Conceptually, the Real Estate Transfer Tax – or also called the Inter Vivos Transmission Tax – is the tax due on the transfer of property ownership against payment, that is, in the cases where the seller receives a value from the buyer for the sale or assignment of acquisition rights of the asset.
This tax is described in the Federal Constitution, in article 156, item II and in articles 35 to 42 of the National Tax Code, and the municipality is responsible for its institution. It is worth mentioning that this tax is due and will be charged by the Municipality where the property is located, it is irrelevant that the seller and the buyer live in other locations.
Not only the property, but other configurations of transfer of real right over immovable property are also subject to the collection of ITBI, such as: the surface right, easements, use and usufruct, housing. Only the types of guarantee (pledge, mortgage and anticrese) are exempt from tax.
Another issue that causes discussion when it comes to the transmission tax is the basis of calculation. This is because the value of the sale in the document is of little importance: the tax base takes into account the venal value of the asset, established by the municipality.
Each municipality defines its own tax rate and the Constitution considers some hypotheses where the tax will not be due:
Federal Constitucion of Brazil/1988. Art. 156 § 2º – “It does not affect the transfer of assets or rights incorporated into the equity of a legal entity in the realization of capital, nor the transfer of assets or rights resulting from the merger, incorporation, spin-off or extinction of a legal entity, unless, in such cases, the activity preponderant of the acquirer is the purchase and sale of those goods or rights, lease of immovable property or commercial lease “
