FAQ – Buying in Brazil?

Who is Kapital International?

We are a Scottish based development company. Kapital International is part of the Kapital Corporation, which is a business enterprise modeled on the Japanese principles of a Keiretsu i.e. a set of companies with interlocking business relationships and shareholdings.
Being a member of the Corporation, we benefit from an international network of affiliated companies. The company provides International Real Estate services to our partner companies. Our sister company in Brazil is Kapital Nordeste Empreendimentos Imobiliarios Ltd who undertake real estate developments in the North East states of Ceará.

What does Kapital International do?

We are constantly looking for good land investment opportunities worldwide although our main focus at the moment is in Brazil. We buy up large areas of prime land with the aim of turning it in to a high quality residential development. Which we can then offer to our clients fully serviced plots and in some cases a fully constructed villa or apartment at a competitive price, with good growth potential.
Our services include:

  • Land Acquisition
  • Land Development
  • Project Design Production
  • Project Management
  • Market Research
  • Creative Project Marketing Package
  • Key Player Networking
  • Due Diligence Report
  • Project Cash-Flow Analysis Report
  • Financial Transparence
  • Complete Projects

Is Kapital International the developer?

Yes, it is actually our sister company Kapital Nordeste Empreendimentos Imobiliarios Ltd that is the registered land owner, but we offers Real Estate Agency Services to our Kapital group member companies. Coupled with our membership of the Association of International Property Professionals, means our clients can buy with total confidence.

I am thinking of investing in property abroad, so why should I consider buying overseas properties in Brazil?

Once you have visited and know Brazil well, this question may not be foremost in your mind. Having said this, putting your feelings about the country and culture itself aside for one moment, Brazil has seen progressive economical growth, in particular over the past 5 years, and people who decided to make investments in Brazil a few years ago are now seeing significant returns on their investment in the form of capital gain and ongoing rental yields. As an example, Brazil has seen stable increases on property prices of up to 25% per annum in some areas for a sustained period.

The all year round good climate in Brazil's Northeast is also worth taking into account because you can visit your property at any time during the year and experience sunny weather meaning that property rental yields in Brazil are potentially high as a consequence.

I am considering investing in Brazilian real estate, but is it the best overseas investment for me?

Brazil is amongst many emerging markets that are delivering similar returns for the overseas property investor, so it can be regarded as one of the best opportunities for worldwide property investment at present, not only from the viewpoint of capital gain on the property itself, but also the huge potential with ongoing property rentals.

How an offer is generally made when I want to buy into the Brazilian property market?

All of Kapital International properties are available as fixed price and you simply need to contact us and advise of your preferred property. At this stage Kapital International will be able to recommend a lawyer to you to formalise your final price agreement and to oversee purchase proceedings, including reservation fee payments. After that a contract will be issued and our lawyer will be ensuring the complete process. Contact us on +44 1383 417 830.

Is the currency a risk in Brazil?

Reais = Brazilian money. Currency is always a risk when buying overseas property in any market. Brazil is a growing economy; its inflation is coming under control and its interest rates dropping. The Real’s performance against the pound in recent years has begun to stabilize. Kapital International properties and lands are fixed in Reais so subject to rates fluctuation.

Will the property be freehold?

Investing in real estate in Brazil is as safe and easy as in any modern country like the USA or Europe. There are no restrictions for foreigners buying property and ownership is solid and secure; you own 100% of land and property. All property sales are titled and foreign investors receive the same investment and possession rights as Brazilians.

What's the next step?

For a foreign investor to buy real estate in Brazil the only requirement is that they have a CPF number - which is a tax number. The number can be obtained within a couple of weeks (by a local Brazilian lawyer) and is a legal requirement, as it enables the investor to be uniquely identified for taxation and title purposes. The lawyer will assist you in obtaining this and the whole process can be done without visiting the country, providing that power of attorney is given to the lawyer. The Brazilian government has sophisticated and well developed real estate laws which protect the property owner whether they are a foreign or local owner and legal assistance should be sought for the entire purchase process to ensure the investor's rights are properly looked after.
The title transfer can take a couple of weeks to be recorded and after that the land Registration takes place. The whole process can varies from time to time, according to the work load of the local organs.

Do I need a lawyer?

Kapital International has recommended Brazilian Lawyers based in Brazil that will look after all documents and will ensure the legacy and accuracy of the whole process.

How do I reserve a property?

Contacting Kapital International on info@kapitalinternational.co.uk or call us on: +44 1383 417 830

What purchasing costs can I expect?

You can expect to pay approx. 6% in purchasing expenses as follows:

  • Real Estate Transfer Tax: 2% of total value of the property
  • Registration Fee: 4-5% of total value of the property
  • Legal fees: BRL 2,200 up to BRL 200,000.00 investment.
  • Possibly money transfer fees from bank to bank.

How does the property registration system work in Brazil?

The property registry system in Brazil is well developed and safe. The registration itself is carried out by private notary publics. All property is registered at one single registry, which records details of the entire commercial history and the physical identification of each property. It is obviously very important to ensure that any property you buy in Brazil has a clear title. Access to registry information is available to the public and includes relevant details on ownership, mortgages and other pending debts. In the larger cities, these services may be automated.

What running cost can I expect?

You can expect to pay approx. 1% of total value of the property per year as a kind of council tax.

What about Tax on profits?

Income earned from property in Brazil is taxable whether the investor is resident or non-resident in Brazil. Non-residents are usually subject to a capital gains tax rate of 15% on any gains they make on properties in Brazil, but both these taxation facts are subject to alteration depending on any double taxation treaties in place between Brazil and the investor's country of residence.

Can I get a mortgage on a Brazilian property?

Yes, but mortgages are not available for land purchases. To obtain a mortgage you will need a visa for that and our Brazilian Lawyers will be able to guide you through process.

Is Brazil a safe country?

One of the urban myths that surround Brazil is the question of safety and security. In fact, Brazil is no more dangerous than the main cities in Europe or North America. Being sensible and streetwise is the key to trouble free and enjoyable stay anywhere in the world, including Brazil.
Brazilians are further known to be very friendly people and it is extremely rare to see aggressive behavior from Brazilians. In fact, what you will see more than anywhere else in the world is a lot of smiling and dancing!

What's the climate like?

Kapital International operates in the Northeast of Brazil not too far from the equator, the climate is tropical. Most of the year, the average daytime temperatures are around 27º C. The sea water temperature is equally warm all year. Further, Brazil does not suffer from any tropical storms, hurricanes or earthquakes.

What can I expect to pay for food & drinks?

Generally prices are around 1/2 to 1/3 of UK prices.

How are the roads?

The roads in Brazil are generally excellent, however they get a bit rough in places, and distances can be vast in a country the size of Brazil.

Can I invest in Brazil and buy property with my friends or fellow investors?

If you are thinking of investing in Brazilian property with your friends or business colleagues as just examples, then this is no problem at all, as up to 10 individual names can appear on a title deed following a property purchase.

As a foreign investor, can I open a bank account in Brazil once I have bought my property?

Opening a bank account in Brazil is an option only if you have a permanent visa and buying a property doesn't automatically entitle you to have a permanent visa, although this of course does not stop you from buying your property in Brazil as funds are sent direct from your bank account overseas to the sellers bank account in Brazil using the usual route for international bank-to-bank transfers (SWIFT or CHAPS are examples of organisations that will be involved here).

If you have a permanent visa then you have the opportunity to open a current account (conta corrente) or deposit/savings account (conta de poupança). Current accounts give all the usual benefits including cheque books and cash withdrawal cards which you use at ATM's or for point of sale transactions in Brazil. Deposit or savings accounts in Brazil offer extremely favorable interest rates for your investment when comparing to other countries around the world.

Both 'conta corrente' and 'conta de poupança' are available to individuals (pessoas fisicas) with permanent visas or for directors of a registered company in Brazil (pessoas juridicas).

If a Brazilian bank offers you the facility to open a bank account without a permanent visa, then please be warned, as this does not conform to current Brazilian banking laws.

Do I need a tourist visa if I decide to visit Brazil?

Most travelers visiting Brazil will receive a 90 day tourist visa on entering the country, although please note that USA citizens do need to apply before travelling to Brazil. You can apply for an additional 90 days on your tourist visa whilst in Brazil via the Federal Police station if you so wish.

USA citizens

You will need to apply for your own visa via the Brazilian embassy in the US, their web site is www.brasilemb.org and the cost is US $100 (2008 prices). By post it can take a few weeks but if you visit in person (probably not practical to most as the embassy will be in Washington) they can do it same day. It is valid for 5 years and you need to have at least 6 weeks left on your passport when you apply.

What is the position of inheritance tax in Brazil?

The Tax on Donation and Inheritance is a state tax levied on the transfer of real estate upon death or through a donation. Rates are progressive and vary from state to state according to the value of the property. However, the maximum tax rate is 8%.

What are the costs of the furniture packs?

Furniture packs will not be included in the build price per meter. However, there will be a choice of furniture packs available.