Published in 11/02/2019, Valor Econômico
Is it worth transferring the properties of the individual to a legal entity? adopted in the marriage in the succession of the spouses
Brazilians are strongly attracted to real estate. Many accumulate them, bought or inherited, with little clarity regarding the costs and taxes necessary to maintain these assets.
José has just inherited some real estate. Some will remain leased, and he plans to sell others. José heard that the best thing to do is to transfer the properties to a legal entity, as the taxation is lower. Hum, is it that simple?
Before deciding, it is necessary to compare the taxation of rental and capital gains for individuals and companies, in addition to calculating the costs of opening, maintenance and eventually the closure of the legal entity.
For individuals, rental income is taxed monthly by the progressive table (0 to 27.5%) and added to other taxable income in the Income Tax return. The final tax will depend on taxable income and deductible expenses, which will lead to the choice of the declaration model to be used.
In the case of José, who has other taxable income (monthly salary of R$ 15,000) and uses the simplified declaration / standard deduction (he has few deductible expenses), the income tax will be higher than 20%.
If you transfer the properties to a legal entity whose activity is the purchase, sale and rental of own properties, it will pay taxes according to the chosen taxation regime.
As the “Simples Nacional” regime cannot be adopted in this case, in general the most interesting regime is the presumed profit (“lucro presumido”), which will tax rental income from 11% to 14%. Thus, if José transfers the properties to a legal entity, he will pay less income tax. But that’s just a piece of the history.
If and when José sells the properties, the individual will pay income tax of 15% on the profit, if less than R$ 5 million. Even in this condition, he can benefit from exemptions — for example, he will not pay income tax on the sale of a residential property if he buys another residential property within 180 days; he will be able to apply the reduction percentage on the properties he has owned for a longer time; at the limit, the profit will be exempt from income tax if the properties were purchased before 1969.
When a legal entity sells a property, taxation depends on its activity and the accounting classification of the property. It demands a deeper analysis, as both in the individual and in the legal entity there are particularities and variables that result in more or less advantageous taxation, depending on each situation.
Still speaking of tax, the transfer of the property of the individual to the company, whose activity is the purchase, sale, rent and leasing of its own properties is subjected to ITBI, the municipal tax on onerous transfers of real estate (in São Paulo, the rate is 3%).
In addition to tax issues, other costs must be considered, such as opening the company, maintenance and/or closing, registration with the commercial board, accounting, legal advice, etc.
Attorney Luciana Pantaroto recalls that, in addition to considering all costs, opening a company can have broader financial impacts and requires special attention to corporate and succession issues. Married people or those living in cohabitation must also check the implications arising from the marriage property regime.
Initially, José was determined to open a legal entity to receive the properties inherited motivated by the lower taxation on rents. However, after understanding all the complexity and costs involved, he decided to seek expert advice to make the most appropriate decision.
Marcia Dessen, with the collaboration of Luciana Pantaroto
