Property Taxes in Brazil

In a past article, we covered fees and taxes paid on Brazilian real estate transactions. If you missed it, click here to check it out. After you buy a property, you’ll also want to know what you’ll pay in property taxes.

Property taxes in Brazil are called Imposto sobre a Propriedade Predial e Territorial Urbana or IPTU for short. It’s a municipal tax charged every year on real property, and unless there’s an exemption, the owner must pay it for each property he owns.

The tax rate varies from city to city and depends on the property’s purpose. The amount due is calculated based on the property’s assessed value (valor venal). For example, São Paulo and Rio de Janeiro charge 1% of the assessed value for residential properties. For commercial properties, São Paulo charges 1.5% and Rio charges 2.5%.

If the property is leased, the owner is still responsible for paying the IPTU. While the lease can require that the lessee pay it, ultimately it’s the owner’s responsibility. If it doesn’t get paid, the debt will attach to the property.

In addition to being a tax, in many locations IPTU also refers to a registration number for each property. With the IPTU number, you can search to make sure that all taxes on the property have been paid.

If you’re planning on buying a property in Brazil, it’s critical that you first confirm that there are no outstanding IPTU debts associated with the property.