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ITBI – Check 05 frequently asked questions about this tax and don’t forget to put it in the planning!

ITBI – Check 05 frequently asked questions about this tax and don’t forget to put it in the planning!

The planning of your own home goes through several stages. This is a very common theme on our blog. We even have other materials here. One of the most important steps for planning is the financial one.

Of course, we keep in mind that each family has its own reality. Thus, financial plans are diverse. Some prefer to finance the property over long periods. Others finance the property in shorter periods. And others even buy real estate on sight.

However, everyone who wants to own their own property must face an issue that will never change: taxes! They are often forgotten about financial planning and it is only when it is time to pay that they are reminded.

By the way, check out this post here, in which we talk about post-purchase expenses! This is also another subject that is often overlooked.

With that in mind, we made this post. Not only to help you remember to put taxes on your accounts. As well as to deal with one, in particular, that is almost always forgotten by buyers: the ITBI.

Ready to find out what it is? What do you eat? And how do they reproduce? Read on and let’s go to the 05 most frequently asked questions about this tax!

#1 – What is ITBI?

ITBI is the acronym for – Tax on Transmission of Real Estate – and is a tax put into practice by the municipality in which the property is located. So yes, it came straight from the city hall jurisdiction of the place where you are looking for the property of your dreams.

It was instituted as a tax for when a real estate transfer occurs.  In other words, whenever there is a purchase and sale process, ITBI comes into play. However, stay tuned to the Federal Constitution!

This tax, according to the constitution, is levied whenever there is a transfer of property involving living people! When there is succession by death or donation, another type of tax is charged. Called ITCMD, acronym for – Transmission Tax “Cause Mortis” and Donation – so stay tuned!

#2 – Why is your payment required?

The answer to this question is quite simple. It is necessary to pay the ITBI, as it is through this document that the buyer guarantees ownership of the property. Very important, isn’t it?

That’s right, the payment of the Tax on Transmission of Real Estate, as the name says, is what guarantees the transfer or transfer of ownership of a real estate property. Thus enabling it to be purchased for the name of the buyer in question.

Thus, this tax is very important to ensure the regularization of the property in public records. It is through it that, for example, some basic rights are guaranteed. As street paving services, garbage collection, installation and supply of water and electricity, among many others.

#3 – When is the best time to pay ITBI?

As mentioned before, it is a tax that acts directly on the transfer from one owner to another of immovable property. So, you must be thinking: “so when I transfer at the registry office, I have to pay, right?”

It doesn’t always work that way. As ITBI is a municipal tax, each municipality can set different rules for when to pay ITBI. Some municipality’s state that the ITBI must be paid after the public deed is drawn up.

Other municipalities already establish that the payment must be made after the registration of the deed. Thus, we recommend that you always pay attention to the rules of your municipality and look for what works best in your case in public agencies.

To make life easier for those who live in São Paulo, where AoCubo is headquartered, we have left a link to the city hall’s website, where this information can be found.

#4 – Whose responsibility is it to pay this tax?

As the Federal Legislation does not make it clear who must pay this tax, it is common for this issue to fall under a municipal law. Therefore, who will say who is responsible for paying the ITBI is the municipality of the municipality where the transfer is taking place.

In most cases, however, it is established that the buyer is responsible for paying the ITBI. However, this is just a common practice in the real estate market, and not what the law of each municipality says. Therefore, search for information in your city!

AoCubo TipNothing prevents both parties to the negotiation from making an agreement for the seller and buyer to partially assume this commitment. The ideal is always to avoid conflicts and problems. Making everything very clear and simple, in an amicable agreement.

#5 – How to calculate the ITBI?

ITBI does not have a fixed billing amount. This is because its calculation was based on the real (sale) value of the property, shown in the IPTU payment form. However, the calculation was also made through the price registered in the purchase and sale agreement, in addition to the deed.

Did you find it confusing? Well, the Superior Court of Justice too! Thus, to avoid undue charges, it was understood that the ITBI should be calculated on the property’s purchase price. So that the value of the tax was consistent with the real value of the asset.

To determine the value, simply multiply the tax rate with the property’s value. Since the result of the account is the amount to be paid in tax.

AoCubo ReminderMany city halls still use the market value of the property, when this is higher than the negotiation amount. This is an illegal practice! And if the contributor feels harmed, he can file an appeal for the ITBI to be recalculated. We advise that if this happens, seek expert legal advice to find out what resources are available in your favor.

Conclusion

Pay close attention to ITBI. It is a municipal tax and is often levied according to the rules of the municipality in question. So, look for information on the government agencies responsible for this tax.

It is a tax placed on the transfer of real estate, so be very careful with its regulations. Because without it you won’t own the property you bought! Also, put it in your calculations and set aside money according to a previous, basic account, so that your budget doesn’t go out of line.