If you invest in real estate in Brazil, the costs to get any property into your name can be resumed as follows:
Notary & admin costs
CPF application costs total
POA's issue total
IPTU (Annual Property Tax)
As you can see, costs are really limited and especially once you own the property, there is hardly any costs annually for holding the property.
Once you have gone through the questions stated above, the type of investment that suits you best automatically comes into the picture:
a beach house or holiday home
a family condominium or apartment
a pousada or hotel
a watersports or activity center
a kite- or windsurfing school
a beachfront building plot
It is all within the possibilities, with central factor all behind it:
the value of your property will increase, year after year, and you will enjoy an attractive ride on the rising real estate market of NE Brazil!
But also think about how much you want to invest and if it's should be a one off amount or if you like to have the possibility to increase the investment further.
PROFITS & TAX
Income generated over the sale of Brazilian real estate is also subject to tax.
But the capital gains tax is more then acceptable, being for non Brazilian residents only 15%.
If the real estate is owned through a Brazilian company (one that you could simply decide to establish), taxes are even reduced to only 2,8 % by taking a 25 % corporate tax over profits x a possible choice to go for the Lucro Presumido = Estimated Profit system, which is a Brazilian tax option allowing a company to limit it's profits to a theoretical 11% profit max over the turnover effected: the result is then 25% x 11 % = 2,8 % tax in total over the turnover generated, very attractive really if your profits may reach up to 70-80% per annum!
The additional advantage here may be for you, that any capital input of you as private investor of min. Usd 50.000.- will be seen as an investment in Brazil, entitling you apply for a a permanent visa that in such case will always be granted!
In this respect please also note, the company can be established at any moment in time, even after you first buy any property in your private name: if you transfer the property from your private name to the company's name within 6 months, you don't pay the 2% transfer tax again if the property is incorporated into the company's capital.
So, our advice therefore is: buy the property privately and wait the development of the value: once you start selling you can always still transfer it into a company and then sell it out in an attractive way.
TARGET TO INVEST
Before you start investing, a very important question to yourself is, what is the target of my investment?
Of course, the returns are overall attractive but this doesn't mean that every property is what fits you best!
You should ask yourself therefore the following questions:
do I want to work on my investment?
do I want to rent out my investment?
do I want to construct with my investment?
do I want to use for private purpose my investment?
do I want to have regular income on my investment?
do I want to do a long or short term investment?
do I want to run a commercial business with my investment?
do I want to visit brazil regularly from now on?
do I want to live in brazil now or maybe in the future?
do I want to take a permanent visa in Brazil?
The answers to these questions are very relevant, since they indirectly have consequences for the type of investment that you should go for.
Go through the questions, get your mind set, and you will enjoy the investment you finally choose for so much more!
CREDIT & FINANCE
If you are a first time investor in Brazil, you may wonder if there is any way of getting credit or finance in Brazil.
But here we also want to be very open to you: getting credit in Brazil is very difficult or even quite impossible, especially for an overseas investor. The only way for you to get a mortgage to finance any Brazilian real estate is back at home, against the overvalue of your property maybe down there.
But see it positive! This is also why the worldwide crisis didn't affect Brazil!
To be very up-to-date, recently, the mortgage market started to open up a little, banks start to give credit slowly to some well earning Brazilians while the country and economy is doing very well.
But the key for you is, if you want to invest on the real estate market of Brazil, you will need to have some own capital, a fact for anyone that wants to get started.
But at Ilha do Guajiru things are a little different: here, Beachlife offers an attractive solution to any investor:
The reason also why the island is moving forward at maximum speed!
The conditions of this credit facility are simple as follows:
min. 25% deposit / guarantee
max. 75% in future installments
only 6% interest charges per annum
only interest over effective credit used
no penalty/free pay off at any time
min. 30.000.-/max euro 500.000.- per transaction
no rating or qualification further needed
So, if you have limited own capital only and are interested to invest in a rising, attractive area in NE Brazil, then consider to invest in lha do Guajirú, the only project where credit can be obtained by overseas investors!
OWNERSHIP & TITLE
Brazil is today legally a very organized country and cannot be considered anymore any so called banana republic. It's law functions like anywhere else worldwide, Europe or the USA and does not expose any investor to any un-acceptable risk situation.
The ownership of real estate is organized in a very clear way: you become a 100% owner of a property, are recognized through a registered deed at a Public Notary and the ownership is FREEHOLD.
There is no need of existence required of any Brazilian partner etc. like is sometimes seen in countries like Egypt where you can f.e. only own a property for max 49%.
An important issue to look at, when you buy a property in a holiday state like Ceará
or NE Brazil, is rental possibilities!, monthly returns on your overseas investment.
You can imagine, while the number of tourists in NE Brazil is increasing sharply year after year, there is an increasing demand also for the rental of holiday homes.
The rental income is generally very good in Ceará, the returns sometimes even approach
2 digit numbers per annum
For an example of how overseas investors rent out bungalows successfully in Brazil at Ilha do Guajiru -with returns of up to 35 % per annum- see www.thewindvillage.net
This is a formula and location where it rents out very easily really, this is what holiday makers are looking for!
The key thing for good rental returns is: invest in a property that is well located, in a rising spot with increasing tourists so a lack of beds, and offer comfort and facilities that you would yourself also appreciate.
So think and question yourself: would I rent my own property?
If the answer is yes, then you will enjoy your investment returns and decision!!
Chart Rental Income the Windvillage 2009
Along the (NE) Brazilian & Ceará coastline, there is a wide range of investment possibilities, so wide really, that it can even be difficult to decide what to go for.
But not all of them are good investment opportunities!
The key also is in Brazil: you have to select and compare, and not simply look for the lowest possible price!
This is the main mistake that first time investors make in Brazil.
They try to find an investment opportunity at the cheapest possible price
But also in Brazil there is a reason always for being the cheapest! To be in the middle of nowhere, or for having no other investors investing in the area with you, for missing infrastructure, like a highway or an airport, things that you won't be able to solve all alone!
For a correct investment opportunity, have a look at new, popular & upcoming spots or villages, where everything is much in the lift and things get booming, where investors put money and definitely construct, where the municipality and government is supporting, where infrastructure is improved, where more tourists are visiting every year and so on.
A good example of such spot is Ilha do Guajirú, often called the Investor's Paradise', a peninsula island that was discovered somewhere end 2008.
This spot has all ingredients for being a good investment and having a promising future well in place:
a beautiful, coco-palmed island interior with normal road access!
NE Brazil's biggest lagoon, a river & the sea surrounding it!
perfect winds for all water sports with surely no mosquito's!
new infrastructure, the CE 085 highway and Guajirú North International Airport at only 30 km distance
sharply increasing tourist numbers, year after year!
various new pousada's, restaurants & bars nicely in place!
attractive underpriced real estate prices!
(up to 3 - 6x cheaper then Cumbuco or Jericocacoara)
low construction costs, only Rs 500 to 700.- /m2!
constructions arising from various entrepreneurs with speed!
top local support of the maire and municipality!
a central website (ilha-do-guajiru.com) with worldwide promotion!
What happens here is no coincidence: it is simply a result of having all the needed investment ingredients well in place. It all started with a unique location, in line with the famous saying:
In real estate the price is defined by three things only:
Location, Location & Location!
Once you have studied our information on WHY INVEST and you come to the conclusion, that investing on the booming real estate market of (NE) Brazil is simply very attractive, the next question that arises with you will be:
HOW DO I INVEST?
An important question, especially since you are looking to enjoy and have success with your investment and not land into disappointments or headaches. But here, kindly rely on the expertise of us as your local real estate partner! With experience in the real estate market of NE Brazil, for many years!
Of course, there is more then one issue to consider when deciding which investment you should go for.
PAYMENT & FOREX
Brazil is a country with a currency control system, meaning all currency transactions are registered at Brazil's central bank (or banco central).
But there is no complication for any investor due to this. Money can go in and out of Brazil, any time needed, there are no restrictions on this at all.
So, if you invest day x and bring euro's or dollars into Brazil from abroad, these transactions are registered but that's it: when you sell the property day y, the money can be transferred back to your home country, there is no problem or obstacle hindering this at all.
The system simply dates back from the days that Brazil was having a foreign currency shortage, we are talking now many years ago, but as you can imagine, it takes more then some political decisions then just one to get rid of it.
That's why it is still there and at the same time with quite no meaning at all.
So, don't worry, your money is SAFE in Brazil all the way through during the time of your investment.
STEPS TO INVEST
Once you have an attractive investment object into the picture that fits you best, the next issue you come across is: what is applicable investment procedure?
But also here Beachlife is able to help you with information and experience.
For a detailed summary of all steps please find herewith our summary:
closing of agreement between buyer & seller
registration of buyer's signature at the notary office (cartório)
issue of necessary POA's (powers of attorney) at the notary office
application of buyer's CPF (social/fiscal number) for title and tax purposes, at the Receita Federal (Brazilian Tax Service)
down payment xx% by buyer to seller to seal' the deal
foreign exchange to Reais effected by the Central Bank
delivery of property documents by seller to the Notary for check
check by Notary of all documents being clean and o.k. and free of any debts, mortgage, pledge, rights of third parties, etc.
balance payment xx% by seller to buyer
payment by buyer of 2% Transfer Tax (ITBI) to the municipality
transfer of property from seller to buyer by the notary
updating of land certificate (Matricula) with new/actual owner
When you invest in Brazil, you will soon find out Brazil is welcoming enormously all foreign capital and investments.
Basically any foreigner can become a real estate owner in Brazil and no obstacles are created to it.
WORDS & TERMS
In order to avoid, you get confused by or don't understand what certain words mean during your process of starting to invest on the real estate market of (NE) Brazil, we herewith offer you the option to look up the meaning of some words and terms used in real estate:
the notary office
the land certificate
transfer tax (2%)
annual urban property tax
annual rural property tax
the notarial deed
the registration = publication of the deed
the building licence
a planta baixa
the ground plan
certificate of a fysical person (title & tax purpose)
An interesting issue is also, when you first time invest in the real estate market of Brazil, to know the major mistakes made by starting investors.
But be realistic, wouldn't you like to know?
We herewith list the mistakes most often made:
buying a property because it's the cheapest???
buying a property that doesn't fit your personal situation???
buying a property in an area that does not improve & develop???
buying a property with backdated maintenance and hidden costs???
buying a property that is not current and sellable at any time???
buying a property that creates trouble to you at distance???
Realize yourself, you can better spend a little more at start and choose a property that is in good condition, located at a popular spot in a rising and developing area, with plenty visitors and tourists wanting to rent it instead of buying a property at a cheap price, at maybe a wrong location, with people calling you day and night because of it's bad maintenance, with increasing cost that you never expected or counted on.