Anyone who buys, donates, or inherits real estate in Brazil must pay attention to two key taxes: ITBI and ITCMD. Although similar in name, they apply to different situations and are collected by different levels of government.
ITBI (Imposto sobre Transmissão de Bens Imóveis) — or Real Estate Transfer Tax — is a municipal tax charged on onerous transfers, meaning cases where there is payment involved, such as purchase and sale, exchange with cash adjustment, or payment in kind.
The tax base is the market value of the property, and rates usually range between 2% and 3%, depending on the city.
This tax is mandatory to register the deed at the notary’s office and applies equally to Brazilians and foreigners: anyone purchasing property in Brazil, regardless of nationality, must pay ITBI in the municipality where the property is located.
ITCMD (Imposto sobre Transmissão Causa Mortis e Doação) — or Inheritance and Donation Tax — is a state tax that applies to gratuitous transfers, such as donations and inheritances.
Rates vary from 2% to 8%, depending on the state, and the tax is paid by the person receiving the asset — the donee or heir.
In summary:
- ITBI: paid by the buyer; applies to transactions involving payment; collected by the municipality.
- ITCMD: paid by the recipient; applies to donations and inheritances; collected by the state.
Both use the market value of the property as the calculation base and are essential to legally regularize ownership in Brazil.
Want to know which tax applies to your case or how to properly register a purchase or donation in Brazil — especially if you’re a foreigner?
Consult a real estate and tax law specialist to ensure full legal security throughout your transaction
