Chapter%206:%20In%20This%20Chapter

1
Chapter 6 In This Chapter

• Introduction
• Foreign ownership
• Financing
• Commercial real estate
• Residential real estate
• Rental property
• Licensing and brokerage

• Government
• Legal system
• Economy and business
• Taxes and fees
• What you need to know
• Beyond the basics
• Key contacts

2
Map of Brazil
Source CIA World Factbook
3
Introduction to Brazil

• Portuguese is official language
• Strong economy
• BRIC nation
• Energy
• Diversification necessary
• Non-renewable reserves
• Energy efficiency and renewable energy

4
BrazilThe Rich Tapestry
Source Wikipedia
5
BrazilThe Rich Tapestry
Source Wikipedia
6
BrazilThe Rich Tapestry
Source Wikipedia
7
BrazilThe Rich Tapestry
Source Eyes on Brazil
8
Foreign Ownership of Real Estate

• Restrictions on
• Borders
• Some coastal lands
• Rural properties
• Additional restrictions on agricultural land in
  2010

9
Financing

• Expansion of mortgage market
• Increased protections for lenders
• Expanding middle class
• Government subsidies
• Foreign residents may obtain mortgages but face
  difficulties
• Cash transactions still common

10
Commercial Real Estate

• Strong market
• Lots of construction
• Market drivers
• Sports events
• Growth Acceleration Program

Source FIFA
Source Rio 2016
11
Residential Real Estate

• No official data
• Construction, prices, and sales up according to
  reports
• Disagreement among analysts over existence of
  bubble
• Second-home market
• Minha Casa, Minha Vida

Global Demand for Luxury Second Homes
Source Knight Frank and Itacaré Capital
12
Rental Property

• Pro-landlord
• Varies by state
• Caseload makes evictions lengthy
• Leases
• Professional property management in demand

13
Licensing and Brokerage

• Licensing required
• Listings
• Transaction process

14
Realtor.com/international
15
What You Should Know About Government

• Federal presidential democratic republic with
  executive, legislative, and judicial branches
• Current constitution enacted in 1988 to
  democratize the country
• Mostly pro-market policies to foster growth
  should continue
• Some instances of protectionism, however

16
Legal System

• Civil law system
• Contract disputes adjudicated at state level
• Judge decides all civil cases

17
Economy and Business

• Diverse economy
• Some challenges related to declining demand for
  commodities
• Sociopolitical pressures to improve living
  standards
• Brazil costs
• Still one of the top places to invest
• Technology and communications

18
Real Estate Taxes and Fees
Real Estate Taxes and Fees Real Estate Taxes and Fees Real Estate Taxes and Fees
Tax or Fee Amount Paid by
Transfer Tax 2-4 Buyer
Notary Fee 1-2.5 Buyer
Land Registry Fee Approx 0.75 Buyer
Legal Fees 0.5-2 Buyer
Agent Commission 6 Seller
Municipal Property Tax 0.3-1.5 Owner (Buyer)
Federal Rural Property Tax (some properties) 0.03-20 Owner (Buyer)
Source Global Property Guide, International
Living, Pathfinder Ltd.
19
Business and Income Taxes

• Individual income tax
• Residents Progressive up to 27.5 on worldwide
  income
• Nonresidents 27.5 on earned income, 15 on
  other income on Brazil-sourced income only
• Business income tax
• Combined rate of various taxes 34
• Withholding tax
• Interest 15 for nonresident corporations
• Royalties Generally 15
• Capital gains
• Individual 15
• Business 15 on nonresident corporations on
  investments registered with Central Bank
• Value-added tax
• Federal average of 20
• State 7-25
• Other taxes

20
What You Need to Know

• Strong, diverse economy with some challenges
• Mortgage market growing but difficult for
  foreigners to obtain financing
• Commercial market drivers
• Sports events
• Growth Acceleration Program
• Residential market on the rise
• Professional property management in demand
• Licensing and CRECIs
• MLSs RedeSecovi de Imóveis and Redimob
• Technology and communications
• Mostly pro-market policies but some instances of
  protectionism

21
Beyond the Basics

• Greetings
• Attire
• Appointments
• Business practices
• Business dining
• Taboos
• Visas

22
Key Contacts

• SECOVI-SP
• COFECI
• Brazilian-American Chamber of Commerce
• Brazil-U.S. Business Council
• USA Embassy in Brasília
• USA Consulate General Rio de Janeiro
• USA Consulate General São Paulo
• USA Consulate Recife
• Brazilian Ministry of Tourism