The opinion of the rapporteur, senator Eduardo Braga (MDB-AM), increased the discount on Value Added Tax (VAT) for rental operations to 70%. The text approved by the Chamber provided for a 60% discount
The senator’s opinion Eduardo Braga (MDB-AM) for the regulation of tax reform in the Senate, presented this Monday (9), came with several changes in the real estate sector, which should benefit from reduced taxes and exemption bands.
Braga’s text increased the discount on Value Added Tax (VAT) for rental operations to 70%. The text approved by the Chamber provided for a 60% discount.
Individuals who rent properties will be exempt from VAT, as long as they earn less than R$240,000 per year from rentals and have less than three properties rented. From these limits, the lessor will have to include consumption tax in the rental calculation, even if he is an individual.
Anyone who has sold more than three properties in the previous year or sold a property built by the seller himself in the five years prior to the sale will pay VAT.
Social Reducer
Braga also expanded the social reducer, which reduces the value of the property when calculating the tax. According to the opinion, the reduction for rentals in the base value of VAT will correspond to R$600, compared to a reduction of R$400 approved by the Chamber of Deputies in August.
For the sale of properties, there were no changes in relation to the Chamber’s text. The reduction will remain at R$100 thousand for buildings and R$30 thousand for lots.
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Real Estate
In relation to real estate, the senator increased the discount from 40% to 50% in relation to the standard VAT rate for some operations. The discount increased for civil construction services and property management and intermediation operations.
The opinion also created a transition period for transactions with real estate. According to the text, the transition rules will help reduce the impact on the tax burden on projects already contracted, which take a long time to mature, in addition to bringing more legal certainty to the real estate sector.
