Capital Gain (Ganho de Capital)

Capital gain is the positive difference between the price at which a property is sold and the acquisition cost recorded by the seller. This profit is subject to individual income tax (IRPF), calculated on the net gain after legally allowed adjustments.

• Progressive rates: 15% on gains up to R$5 million; 17.5% from R$5 million to R$10 million; 20% from R$10 million to R$30 million; and 22.5% above R$30 million (Law 13,259/2016, art. 1).
• Acquisition cost: the value declared on the seller’s most recent annual income tax return, which can be adjusted upward with documented expenses for renovation, expansion, brokerage fees paid at purchase, and land premium fees (laudêmio).
• Payment deadline: the tax payment form (DARF) must be paid by the last business day of the month following the sale, or penalties and interest apply (art. 21, Law 8,981/1995).
• Reinvestment exemption: an individual seller who reinvests the full sale proceeds into another residential property in Brazil within 180 days is exempt from income tax on the gain, provided they have not used this benefit in the last 5 years (art. 39, Law 11,196/2005).
• Value-based exemption: the gain on the sale of an individual’s only property is tax-exempt when the sale price is up to R$440,000, provided the seller has not made any other property sale in the last 5 years (art. 23, Law 9,250/1995).
• Reduction factor: properties acquired before 1988 benefit from progressive reduction factors, which can reach a full tax exemption for properties acquired before 1970 (Brazilian IRS Normative Instruction 84/2001).
• Property swaps (permuta): in swaps without a cash balancing payment (torna), no capital gain is calculated; with a balancing payment, income tax applies only to the amount of that payment.

In Florianópolis, where appreciation of 40% to 100% over ten years is common in high-end neighborhoods, capital gains tend to be substantial. Tax planning before a sale is key to properly using the available exemptions and reductions.