How to buy a pre construction property in Rio de Janeiro ?
31 July 2020
During a real estate project, a crucial question arises: should I buy on plan ?
In this series of 3 articles, WhereInRio helps you to see more clearly on the specificities of a purchase on plan. Today we are interested in the process of buying a pre construction property.
WHAT IS A PRE CONSTRUCTION PROPERTY PURCHASE OR "LANÇAMENTO" ?
A pre construction purchase is a new construction which, most of the time, in Rio de Janeiro, takes place after the demolition of an existing building. In Brazil, there are two main kinds of pre construction projects, by incorporation and by administration.
To summarize, in the case of a project by incorporation, the company in charge of the project also takes care of the work. In other words, the builder manages the project from A to Z - from the purchase of the land to the sale of units - deriving its income from the final sale of units.
In the case of a project by administration, a service provider hired by a real estate fund is in charge of the administration of the project. In other words, the builder is not the owner of the land.
For more details on the differences between these two types of projects, click here.
WHAT IS THE PROCEDURE FOR BUYING A NEW PROPERTY ?
Like the purchase of old property, the first step is to sign a preliminary sales agreement between the two parties. This document can be signed using an electronic signature, such as DocuSign, while guaranteeing a secure legal value. The physical presence of the parties is no longer mandatory (more information here). The contract will include the terms of payment as well as the various clauses in the event of late or non-delivery of the goods.
The notarial deed ("Escritura") will be signed before the handing over of the keys and it is at this time that the various government taxes for any acquisition of property (ITBI, RGI...) will have to be paid. This allows you to pay these costs later and free up a little more capital at the contribution.
CAN I NEGOTIATE THE PRICE OF THIS TYPE OF PROPERTY ?
Yes and no! First of all it varies a lot from one builder to another. Some projects offer a very interesting price per m² (square feet) and have little leeway, others are a little more flexible.
In all cases, what will enable you to negotiate the price of this type of property mainly includes the deposit to the purchase. The more the deposit is important, the greater the room for manoeuvre will be...
In any case, the builders communicate the "price table" of the project in order to know the "minimum" conditions of purchase (generally this is between 10 and 15% of contribution to the purchase).
WHAT ADDITIONAL COSTS SHOULD I EXPECT WHEN I BUY ?
There are two major costs when purchasing any property. The most important is the ITBI - Impostos de Transmissão de Bens Imóveis (Property Transfer Tax). This is a tax that has to be paid for any transmission of a property. In Rio de Janeiro the ITBI is 3% of the market value of the property in the case of an old property. For the purchase of a pre construction property, this will depend on the type of project and this percentage will be calculated either from the market value of the final property or from the value of the part of the land used for the chosen property (in this case, the cost is lower!).
In the case of a pre construction apartment, it is true that the property will not have been inhabited before you. However, there was already a building before! There is therefore a transmission of property since the land was bought by the builder or the real estate fund.
Then there are legal costs (lawyer, notary) for writing the deed and registering the property with the RGI - Registro Geral de Imóveis - this is between R$ 5,000 and R$ 10,000 depending on the property.
HOW CAN I FIND OUT THE AMOUNT OF THE CO-OWNERSHIP CHARGES AND THE PROPERTY TAX (IPTU)?
As far as condominium charges are concerned, most builders provide an estimate, some of them per m² (between R$ 10 and R$ 16 / m2 of the useful surface of the apartment), others opt for identical charges for all the units for sale.
For the property tax (IPTU) it is complicated to define an exact value since this is decided by the town hall once the property is ready to live-in and according to an average per m² per district, and only when the property is registered, just before the handing over of the keys. It is therefore necessary to make an estimate based on properties that are geographically close to the apartment you wish to buy. One of our advisers will be able to help you with this calculation.
WhereInRio offers you a quality personalized accompaniment for your project thanks to more than 14 years of experience on the Brazilian real estate market. Our international and multilingual team will advise you and direct you to qualified and trusted professionals in order to meet your expectations and acquire the property of your dreams (bilingual lawyers, architects, etc.). Whether it is a personal purchase or an investment to rent, we offer all the necessary services for your project (research and purchase of a property, assessment of your rental potential, property management).
More information on this topic :
> Why invest in pre-construction sales in Rio de Janeiro ?
> By incorporation or by administration, what's the difference ?
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> How to get a Golden Visa in Brazil by investing in real estate ?
> 4 Good reasons to invest in real estate in Rio de Janeiro
> Covid 19 & Buying real instate in Rio de Janeiro
The best pre construction purchase in Zona Sul, Rio de Janeiro
> Ipanema :
Studio : Bossa 107
1 bedroom : Pura
2 bedrooms : Two suites
3 or 4 bedrooms : Nove
> Leblon :
> Copacabana :
Atlântico Bait : more information is coming in a few days, the last project in Avenida Atlantica !
> Jardim Botânico :
> Lagoa :
For more questions and infos, contact WhereInRio :
Tel/Whatsapp: +55 (21) 96946 -0929