Tax implications for selling up in Brazil and moving back to the UK

Hi Riodejaneiro23,

If you sell your property, you will have to declare the capital gains on your DIRPF (Declaração de Impostos de Renda Pessoa Física). That will be compared to the value of the purchase you declared to the Receita Federal.

When leaving Brazil you must declare ANY amount of currency equal to or over R$10 thousand regardless of the national currency that may be. So that would mean US$2506, 85 / 2304 Euros / £1811. Over that you will be required to declare the currency, its source and justify its destination.

Regardless of the amount, it is highly dangerous to carry large sums of currency when you travel. Don't forget that Customs agents are going to count it out very publicly for all to see. That would put you at risk of being robbed.

Also a new Supreme Court regarding bank information means that your Brazilian bank must report any transactions of R$2000 or more in any month, directly to the Receita Federal. You could be required to explain that transaction at any time.

Personally, my advice (if you can afford to do so) is to keep the property, rent it out with the tenant depositing directly to your Brazilian bank account. You can use your debit card to make daily ATM withdrawals to your daily limit Mon. - Friday and once on the weekend. That would likely not exceed the R$2000 reporting limit so would keep you off the Receita Federal's radar too.

Of course you could always ask a Brazilian politician for tips, they seem to be able to move millions of dollars to offshore accounts without the slightest problem. 

Cheers,
James
expat.com Experts Team

Just hot off the wire today...

The capital gains tax on property has just been increased from the old amount of 15% to 22.5% of the total value of purchase or sale.

So that means if you purchased a home for R$100 thousand, and sold it for R$200 thousand you're going to pay 22.5% on R$100 thousand, or R$22,500. That's sure a big hit to the wallet and doesn't even take into account realtor's commission and/or any other fees you will have to pay.

Cheers,
James
expat.com Experts Team

Dear James-
Thanks very much for the  advice although I'm not sure how with the rental option  I would be able to use my Brazilian bank card to get the money out if I'm back in the UK.. ?

I also thought you didn't have to pay the capital gains tax if you bought another place within 6 months.. Is that no longer true?

Actually we do have several Brazilian politicians living in my building but I'm not sure it's terribly wise to ask them about their Swiss bank accounts....

Thanks anyway- it's got me started!
Cheers
Alison

Just as you can withdraw cash from your UK bank account through an ATM here in Brazil, you can withdraw cash from a Brazilian account in the UK. You are however subject to a daily withdrawal limit.

There is also another option. You could probably arrange for your Brazilian bank to make regular transfers of a specific amount to your UK account. That would however be subject to the bank fees for transfers and to the IOF (Imposto sober operações financeiras) and if the CPMF is reintroduced that would also apply.

Regarding the capital gains tax, you're correct if you're purchasing another home within 6 months then you wouldn't pay the tax. The catch is that would need to be a home in Brazil, according to my understanding of the legislation.

Cheers,
James
expat.com Experts Team

Some answers:
1. If you are planing to keep your CPF (Cadastro de Pessoas Físicas), you can declare in Brazil your brazilian income, without tax payment until R$ 25,661.70. (2015). And, obviously, you can use or transfer as you want your money.

2. If you are going to transfer all your tax data to other country, you need to check if this country has income tax compensation agreement with Brazil.

3. About you property, analyzing the situation as a brazilian tax contributor, you can claim exemption of it if:

a. If you did not sell another property in the previous 5 years AND the total value of the sale is less than R$ 440,000

b. Your property was already yours before 1969

c. Your property was sold for less than 35,000

d. You buy another property within 180 days at or above the sold property value.

Regards