property tax

Every year, Brazilians need to pay a wide variety of taxes, but many people are not sure how they are calculated. One of these charges is the Tax on Land and Urban Property – the famous IPTU. Understand how to calculate the property tax of your property and much more!

Despite being charged to most urban property owners, not everyone researches how property tax is calculated. However, with this knowledge, it is even possible to identify some undue value.

  • Summary

See the example below of the calculation of IPTU of the Municipality of São Paulo for properties used exclusively or predominantly as a residence:

Venal value ranges Multiply by Subtract
Up to R $ 150,000.00 0.007 R $ 0.00
From R $ 150,001.00 to R $ 300,000.00 0.009 R $ 300.00
From R $ 300,001.00 to R $ 600,000.00 0.011 R $ 900.00
From R $ 600,001.00 to R $ 1,200,000.00 0.013 R $ 2,100.00
Above R $ 1,200,000.00 0.015 R $ 4,500.00

To learn more about how this important municipal charge is calculated, read on!

What is IPTU?

For municipalities, IPTU is a charge that is levied annually from taxpayers who own urban property. Its main objective is to fund the municipal administration, and can only be charged if the property is assisted by two of these public services:

  • paving;
  • water supply;
  • channeling rainwater;
  • sanitary sewer system;
  • public lighting network;
  • health post or primary school (proximity of at least 3 km).

How to calculate IPTU?

Each municipality has its own legislation that regulates the charging of the charge. Although there are differences between the values, it is common for city halls to use similar methods to calculate IPTU.

In practically all Brazilian cities, the basis for calculating the tax is the venal value of the property – which is the amount paid in cash at the time the asset was sold. In addition to this factor, each municipal legislation has other criteria that influence the charge, such as:

  • property type;
  • land size;
  •  property location ;
  • building area;
  • finish type etc.

It is common for city halls to have different rates according to the function of the use of the property. Thus, if the property is residential, the IPTU is charged in a different way from commercial real estate. The same is true for lots that have not yet been built.

Another aspect that influences the tax calculation is the construction time. Older properties are depreciated due to the action of time. So it is normal for the tax to become cheaper over the years.

How is the payment done?

As each city charges the IPTU in a different way, normally, the payment slip arrives at the property address in the first quarter. However, some city halls send the booklet in the previous year.

So that there is no default, it is common for municipalities to pay the tax in installments and give discounts to those who keep their bills up to date. However, if the taxpayer delays some benefit, a fine is charged, in addition to the property’s registration in the municipal debt.

And in the case of a lease agreement?

One of the main doubts that afflict the parties to a lease agreement is about who has responsibility for the payment of IPTU. According to Brazilian law, the discharge of any tax is the obligation of the individual who practices the so-called taxable event, that is, the owner.

However, the Tenancy Law allows the landlord to transfer to the tenant the commitment to pay this tax. For this to happen, it is necessary that the term is agreed between the parties and that it appears clearly in the lease.

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