Expert: Ken Rapoza Cruz - 5/7/2008

Question
QUESTION: Hello, I am possibly re-locating to Brazil (from US) for work on a work visa. I Also have a Brazilian Girlfriend that lives there right now. I would like to get a house with her when i move there and i was curious if you know if i can buy property there, and if i can get a loan from a Brazilian bank?

ANSWER: Hello Doug. Yes you can buy property here in Brazil and get a loan from a bank, BUT first you will need to have a Cadastro de PEssoa Fisica card, or CPF, which makes you a law abiding, tax paying citizen of Brazil. Now it is harder for you to avoid paying federal income taxes on your income, keep that in mind. (Figure 20% to 25% of you rincome will go to taxes, depending on your income of course.)  Y ou will also need an RG, Registro Geral. But as you are a foreigner, you will get a Registro Nactional Estrangeiro, RNE. You will apply for one at the local immigration office branch at your local Federal Police agency. Your girlfriend should be able to help you find that. Once you have a CPF and an RNE you will need proof of income from your job. If I were you, I would get a CPF before I come to Brazil. .YOu can get one at the consulate or embassy.  Then apply for a bank account at Banco Itau, Caixa Economica Federal or Banco Santander. CEF is state, ,the other two are private. Itau and Santander are the onlly ones that offer long term 30 year mortgages at lower rates..say 7% annually. Federal does too, but I dont know teh rates. A few minutes surfing their website should giv eyou more details.  

Get teh CPF, get the RNE, open a bank account at  one of these places and youre all set.

ken

---------- FOLLOW-UP ----------

QUESTION: Thanks for the response! Also, If i rented there instead of buying, would i need to get a CPF and have to pay taxes there? If i had to pay taxes there and here it would not be favorable.

Answer
You dont need to pay taxes to the US gov IF you are a staffer working for an AMerican or European company and earning under 85k a year. We call that the foreign earned income exemption. HOWEVER, you are required to pay Brazilian taxes or at least report your inicome to Brazil. How you do that is up to you. Now, if you are going to be in Brazil just for a year or two, then you could definitely get away with tax evasion in Brazil. Its just that with a CPF, the tax authorities will eventually catch up to you, and if they do, and discover you didnt pay taxes for 1, 2, 15 years...well, you can imagine the penalties. If your girlfriend is a Brazilian, she must have a CPF, unless she lives in a remote indian village. My wife has a CPF. I, on the other hand...DO NOT. Aha! So I pay bills and rent things in HER name, not mine. You could  do the same if both of you were that serious about each other. Otherwise, gget a CPF before you go to Brazil. In a rare circumstance wher eyou know the owner of the apt you want to rent, they wont require a cpf. You had at first talked about buying, if you want to have legal title to your home...you will need a CPF.

Oh, if you are from Massachusetts, you will have to pay taxes on all dollar income. It does not meet the foreign earned income exemption in that state at least.  You wont pay fed taxes. If you are a staffer adn they are shipping you overseas, they know this already. If you are coming here to freelance, you will have to just pay US taxes, not Brazil. If you are coming here to teach english and make BRLs, you will be required to pay yBRL taxes, but as I said before...depends how longn you want to stay. I think you can get away with not paying taxes for a year as an expat here with a new CPF. Tax authorities wont be chasing you down an the US and BR govs do not share tax information about individuals residing in one anothers countries.

Ken