Embed Size (px)
Citation preview
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
Page 141
Map of Brazil
Source: CIA World FactbookPage 142
Introduction to Brazil
• Portuguese is official language• Strong economy
– BRIC nation
• Energy– Diversification necessary– Non-renewable reserves– Energy efficiency and renewable energy
Page 142-146
Brazil—The Rich Tapestry
Source: Wikipedia
Page 146
Brazil—The Rich Tapestry
Source: Wikipedia
Page 147
Brazil—The Rich Tapestry
Source: Wikipedia
Page 147
Brazil—The Rich Tapestry
Source: Eyes on Brazil
Page 148
Foreign Ownership of Real Estate
• Restrictions on:– Borders– Some coastal lands– Rural properties
• Additional restrictions on agricultural land in 2010
Page 148-149
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
Page 149-150
Commercial Real Estate
• Strong market• Lots of construction• Market drivers:
– Sports events– Growth Acceleration
Program
Source: FIFA
Source: Rio 2016
Page 150-152
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
Page 153-154
Rental Property
• Pro-landlord– Varies by state– Caseload makes evictions lengthy
• Leases• Professional property management in
demand
Page 154-155
Licensing and Brokerage
• Licensing required• Listings• Transaction process
Page 155-156
Realtor.com/international
Page 157-161
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
Page 162-163
Legal System
• Civil law system• Contract disputes adjudicated at state
level• Judge decides all civil cases
Page 163-164
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
Page 164-168
Real Estate Taxes and Fees
Real Estate Taxes and FeesTax 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.
Page 168
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
Page 168-169
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
Page 169-170
Beyond the Basics
• Greetings• Attire• Appointments• Business practices• Business dining• Taboos• Visas
Page 170-173
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
Page 174-175
