“Real Estate CPF” could increase taxes for property owners

The creation of the so-called "CPF for properties" has raised questions about a possible tax increase for property owners. Regulated by the Federal Revenue Service in August, the Brazilian Real Estate Registry (CIB) aims to unify information on urban and rural properties into a national database, connecting notary offices, city halls, and regulatory agencies.

The measure could increase transparency in the sector and close loopholes in informal transactions, such as unregistered rental agreements. With more data available, the Federal Revenue Service will have greater control over the ownership and movement of assets. There are concerns that data integration will inevitably increase oversight and increase federal revenue.

"It will certainly lead to an increase in taxes, because, with the unification, the Federal Revenue Service will have access to all changes in ownership, purchase and sale transactions between CPFs, because even today it is possible to say that there are several taxpayers who do not correctly declare their properties or the patrimonial movement of urban and rural properties", said to CNN Humberto Aillon, tax management specialist at Fipecafi (Foundation Institute of Accounting, Actuarial and Financial Research),

In practice, property owners who own many properties for rent, or who receive higher rental income, may be impacted by additional taxes—state, municipal, and federal—in addition to income tax. Those who own few properties or earn income below a certain threshold tend not to be affected.

The CIB's operation will also depend on the full adherence of notary offices, which will have to include the code in documents and records. Some experts support the proposal as a way to organize contracts.

"The measure is nothing more than a way for the government to control its tax situation," lawyer Ana Taques, a partner in the real estate department at Siqueira Castro law firm, told CNN. "In transactions involving CPFs, many are made through so-called 'under-the-table' or private contracts, which are not formally registered — therefore, there is no tax on the rent."