ITBI — Real Estate Transfer Tax
ITBI is a municipal tax levied on any transfer of real estate for consideration between living persons (inter vivos), such as a purchase and sale, a payment-in-kind settlement (dação em pagamento), or a property swap with a cash balance (permuta…
Explanation
ITBI is a municipal tax levied on any transfer of real estate for consideration between living persons (inter vivos), such as a purchase and sale, a payment-in-kind settlement (dação em pagamento), or a property swap with a cash balance (permuta com torna). It falls under municipal jurisdiction per Article 156, II, of the Federal Constitution, and must be paid before the public deed is executed or the financing agreement is registered.
- Taxable event: the transfer of real property ownership or of real rights over the property, including a purchase-and-sale agreement with registry effects. Brazil’s Superior Court of Justice (STJ) settled the matter (Topic 1,113, ARE 1294969, decided 04/27/2023): the taxable event occurs upon registration of the transfer at the CRI, not when the instrument is signed.
- Rate in Florianópolis: 2% on the value declared in the transaction. The municipality cannot automatically impose the property-tax (IPTU) assessment as the tax base, nor demand a minimum equal to the assessed value; any reassessment that differs from the declared value requires an administrative proceeding with due process (STJ Topic 1,113).
- Relevant exemptions: ITBI does not apply to a property transfer made to pay in capital stock of a company, unless the company’s main activity is buying, selling, or leasing real estate (Article 37 of the National Tax Code).
- ITBI vs. ITCMD: ITBI covers transfers for consideration (purchase and sale); ITCMD covers transfers free of charge (inheritance and gifts). They never stack on the same transaction.
- Total cost of purchase: ITBI is one of the main acquisition costs, alongside notary and registry fees (deed plus registration) and the real estate agent’s commission. In Florianópolis, buyers should budget 4% to 6% of the property price to cover these total costs.
In Florianópolis, payment is made via a form issued through the City Hall portal, with the due date set on the form itself. Failure to pay blocks both the execution of the deed and registration at the CRI.