Investing in one’s own property is the biggest step one can take towards a more peaceful and stable life, but whenever the matter starts to get more serious, what people worry most are the fees and taxes that affect purchase transactions and sale of real estate. And that makes perfect sense: these expenses are quite considerable, reaching up to 15% of the negotiated value. Having good planning at this point is essential for both buyer and seller. Know the fees and taxes involved and avoid losses in the middle of the negotiation!
What does the buyer pay?
Check out everything a buyer pays:
In general, all sales and purchases of real estate take place through the mediation of a broker. In the case of a new property, when a deal is closed, the developer pays 6% to 8% of the property’s value to the broker responsible for the sale. And that value is usually included in the product value.
Technical and Real Estate Advisory Service Fee (SATI)
This rate applies only to new properties and, on average, is 1% of the value. It is a cost charged by developers for providing technical and legal assistance services during contract negotiation.
This service is optional and is intended to assist the buyer in choosing properties compatible with their economic situation, clarifying contractual clauses and helping and clarifying financing. This fee can only be charged after it has been duly informed to the buyer and the buyer must be fully aware that he is hiring an advisory service. Otherwise, the charge is improper. Stay tuned!
Real Estate Transfer Tax (ITBI)
This tax is charged by the City for the transfer of the property. The amount varies according to each municipality and must be paid within the period established by the local administration. We’ve already talked about ITBI in a previous post, take a look and learn all about this tax that can weigh a lot in your pocket at the end of the negotiation.
Anyone who buys property in cash needs a public deed of the property – the purchase and sale contract of the person who finances it has the same value as that document. And obviously, the deed has a cost that is paid at the notary’s office according to the price of the negotiated property. The list with prices can be accessed on the website of the Instituto de Registro Imobiliário do Brasil (IRIB). There are several types of deeds and each one has clauses specific to that negotiation.
Another expense is charged by the registry to register the property in the name of the new owner and its value is calculated based on the sale value of the property. Registration is paid after payment of the ITBI and the deed. We’ve already taken the step-by-step instructions on how to register a property in a previous post, you’ll like it!
This one is for you to be smart when closing a deal with the developer! When the buyer receives the keys and decides to complete the financing in a bank other than the one indicated by the developer, the developer charges a fee of up to 2% of the property’s value. This is called tying: the buyer buys the product and also the service from the bank indicated by the company. THIS PRACTICE IS PROHIBITED!
By article 39, item I, of the Consumer Law Code, which deals with abusive practices, it is prohibited to condition the supply of products and services to other products and services. In this way, the supplier cannot link the product to another product that the buyer does not want.
Work evolution rate
This is a fee charged by the construction company related to the cost of construction materials used during the construction. It is a fee charged only in cases of financing and its value, on average 2% of the property’s value, is diluted in the installments. This cost is based on the INCC – National Construction Cost Index – an index that analyzes the variation in the cost of material and labor used during the construction period of a housing project. In other words, in addition to the interest and fees stipulated by the bank and the developer, there is an adjustment in the value of the installments referring to the variation in the cost of building the property in question.
In the case of financing, there is a rate called Total Effective Cost (CET), which is a rate corresponding to all charges and expenses incurred in credit operations, such as insurance and services, offered by the company that grants the financing to the buyer.
What does the seller pay?
Check out everything a seller pays:
The broker responsible for brokering the sale of the property receives a commission for the deal closed. The amount of this commission may vary by state. In São Paulo, it is around 6% to 8% of the value for which the property was sold.
Income tax on capital gain
If there is a profit on the transaction, the seller must pay 15% of its capital gain (the difference between the purchase and sale value) to the IRS. In other words, if you bought a property for R$300 thousand and then sold it for R$500 thousand, you had a capital gain of R$200 thousand and must pay R$15,000 in income tax.