Taxes on funds that are transferred for purchasing property

56tbourne Active member

64POSTS

3 years ago

Reading a few different things. Since there is an array of transferring funds, 1 question remains. If transferring $ from a bank in the US to to private seller/bank in Brazil, besides the usual small fees for the transaction, would one expect taxes on the money itself? Just don't want any big tax surprises. Comments or recommendations are welcomed. If anyone has an example that would be great. Just trying to get a clearer picture. The property we are looking at is around 1.5聽 million Brazilian R

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Inubia Serial expat

293POSTS

3 years ago

My understanding (which is by no means perfect) is that any transfer to Brazil in which the owner of the sending account and the owner of the receiving account are identical, is not subject to tax, but don't put it past somebody to try to tax it anyway.聽 However, any transfer that is NOT to the same person, even if its to the spouse, is subject to tax AND subject to daily, monthly, and annual limits imposed by the government for the type of transaction, which must be identified in the wire, such as family maintenance, real estate purchase, gift,聽 illegal drug trade, moneylaundering, or whatever .....

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Mikeflanagan Serial expat

471POSTS

3 years ago

There is an endless slew of taxations in brazil. There will always be hidden surprises no matter how prepared you are lol.

You may want to clarify whos going to pay聽 the transfer tax on that. because that 1.5 mil can easily jump in pricing and costs. Not to mention if you haven't had the property checked for previous debts. Because when you purchase a house in brazil - any negative debt the previous owner has transfers over to you. Be prepped for the worst if your not using a legal medium for the process.

So what may seem like a good deal for cost or benefit here - most cases comes with a string of shit with it !

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56tbourne Active member

64POSTS

3 years ago

Thanks! As always, have another set of eyes or possibly an attorney there to look at it before making a big purchase.

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Mikeflanagan Serial expat

471POSTS

3 years ago

100% lock it down with the lawyer, they will have the ability to back check for any amounts owing or previous debts which would not be in plain sight! If they get jarred ( seller ) was not a deal for you!

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sprealestatebroker ViP

1288POSTS

3 years ago

Any valid transaction that is run with the aid of a license broker needs to be verified thoroughly.聽聽

That means running quit claim deed聽 paperwork on

1.Liens on the property

2.Any litigation, civil or criminal the seller is being subjected to

3.Any unpaid City, State, or Federal Tax levied against the seller.

4.Any unresolved litigation the seller is a plaintiff through the courts system.

5.Any labor claims against the seller.

All of the above is extended to spouse, and corporation the seller might have sole ownership or partnership.

Most of the certificates are free of charges except for one run through the Seller's City of Residence and Deed through various Registries of Deed ( aka Cartorios ). Which runs under R$ 300./

All of the paper work goes through the Register of Deed. If they rubber stamp it, then you are free and clear to聽 acquire the subject property.

Your Transfer tax varies,. In Sao Paulo, the city, is about 3% of whichever higher value ( negotiated or city assessed ) it holds.聽 Then there are Cartorio Fees to prepare Title and Deed, plus stamps. All of which has published price tables available to the general public.聽

There are no escrows in Brazil, nor Title Insurance.聽

It's either cleared through Cartorios, or you can't take a Title.

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dalezuk Active member

30POSTS

3 years ago

@56tbourne I consulted with our Accountant and he indicated that money transferred to Brasil for the purpose of purchasing a home is exempt from taxation.聽 But there is a big but.聽 You must provide documentation that this money is 'clean'.聽 Copies of bank statements, taxes, paychecks etc.聽 will always pave the way for transfers of large sums of cash.聽 As others have stated, build that relationship with your bank and give them plenty of notice when you are going to transfer the funds.聽 You also will save yourself a lot of hassle if you transfer it from yourself to yourself and not a third person.聽 The bank transfer fees and IOF taxes can be negotiable with the bank but those fees are relatively small when you consider the amount of money transferred.聽 What is especially maddening is that no matter how well you prepare, the central bank could and will likely deny the transfer until you upload the same documentation to them.聽 I have transferred over $250K to Brazil over the last year and encountered these temporary road blocks more often than naught.聽

The reasoning for this administrative nightmare is pretty simple.聽 The culture in Brazil banking is to CYA at all costs.聽 Nobody wants to have their name associated with any kind of problem down the road so they simply try to get you to give up.聽

My advice is to get a lawyer and have him handle the transfer for you with an escrow fund.聽 Makes life much easier down the road.

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Michael P369 Member

11POSTS

3 years ago

Reading a few different things. Since there is an array of transferring funds, 1 question remains. If transferring $ from a bank in the US to to private seller/bank in Brazil, besides the usual small fees for the transaction, would one expect taxes on the money itself? Just don't want any big tax surprises. Comments or recommendations are welcomed. If anyone has an example that would be great. Just trying to get a clearer picture. The property we are looking at is around 1.5聽 million Brazilian R
- @56tbourne

In Brazil there is no wealth tax, also there shouldn't be any additional taxes for bringing money into the country. The other way round there is a IOF, which depends on other circumstances. Actually the rules regarding foreign assets are kind of liberal down here and there a few usefull things.

What was already mentioned: It'S almost for sure, with that amount of money transferred, the receiving bank will ask for a proof. This is a legal thing here and the banks can't bypass this without getting into trouble thereselfs. I have a gardener here, this guy receives like 100USD a month and last year he wanted to have a statement from me (for his bank), for what I pay him, etc. pp.

I don't have any real estate down here but I know, the currency exchange rate is now really good for peoples with USD, make sure to keep other things in mind. I needed to file a central bank report every year, because I had assests >100k USD (all over the world). They now changed the requirement to >1mio USD, but there might be other things to keep in mind.

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jonesio Contributor

108POSTS

3 years ago

@Michael P369 You're forgetting about the state tax on transfer of wealth. Most states levy taxes聽 of up to 7% on gifts and inheritances, even when they come from outside the country.

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