Brazil’s 2025 Tax Reform: What Real Estate Professionals Need to Know

The tax reform brings significant changes for individuals who own multiple properties — for rental, resale, development, or as a long-term investment.

With the enactment of LC 214/2025, which established the IBS/CBS and is reshaping the Brazilian tax landscape, you need to understand the new tax risks and liabilities that are emerging.

The era of “informal” management of real estate assets by individuals is coming to an end. What once seemed like a convenience can turn into a significant tax liability, requiring an urgent review of how you manage your properties under your CPF (Brazilian individual taxpayer registration number).

1. The end of the “tax invisibility” of real estate owned by individuals.
Until recently, many property owners operated in an area with lower tax visibility. The Internal Revenue Service already had mechanisms in place such as:

DOI (Declaration of Real Estate Transactions) – registry offices report all property transfers, including values ​​and parties involved;
Cross-referencing financial data – bank transactions, income tax returns, among others.
In practice, however, oversight of real estate assets belonging to individuals was more reactive, meaning it depended on complaints or specific audits.

Deeds drawn up late, undeclared rents, and transactions with undervalued amounts, although illegal, often went unnoticed for some time.

Tax reform and technological advancements, however, promise to change this scenario. Managing real estate as an individual tends to become riskier, especially when you accumulate assets and income without proper planning.

2. CIB and SINTER: the “CPF of the property” and the new tax intelligence
The government is investing heavily in systems that expand its oversight capacity. Two tools are central to this change: CIB and SINTER.

2.1. CIB – the “CPF of the property”
The Brazilian Property Registry (CIB) will function as a unique identifier for each urban or rural property. It:

It unifies data from various databases;
assigns a unique number to each real estate unit;
Creates a standardized national inventory of properties and property owners.
Law 214/2025 establishes deadlines of 12 months for the federal public administration and 24 months for states and municipalities to integrate their systems into the CIB. The result will be a robust and constantly updated database, with a clear view of who owns what.

2.2. SINTER – the “real estate intelligence hub”
SINTER (National System for Territorial Information Management) integrates and cross-references data from:

real estate registry offices;
city ​​halls;
Water, electricity, gas, and internet service providers;
financial institutions (via COAF and other reports);
own Federal Revenue Service.
The CIB will be integrated into SINTER, forming an unprecedented network of information. Through intensive use of data cross-referencing (and possibly artificial intelligence), the system identifies patterns and anomalies, facilitating the detection of large-scale tax irregularities.

3. The practical impact for those who do not declare their real estate income
With the interconnection between CIB and SINTER, it will be much simpler for the tax authorities:

Identify properties and their respective owners, including irregular properties or those with outdated registration;
to know who occupies the property and under what legal title;
detect undeclared rental income (for example, by comparing energy consumption with income statements).
Auditing is shifting from reactive to proactive, based on massive cross-referencing of data and presumptions of irregularity.

In short: the tax authorities will know who you are, where you live, what companies you own, and, with CIB and SINTER, all your real estate. If your income tax return doesn’t match this information (for example, a property listed as your residence but in someone else’s name, with no rental income declared), a red flag should be raised.

This also applies to construction and renovation projects: SINTER can cross-reference municipal building permits with the National Registry of Works (CNO) to verify the collection of INSS (Brazilian Social Security) contributions on labor, reducing opportunities for tax evasion and increasing the risk of fines.

In this context, asset management intelligence and tax efficiency cease to be optional: they become a necessity to protect assets and ensure tax compliance.

4. IBS and CBS: when individuals begin to be treated as “professionals” in the real estate market
The tax reform creates the IBS (Tax on Goods and Services) and the CBS (Contribution on Goods and Services), a dual VAT model that replaces taxes such as PIS, COFINS, ICMS, and ISS.

For the first time, individuals will be subject to these taxes in certain real estate activities that the tax authorities now consider professional or speculative.

An individual becomes a taxpayer for IBS and CBS in the following transactions:

location;
onerous transfer;
leasing of real estate,
if, in the previous calendar year, cumulatively:

Total revenue from these operations exceeds R$ 240,000.00 (an average of R$ 20,000.00 per month); and
If there are more than 3 (three) distinct properties involved.
I.e:

Revenue > R$ 240,000.00 with only 1 or 2 properties → no IBS/CBS;
More than 3 properties, but annual revenue ≤ R$ 240,000.00 → there is also no IBS/CBS.
The goal is to separate the occasional investor from the professional lessor operating as an individual. This “professional” lessor will then face a much higher tax burden: in addition to Income Tax (Carnê-Leão/annual adjustment), they will also be subject to IBS/CBS.

4.1. Specific rule for rentals above R$ 288,000.00
Regarding rental income, if the annual revenue exceeds R$ 288,000.00, IBS and CBS taxes apply to the amount exceeding this limit, regardless of the number of properties, starting from the moment the limit is surpassed. Therefore, we are not talking about tax paid in the fiscal year following the calendar year.

4.2. What will be the effective tax burden on real estate for individuals?
In addition to Income Tax, whose rules are not affected and will continue to be charged normally, the IBS/CBS will also apply in the above cases, although the rate is not fully defined, but is estimated at approximately 28%.

In the case of rentals, there will be a 70% tax rate reduction, bringing it down to approximately 8.4%. It will also be important to assess any potential reduction in the tax base.

5. Transitional rule: reduced tax rate until 12/31/2028 (and deadline for registering contracts)
Brazilian Law 214/2025 establishes a transitional rule for leases, rentals, and onerous assignments. Taxpayers can choose to pay IBS and CBS at a rate of 3.65% (currently corresponding to PIS/COFINS), instead of a rate that is still unknown but will most likely be higher. The cumulative requirements are:

Non-residential lease agreements: reduced rate for the entire contract term;
Residential lease agreements: reduced rate until 12/31/2028.
For this option, you need:

fixed-term contract;
Signature executed before January 2025, proven by notarized signature or dated electronic signature;
Registration of the contract in the Real Estate Registry or in the Registry of Deeds and Documents by 12/31/2025.
If you are in this situation, you need to urgently assess whether it is worthwhile to take advantage of the reduced rate and regularize your contracts within the deadlines.

6. Purchase and sale of real estate: when IBS/CBS taxes apply to individuals
Individuals may also be subject to IBS and CBS taxes when buying, selling, or transferring rights to real estate, when:

sells more than 3 (three) different properties in the previous calendar year; or
sells more than 1 (one) property built by herself in the last 5 years.
In this case, anyone who makes multiple sales or works with construction for resale, even as an individual, is treated as an agent with a more commercial/speculative profile.

6.1. Time of occurrence
Another sensitive point: the IBS/CBS will now apply at the time of the promise of purchase and sale, and not only at the time of the final deed.

This directly affects those who work with:

auctions;
incorporations;
House flipping in the individual’s name.
Because the tax may be due before the sale is finalized and the full price is received, requiring much more rigorous cash flow planning.

6.2. When does the contribution begin?
If, in the same calendar year, you sell 4 properties and meet the legal requirements, the first 3 transactions are exempt from taxation, and the fourth transaction is subject to IBS/CBS. The calculation is annual and progressive.

7. Important exceptions: when the sale does not generate IBS/CBS
The legislation includes relevant exceptions, which seek to avoid taxation of non-speculative transactions:

Ownership exceeding 5 years: properties you have owned for more than five years can be sold without IBS/CBS, even if you own more than three properties. The rationale is to exempt long-term capital assets from taxation.
Real estate received through inheritance or donation: the period of possession by the former owner (donor/deceased) is considered. The heir is not automatically treated as a “speculator” when selling the property.
Marriage under the community property regime: the period of possession by the spouse who acquired the property before the marriage is counted, preserving the tax benefit for the couple.
The IBS/CBS tax rate has not yet been precisely defined, but it is expected to be around 28%. For residential properties, a 50% reduction in these rates is expected, making the tax burden lighter.

Furthermore, in the case of rental, onerous transfer, or lease of residential property, the taxpayer may deduct R$ 600.00 per property from the tax base of IBS and CBS, adjusted by the IPCA. This deduction serves as a relief for small landlords.

8. Why does a real estate holding company become strategic in this new scenario?
Given so many changes, owners of multiple properties need robust asset and tax planning. Keeping all assets in personal ownership, without proper structuring, tends to:

increase the tax burden;
increase the risk of fines and penalties;
to hinder succession.
A real estate holding company emerges as a legal and strategic solution for those who want to protect and optimize their assets. Among the main benefits are:

Tax optimization: in many situations, taxing real estate activities as a legal entity is more efficient than taxing an individual with a high volume of transactions.
Asset protection: separates the personal assets of the partners from the company’s assets, reducing risks in case of debts or personal litigation.
Estate planning: facilitates the transfer of assets, reduces probate costs and conflicts among heirs, while preserving control of the estate.
Professional management: contracts, cash flow, tax obligations, and documentation are managed in a centralized and organized manner.
Access to credit and opportunities: companies often have access to financing lines and better credit conditions to invest in new properties.
Image and credibility in the market: operating as a legal entity conveys professionalism and solidity to tenants, buyers, and partners.
There are several ways to structure a holding company focused on real estate assets. The choice depends on the volume of properties, income profile, family and succession goals. Although implementation generates an immediate cost, in practice this investment is usually offset by tax gains and asset protection over time.

9. Asset intelligence in practice: time to review your asset structure
The tax reform ushers in an era of transparency and fiscal rigor. For those who own multiple properties, remaining registered as individuals can mean:

increased tax burden;
greater risk of fines;
more uncertainty in estate planning.
The current situation calls for a personalized analysis of your assets, income sources (especially rental income), and long-term plans.

Professionals specializing in real estate and tax law can:

Map your properties;
Identify tax risks for individuals;
To design the best structural solution, often through a real estate holding company.
Thus, you transform a scenario of increased oversight into an opportunity for security, tax efficiency, and preservation of family assets.

 Click here to access the simulator and discover, in a simple and objective way, if a holding company is the right path for you.

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