Buying real property in Brazil

[imrthr]

Since many of us travel to Brazil and plan to purchase property in that country, I thought that the following would be of interest to those who carry cash out of America. The quoted information is taken from the rear side of the current U.S. Customs form:

 

“The transportation of currency or monetary instruments, regardless of the amount, is legal. However, if you bring in to or take out of the United States more than $10,000.00 (U.S. or foreign equivalent, or a combination of both), you are required by law to file a report on FinCEN 105 (formerly Customs Form 4790) with U.S. Customs and Border Protection. Monetary instruments include coin, currency, travelers checks and bearer instruments such as personal or cashiers checks and stocks and bonds. If you have someone else carry the currency or monetary instruments for you, you must also file a report on FinCEN 105. Failure to file the required report or failure to report the total amount that you are carrying may lead to the seizure of all the currency or monetary instruments, and may subject you to civil penalties and/or criminal prosecution.”

 

The above sounds quite harsh. To make it even worse, there is no statute of limitation on this rule (because it is considered fraud, if violated) and if it is later discovered that the above rules were intentionally violated, most likely, criminal prosecution would occur in addition to seizure of the property.

 

Government auditors or a forensic accountant/detective can usually trace the dates and sources of large sums of cash withdrawn from American banks and brokerage houses. Therefore, one should never violate this rule.

 

If anyone plans to purchase property in Brazil, there are legal ways to get money into that country that will not subject you to civil and criminal prosecution or seizure of the property by either the U.S. or the Brazilian governments.

 

If you bring in R$10,000.00 reais or more (Brazilian money) into Brazil and do not declare it, the Brazilian government could seize the money or the property that was purchased with the funds brought into Brazil that was not declared. Fines and prosecution could occur in Brazil over this violation.

 

Property values in Brazil are rapidly increasing. It is wise to be aware of the above information. That way, you will not find yourself in a mess if you fail to declare the funds if they exceed the above-mentioned amounts.

[trilingual]

Thank you for reminding readers of these regulations. Readers who need to transfer large amounts of funds to Brazil (or other countries) need to be aware of them.

 

As a further reminder, foreigners may buy property in Brazil and Argentina with few (or no) restrictions. There is more information about this in the FAQ section and also in the forums at http://www.GayTravelBrazil.com In both countries, you need reliable local attorneys to represent you and to research the title, because there is no title insurance as we know it in the U.S. Before signing anything, or making any payments, you have to be sure that the seller really is the owner and that there are no liens or encumbrances on the property (like it being part of an estate that's in the process of being settled).

 

For anyone thinking about buying in Brazil or Argentina, DO NOT buy property thinking of it as an investment. While you're unlikely to lose your shirt, property values don't increase the same way they do in our home countries. Additionally, they sometimes lose considerable value, particularly during political/economic crises or currency crashes, and it can take a considerable amount of time to recover their value. If you have fallen in love with a place and want to buy property there, buy it as a place to live or to retire to, but not with the idea of getting rich quick. Foreigners buying in South America face a double risk: decline in the value of their property in local currency terms during economic downturns or political upheavals, and a loss if exchange rates turn unfavorable (which may accompany an economic/political crisis). Buy for the long term; under those circumstances your investment will at least maintain its value and may actually increase.

[uptownmike]

Approximately ten years ago several friends and I formed a corporatin and obtained a 99 year lease on a small place on the hill in Puerto Vallarta, Mexice. SO far no problem. Don't know about the laws in Brazil

[trilingual]

Unlike Mexican law, which prohibits foreign ownership of land in zones that include the coastlines and the borders, Brazil and Argentina permit ownership of property outright, with virtually no restrictions. (Foreigners can own land in Mexico that isn't in the coastal/border zones.) Even the 99-year leases in Mexico carry some risk, for the same reasons described above. Mexico's democracy isn't consolidated, and a change in its political situation could drive down the value of property or leases. Over the years there have been dramatic drops in the value of the peso. I'm not saying any of these things will happen in Mexico any time soon, but it's a risk that buyers need to keep in mind. 99 years is a very long time and a lot can happen during them!

 

I'm not sure what current Mexican law is, but in Argentina the U.S. dollar is legal tender and real estate prices are almost always set in dollars, rather than Argentine pesos. That helps insulate property owners from currency fluctuations. In Brazil it's against the law to use foreign currencies to express prices in real estate contracts. Prices must be expressed in Brazilian reais. Currently, prices in Brazil expressed in reais are holding steady or increasing somewhat (depending on the city/neighborhood you buy in). However, the value of the dollar has dropped, making the apartments worth more (or more expensive, if you're buying) in dollar terms. For example, an apartment worth R$180,000 was worth US$60,000 a year or so ago when the exchange rate was 3 reais to the dollar. The same apartment, with the same price in reais, is now worth US$82,500 when the dollar falls to R$2.18, which was the case a couple of weeks ago. If the dollar strengthens again, the value of the apartment will fall again. I hope this illustrates the kind of thing that can happen, and why it's unwise to buy property in Latin America as an "investment." You have to be prepared to lose big, as well as earn big. On the other hand, if you're buying a place to spend your life in, it's no big deal. Your heirs can worry about what the property is worth! You can just enjoy life in the land of your dreams! ;-)