil can boast top quality property for a fraction of the price of property of far less caliber elsewhere in the world (eg. 80,000 EUR for a luxury one bedroom beachfront apartment in 2008).With improved communications to the country and cheap direct flights now available from most European airports, Brazil is attracting growing numbers of tourists and short-term holiday rentals are generating excellent rental yields for investors. The Brazil Tourism and Culture Movement has great ambitions for Brazil and aims to transform it into one of the twenty most attractive tourist destinations of the world, attracting some 9 million visitors by 2007. This is set to have positive repercussions on an already thriving investment growth rate in Brazil.

Capital Growth Predictions

Based on solid evidence, general opinion is that as an emerging market, Brazil offers some promising growth potential to all types of investor. While some areas of north eastern Brazil around Bahia are currently attracting as much as 20% annual capital growth, and other areas are also experiencing price rises at a healthy rate, Brazil undoubtedly represents a profitable opportunity to early investors aiming to gain the greatest returns possible on their investment.

Rental Yield Predictions

Rental income from Brazil property is of great interest to investors as high rental yields are already achievable from property located in the current tourist hotspots of Brazil. It is expected that mortgage payments and bills can be covered for the year from the rental income achieved during the peak season months alone (December to February).

Brazil Economy

Brazil’s economy has experienced some excellent growth over the last three years since President Lula’s office began. Currency exchange is at a favorable level for foreign investors and inflation is encouragingly low at only 5.7%. In addition, President Lula’s policies encompass strong internal investment as well as funding from the USA to improve the economic structure and entice tourism to Brazil, while continuing to encourage large foreign businesses to establish themselves in Brazil.
Economists now predict that Brazil will be amongst the economic leaders of the future, along with Russia, India and China.

Reasons why Brazil is an intelligent property investment location:

  • Year-round sunshine, with average summer temperatures of 21°C.
  • Some areas in the north east of Brazil saw property price returns of 20%+ in 2005.
  • Current favorable currency exchange, making it cheap for foreigners to invest.
  • President Lula has brought great hope and improvements to Brazil, including a decrease in inflation to an all-time low.
  • Foreign investment is actively encouraged and you can own 100% of land and property.
  • Low cost of living compared with many areas of Europe. Property maintenance costs are low.
  • Inflation low at 5.7%.
  • Increase of thriving manufacturing industries relocated to Brazil.
  • Expected to produce all of its own oil within the next year.
  • Great natural beauty with fantastic scenery and 7,000km of beaches.
  • According to some economists, Brazil will be amongst the economic leaders of the future, along with Russia, India and China.
  • Friendly nature of the Brazilian people, along with rich culture, vibrant cities, carnivals and music.
  • Low international risk of war, terrorism or SARS.

If you want to invest in Argentina, Uruguay, Chile or Brazil contact us at:

felipegonzalezvergara@gmail.com

Uruguay – La Paloma—The Perfect Summertime Getaway

La Paloma is one of the most beautiful bathing resorts in Uruguay. Its serenity, its pristine beaches, and its rhythm makes it a unique and magical place. Located on Cape Santa María, this small seaside village lies 240 kilometers from Montevideo, 160 kilometers from Chuy, and 100 kilometers from Punta del Este.

One of the main oceanic bathing resorts in the Department of Rocha, La Paloma was named by sailors, most of them fishmongers, who would spot the silhouette of a bird on the coast.

Characterized by its beautiful beaches, the resort offers visitors a range of activities and good quality facilities for an enjoyable stay, both in the warm summer nights and in the wintertime.

Its steady population does not surpass 5,000, but during the summer, with tourists and part-time inhabitants, that number increases significantly.

Avenida del Navío (Ship’s Avenue) takes visitors from the main road to the small commercial and shopping center that has emerged at La Paloma.  It is considered to be the main street, and crosses the city up to the intersection of Solari Avenue and the bays known as Grande (Big) and Chica (Small), right off the shores of small La Tuna Island. The most modern and luxurious buildings are in this area. There are also schools, a cultural center, a police department building, a fire department building, and the old cinema. Solari Avenue has the most stores, the casino, the handicrafts markets, the Town Hall, and one of the most emblematic hotels in town: Hotel Cabo de Santa María.

The old city shell is ideal to go for a walk. Follow the streets to the sea, where you’ll find the lighthouse and the most ancient and traditional houses in town; this is where the first dwellers used to reside. Apart from being rented during the high season, these houses are the best-preserved historical heritage in the city, and most of them even date back to the days of La Paloma founding.

Then there are the beaches, each of them with their own geography. Some of them feature quiet waters, such as the ones around the bay; others have big waves perfect for surfing such as La Balconada, El Cabito, and Los Botes.

If you want to invest in Argentina, Uruguay, Chile or Brazil contact us at: felipegonzalezvergara@gmail.com