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- How do I get to Bahia and Brazil from abroad?
- Do I need a lawyer if I buy a property?
- How does the buying process work?
- How is the buying process different for off-plan property?
- Once you own a property what expenses and taxes do you incur?
- What will be the costs associated with purchasing the property?
- What taxes will I occur on selling?
- What is a CPF number, how do I get this?
- What time zone is Bahia in?
- How long does it take to fly to Bahia from other parts of Brazil and overseas?
- Is it is possible for foreigners to take out a Brazilian mortgage?
- What is rental potential like?
- What is Bahia’s Climate like?
- Does Bahia suffer from any natural disasters?
- How do I get permanent residence in Brazil?
- Are there any environmental restrictions on development in Bahia?
- What is CRECI? Why is this important?
- Why not buy in the Caribbean as an alternative?
- Why not buy somewhere else in Latin America?
- Are there dangers of fraud and deception?
- Is the property market safe and legally secure?
- Is foreign investment encouraged?
- What is the bureaucracy like it Brazil?
- Will the property be freehold?
- Many urban myths exist about crime, how true are these and what is the reality?
- Is the gap between rich and poor as great as people say?
Direct access between Europe, America and Bahia is increasing all the time, with Salvador the main hub for international arrivals. However many international visitors to Bahia opt to fly into Rio de Janeiro and Sao Paulo, in the south of the country, as they are well connected to many of the world’s major cities. From here it is possible to get one of many connection flights to Bahia taking only 1.5 – 2 hours. As there are many domestic airports in Bahia, this allows accessibility to some of the more remote locations.
Salvador International Airport is undoubtedly one of Brazil’s finest and has a new terminal and runway planned. Similarly, with package holidays rapidly increasing and huge development of tourist infrastructure, expect direct charter flights from the USA and Europe to continue to emerge.
Whilst Porto Seguro in the south of Bahia also has an international airport, it is not of the same scale; however it still receives charter flights from Europe – expect these to increase in numbers when they finally go ahead and develop a new airport there.
Conventional airlines which serve Salvador include:
- Portuguese national airline Tap, which has frequent direct flights from Lisbon to Salvador; with a connecting service from the UK and all over Europe.
- Spanish airline Air Europe, which has frequent direct flights from Madrid to Salvador, with connecting flights from all over Europe.
- German airline Air Condor, which has regular direct flights from Frankfurt to Salvador, with connecting flights from all over Europe.
- Brazilian national airline TAM, which offers direct flights from Miami.
- Brazilian national airline TAM, which offers direct flights from Paris and London.
Although we advise clients to take legal advice (especially foreigners), not all clients choose to use lawyers, especially on straight forward transactions, such as off-plan property. Through our experienced sales and administration team, Brazil Bahia Property deal with the administration and paperwork to help facilitate a smooth transaction and provide guidance and help throughout.
We have an extensive network of independent lawyers throughout Bahia and we can recommend these accordingly.
- The buyer locates a property to purchase and make an agreement to purchase with the owner, structure of payments etc.
- An initial study is completed on the paperwork; all the original documents for the house and proof of ownership are fetched from the official registry office.
- Certificates relating to council tax debts (IPTU) and personal good standing certificates of debts and liabilities relating to the owner are requested.
- The buyer needs to register for a CPF number (see below for full explanation of this).
- A contract is drawn up between the buyer and seller, called a private sales and purchase agreement (optional).
- A small deposit will secure the property whilst your lawyer checks the documentation and the property particulars.
- The lawyer will then undertake due diligence to confirm that the seller lawfully owns the property, has the correct title deeds, the plot is the correct size and that there are no liabilities on the property, for example outstanding bills. This generally takes longer for second hand property than for an off-plan build, as there may be more issues determining ownership. Clear title and any liabilities must be verified.
- Money is transferred from the buyer’s account.
- Properties then exchange during the ‘escritura publica de compra e venda,’ which is a public sales and purchase deed.
- Upon transfer, ITIV (property transfer tax) of anywhere from 2 to 4% (depending on the County the property is located) of the value of the property is payable to the County (see below for full breakdown). In addition the purchaser must pay registry and notary fees that can incur a further tax of up to 2% of the value of the property.
- Once tax is paid and property is transferred to the buyer through the “Escritura Publica” (pubic title deed), then the property is officially registered in the buyers name at the land registry office. It often takes around 30 days before the escritura is fully registered in a document called the ‘Matricula’ which shows the history of buying and selling of the given property and is what guarantees the owners rights. This is a vital step as without it, you do not officially own the property.
- First make a property reservation with the developer, which is usually valid for 2 to 3 days.
- Sign a ‘reservation contract’ and pay a small deposit to secure the property, this amount varies but can be around £2000. Reservation contracts specify the date when the full deposit for the property needs to be paid. Usually 21 to 30 days from the signing of the reservation contract.
- The lawyer then confirms that the developer or current owner actually owns the property, has the correct title, and that there are no liabilities, such as outstanding bills on the property.
- If all is correct with the contract, it is signed and the money is transferred to the constructor account via the central bank.
- Options usually exist for the buyer to make a payment plan with regular payment plans until the delivery date. Developers are also usually open to payment plan offers. Plans vary from one year to five years. However payments are usually subject to financial adjustment based upon an index set by the Federal Government. This is done to account for variations in the price of raw materials. This means that the final amount paid may slightly differ from the initial quoted price.
- The title to the property is usually transferred to the buyer upon completion of the build and receipt of the keys. This is the ‘Escritura Publica’.
- Property Tax (IPTU – Imposto Predial e Territorial Urbano) – like a council tax – this is for urban property owners. Urban properties are subject to an annual municipality tax, which is around 0.6% to 1% of the official value of the property. However the official value is often much less than the actual value of the property. The charges vary depending upon the municipality in which the property is purchased.
- Foro – like lease fee but nowadays only for the ‘Zona Marinha’- waterfront zone of the beach (only applies to beach front properties). You cannot technically own beach front in Brazil and waterfront zone can only be leased from the Brazilian federal government (SPU) and that is why the FORO charge comes into place. This does not apply to all waterfront zone, and thus a search shall be done to prove its existence or not. Also in many areas it is prohibited to build on the waterfront zone, and therefore there is no point in registering the waterfront with the SPU and paying this.
- Bills – like any other property, if you own a house or apartment, expect to have to pay water and electricity bills. Also if the property is in a condominium, owners are obliged to pay condominium fees, which is effectively the shared costs of running the condominium, for example security and upkeep of communal facilities.
Transaction costs in Brazil are made up of the following: (these can all vary slightly depending on location and individual circumstances)
- ITIV( Imposto sobre transmissão de bens imóveis). This tax is a property transfer tax that is anywhere from 2 to 4% of the value of the property – depending on the local Council.
- Title Deed and Registration of the deeds: Once the title deed has been registered, then the notary public will charge a tax according to a sliding scale. However the final result is usually less than 2%. Often the title deed may cost 1.25% of the value of the property and the registration of the deeds 0.75%.
- Legal fees – typically 0.5% – 2% depending on the complexity of the transaction.
- Laudêmio – This only applies to beach front properties. On the beach, the first 30 meters from the high tide line technically belong to the Brazilian state – called the Zona Marinha. A buyer can obtain private use by paying a small annual occupation tax to the government for private use (Foro – see below). When an owner sells this private use, the government is entitled to 5% of the value of that right (not the property value); called the “laudemio”.
At Brazil Bahia Property we will endeavour to find you the lowest costs possible.
Capital gains on property in Brazil are taxable, to both Brazilians and foreign investors alike. Often, this can be significantly reduced or nothing paid, for example if money was spent improving the property.
Brazilian residents have their burden reduced proportionally towards the time the hold that property. The flat rate is set at only 15% (dependent on any double taxation treaties your country may have) and this can be avoided completely if you:
a. Reinvest the proceeds in Brazil.
b. Hold the property for a significant amount of time (applies only to Brazilian residents, although this is ambiguous, for example if an investment visa is gained).
The only formality required is getting a “CPF” (Catastro de Pessoa Fisica). CPF is the fiscal registration number that you require for any administrative action in Brazil, for example, buying a house, car, getting a phone line or an electricity supply.
A CPF number can be easily obtained online at the Receita Federal’s website or via a local Brazilian embassy, post office, Brazilian Lawyer, or good estate agent. Brazil Bahia Property are happy to help you obtain this.
The CPF also means that you are required to complete an annual tax return – this enables the authorities to follow the development and evolution of a property as well as any income derived from it.
The buyer can get a CPF from outside Brazil by hiring a good lawyer and giving them power of attorney.
Bahia is only 3-4 hours behind GMT. This means the time differential between Bahia and the USA/Europe is never that much.
From the South of Brazil:
To fly to Salvador takes 1.5 hours from Rio and 2.5 from Sao Paulo. To fly to Porto Seguro takes only 1 hour from Rio and 2 hours from Sao Paulo.
To fly to Bahia from Spain or Portugal takes around 8-9 hours and from the UK around 9.5 hours. This is less than other destinations in the Caribbean.
Once a permanent visa is obtained, it is possible, however without this it is currently not allowed, although reforms are expected soon. We generally advise foreigners to take out mortgages abroad with international lenders, as the costs tend to be lower and the process in Brazil can be quite bureaucratic.
Although it is hard to generalise, rental yields in Bahia are generally good, especially by US and European standards. If you buy a good priced property in an area with high demand, the returns can be very impressive. With the economy booming and tourist numbers increasing year on year this can only improve.
Salvador also offers excellent rental potential, as it is a dynamic city of 7m people with plenty of domestic demand for rental properties.
It is hard to imagine a better year round climate than that of Bahia, it is a genuine tropical climate. Although the summer months are slightly hotter, sometimes up to 32°C, temperatures in Bahia are rarely far from 27°C, with a few degree variance either way.
The coastal regions of Bahia experience a year round tropical breeze; this ensures the hottest days are bearable, making spending time in Bahia a pleasurable experience throughout the year.
Bahia is free of natural disasters. There are no hurricanes, volcanoes, tsunamis or earthquakes.
There are various ways to get a residence permit in Brazil: as an investor, by marrying a Brazilian, upon retirement or based upon work.
As an investor:
- The minimum requirement is to bring USD$75,000 into the country, to invest in a real business that generates employment, taxes etc.
- Buying a home does not classify, however the difference between a nice house and a guesthouse can be hard to differentiate legally.
Based on a fixed retirement income:
If a foreigner is over 50 and can prove a permanent, monthly income (such as a pension) of USD$2000, you can apply for a permanent visa as a retiree.
Fortunately for tourists and property owners alike, Bahia has been very stringent on environmental regulations. This governs all aspects of development, we will be happy to talk you through this, or indeed send you further information.
Some areas of the Brazilian coast are protected as APA’s (Area de Proteção Ambiental). These are environmentally protected areas and are meant to preserve rare ecosystems and fauna or flora threatened by extinction.
APA’s include many rules about land use, lot sizes, ground occupation, paving etc. APA’s are often controlled by the federal and state agencies like IBAMA, which is the environment protection agency.
Brazilian estate agents are regulated by a governing body called CRECI – Conselho Regional de Corretores de Imóveis.
Each qualified estate agent or business is licensed with CRECI and is assigned a unique number which is lodged at the Companies House. Many of our international competitors do not have this, which is detrimental in the local property market. We – and all of our agents – are fully CRECI registered.
The Caribbean property market has boomed for many years, it is vastly over priced and investment is flawed as the region is prone to annual hurricanes. Instances have occurred when property has been seized from foreign investors without compensation, accessibility is poor and the costs of living are high in tourist zones and the upmarket beach resorts.
Quite simply Brazil is the economic and political powerhouse of Latin America and aspiring world superpower, abundant in natural resources and reasons to invest. Most of the countries in Latin America have a multitude of reasons not to invest, and the ones which don’t are no way near as attractive as Brazil.
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Like any other property market in the world, there is always the danger of fraud and deception. However, this is a relatively small problem in Brazil, investing in property is safe and easy, and we will guide you through all stages of the process, ensuring all relevant checks are met and that you receive independent advice on all aspects.
Brazil has sophisticated and well developed property laws, similar to any Western democracy. The legal system is very robust.
Foreign investors have exactly the same investment and ownership rights as Brazilian people. Foreign investment in property, tourism and the economy in general is actively encouraged.
Like any other emerging market, Brazil suffers from its fair share of administration and bureaucracy. At Brazil Bahia Property, we will advice you on all aspects of this from start to finish.
Property in general in Brazil is freehold, meaning you will own a 100% of your property.
The gap between rich and poor, along with poverty, inevitably bring a problem with crime. However, the extent of crime in Brazil is an urban myth. The majority of serious crime is confined to the highly populated Southern cities, mainly Rio de Janeiro and Sao Paulo, and indeed much of this is gang related rivalry, in the cities favellas or shanty towns. Crime towards tourists is very rare.
Salvador, like any other major city, receives its fair share of petty crime and its vast favellas mean it should be treated with respect and common sense. Outside of Salvador, crime is not a major issue, the people of Brazil are known throughout the world to be incredibly friendly, and indeed it is rare to see violence from a Brazilian.
Brazil is a country riddled in inequality. With the richest 10% of the population earning more than 50 times more than the poorest 10%. The huge gap between the rich and poor and poverty itself are issues Brazil clearly has to face up to. Brazil is home to more millionaires than anywhere else in the world – reputedly more than a million. Luckily Lula is doing his best to address these issues, with amongst other things, inflation busting policies and raising the minimum wage. The benefits of this are now starting to be seen.