Restrictions on Buying Rural Property
If you’re looking to invest in Brazilian real estate, you need to know that it’s not just beachfront property that comes with restrictions. Brazil also limits foreign ownership of rural property.
Federal Law 5.709/1971, Decree 74.965/1974 and the Brazilian Constitution include conditions for foreigners to buy rural land in Brazil. Here are a few:
Foreign individuals must be residents of Brazil, and foreign legal entities must be authorized to do business in Brazil. Brazilian entities controlled by non-resident foreign individuals or foreign companies are subject to the same legal restrictions.
Foreigners as a group can only buy rural land that doesn’t exceed ¼ of the municipality where the property is located. In addition, buyers of the same nationality can only buy up to 40% of the ¼ limit in each municipality.
Foreign individuals can only own up to 50 módulos for indefinite use. Essentially, buyers are restricted as to the size of their land. In some cases, they’ll have to obtain government authorization.
Foreign legal entities can only acquire rural property for limited purposes, such as agricultural and industrial projects. Such projects are subject to government approval.
The restrictions in Brazil started in the 1970s, a time when foreign companies were buying large swaths of land in the country. But it’s not just Brazil that has restrictions on foreign ownership of rural property. Other countries have similar laws to protect their national interests.
If you’re a foreigner interested in investing in Brazilian real estate, it’s important to understand the restrictions that apply to rural property before you invest.