When buying real estate, it is necessary to know, in addition to the price of the property that is agreed with the seller, what are the costs that will effectively be part of the negotiation. There are other expenses that arise when making the registration, issuing certificates and writing the deed, such as the payment of the Tax on the Transfer of Real Estate (ITBI).
As you can see, the acquisition of a house or apartment requires dedication and study of the conditions of the property and the market. It is necessary to conduct research and schedule face-to-face visits, pay attention to bureaucratic issues and taxes that affect transactions. The ITBI must be paid for you to be able to transfer ownership to your name.
Therefore, in this article, we will present complete content on the subject. Here, we will have a kind of FAQ with the main doubts on the topic, explaining what ITBI is, how it is calculated, when to pay and how this tax influences the value of the property. Finally, let’s talk about the importance of this for those who want to buy a property.
Do you want to know everything about ITBI and how it interferes with financing? Read on!
What is ITBI?
ITBI is a tax that must be paid whenever the transfer of ownership of real estate from one person to another occurs. The tax will always be paid by the buyer who is interested in transferring ownership of a house or apartment.
This needs to be done so that the name of the acquirer will appear as the owner of the property. Therefore, the tax will also be charged by the city on properties that are purchased at the plant. Each Municipality charges a fee that varies from one region to another.
The tax is calculated in a percentage that is between 2% and 4% on the sale value of the good or the venal value. If you want to know the fee charged in your locality, consult a booklet of Property Tax and Urban Land ( IPTU ). Then, check the venal value that is provided by the city.
Therefore, the ITBI is a tax levied by the municipalities due to real estate transactions that are carried out between citizens. Whenever an owner decides to sell his property to another person, and both transfer the property to the buyer, the tax will be charged.
Is this a mandatory tax?
The payment of the ITBI is mandatory whenever the taxable event occurs in accordance with Article 156 of the 1988 Federal Constitution and Articles 35 et seq. Of the National Tax Code. The obligation happens whenever the transmission is made between living people: seller and buyer.
The transfer of ownership of a property takes place under the terms of Article 1.245 of the Civil Code of 2002, which provides that the transfer is made by registering the translating title at the Registry of the Real Estate of the city where the house or apartment is located. If this is not done, the seller remains the owner of the property.
Thus, the transfer of real estate that is the object of a purchase and sale transaction is the fact that generates the obligation to pay ITBI. Usually, the buyer will make the payment, but the seller will be able to pay the tax if this is agreed upon between the dealers. Try to calculate the value of the tax before buying the property.
The regularization of the documents depends on the payment of the ITBI, so that the property will not be transferred to your name without paying this fee. The amount of this tax is destined for public coffers and will be administered by the authorities to maintain the municipality’s infrastructure, hire employees and pay lighting expenses, for example.
On the other hand, ITBI will not be charged by municipalities whenever the transfer of a property is not costly. This means that, if it is not a negotiation of purchase and sale, there will be no levy of the tax, which happens when donations are made or inheritances are received that generate the collection of the Tax on Transmission Cause Mortis and Donation (ITCMD).
There are discussions in the Judiciary about the practice of progressivity by the municipalities. The application of the progressive tax on the ITBI, considering the contributory capacity of the taxpayer or the real value of the property, was considered illegal for a long time. However, there are favorable decisions that allow this procedure in some situations.
When to pay ITBI?
As already mentioned, the payment of the ITBI must be made at the time of the transfer of the real estate. Therefore, do not worry, as the Registry Office or the City Hall must assist in this procedure with the issuance of a Guide for the settlement of the tax. The transfer will only take place after the fee has been paid.
In some cities, the ITBI price may be different if it is paid at the time of registration or before the deed. For this reason, inquire at the Real Estate Registry about these details. And be aware, because if this tax is not paid, your property will not be regularized and you may be left without access to public services.
However, after paying the tax, the citizen has the right to electricity, water supply, sewage, garbage collection, paving the streets, among other benefits. After closing the deal with the seller, pay the ITBI or ask the seller to make the payment if he agreed to this during the negotiation.
Contact the city hall and check the rules for your region. In certain locations, the ITBI is only paid after the registration of the deed, but in others, the payment of the tax is required after the drawing up of the document. To do proper planning, it is advisable to check this out in advance.
How is ITBI calculated?
The amount charged by ITBI varies according to the rate charged by the municipality and the size of the property. The rate is based on the calculation basis considering the transfer value or the reference value. It is not difficult to calculate the price of this tax.
Let us suppose that the sale of a property is made whose amount paid by the buyer is R $ 500 thousand. In this case, the rate of the municipality in question is 2%, for example. Just take the price of the property and multiply it by the percentage of the fee, if the purchase is direct. Watch:
ITBI = Property value X rate
ITBI = 500,000 X 2%
ITBI = R $ 10,000.00
However, if the purchase is made through financing, the calculation is done in another way. In this situation, a percentage will be applied to the financed amount until it reaches a maximum limit, which is defined by the Municipality.
Therefore, the final value of the ITBI will be the sum of two charges. Suppose that the same property in the case above was sold, but had a financing of R $ 200,000 and the percentage applied was 0.5%. In practice, the calculation will be done as follows:
ITBI = R $ 200,000 x 0.5% = R $ 1,000
ITBI = R $ 500,000 – R $ 200,000 = R $ 300,000 x 3% = 9,000
ITBI = 9,000 + 1,000
ITBI = R $ 10,000
The taxpayer can get an exemption from the ITBI if he buys a property through the Minha Casa Minha Vida program (MCMV) or finances it through the Housing Finance System ( SFH ). Under these conditions, it is possible to be totally exempt from paying this tax depending on the city and the amount.
The exemption is also possible when an individual buys a first property whose value is below the limit established by the Municipality. The taxpayer can be exempt if there is a merger between companies and the property is incorporated into the equity of one of them in exchange for shares or quotas.
What documents are required?
Several documents are required for payment of the ITBI. Among them are the copy of the property registration duly updated – which is provided by the Real Estate Registry Office -, the ITBI Guide – which can be removed at the city hall or in a virtual environment, if any – and the Tax and Collection Information Guide of ITBI (GIFRI).
The acquisition of the property also involves bureaucratic aspects that need to be known by the taxpayer. To become a home or apartment owner, it is necessary to have the Identity or the General Registry (RG), the Individual Taxpayer Registry (CPF), the birth or marriage certificate, proof of residence, and profession.
How does ITBI influence the value of the property?
The ITBI can influence the sale price of the property, as it significantly impacts the negotiation. The seller may include it in the final price of the property or leave it out of the negotiation so that it is paid by the buyer. The problem is that many buyers are unaware of the existence of this tax, which is not cheap.
Inclusion in the sale price
For this reason, talk to the seller to find out if the fee has been included in the total budget, as it may change your decision to close the deal or not. If this detail is not analyzed and combined, the municipality will charge the buyer’s ITBI and this may cause problems in their financial planning after the purchase.
Properties in the plant
The tax may also influence acquisitions of houses that have not yet been built and are sold at the plant. Check if the construction company, real estate company or developer is charging values consistent with reality, as it is not worth believing promises of very low property rates or discounts that are not registered in the contract.
ITBI’s value is not fixed and this is one of its main characteristics. Thus, the definition of the amount to be paid will depend on the sales or sales value. Most city halls usually use the highest price to calculate the tax, even though this practice is considered illegal and harms the taxpayer.
Tax rates in capitals
The main Brazilian cities charge different percentages as ITBI, but you can check the rates at the Municipal Finance Secretariat. In São Paulo, Porto Alegre, Recife and Belo Horizonte, the rate is 3%. In Rio de Janeiro and Manaus, the applied rate is 2%. In the city of Salvador, the percentage of only 1% applies.
Real estate financing
However, these rates vary depending on the type of real estate or real estate financing. Popular housing built through government programs benefits from tax rebates. Legal entities that purchase real estate for use also do not pay the ITBI, except when the acquisition is for the purpose of leasing or selling.
Exemption from payment
Municipal laws may also create situations for exemption from this tax by setting limits on amounts. To find out if you are entitled to the exemption or discount, you must consult the rules of the Municipality where the property is located. Consult the legislation and check the conditions established for the reduction in the collection of ITBI.
If you delay payment of the ITBI and miss the deadline, rest assured. No fine, penalty or penalty will be imposed. As soon as you can transfer the ownership of the acquired property, restart the process and make a new requirement to calculate the tax at the city hall. Then just get the updated ticket and pay the tax.
Can the value of the ITBI go into financing?
Yes. Some banking or financial institutions include the payment of the ITBI and the expenses of the Property Registry in the contract for the financing of the properties. However, for these costs to be included in the negotiation, they cannot exceed the limit of 5% of the financed amount or 4% of properties acquired with the FGTS.
It is very important to understand about ITBI when buying a property. Also, know that this tax can be paid in installments by the city in 12 monthly installments without interest charges. But understand that it is interesting to set aside an amount to pay the documentation and taxes after making the purchase of a property to avoid setbacks.
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