A recent investigation by the “Exame” magazine has indicated that the process of buying and selling Brazilian property for capital gain does not present a lucrative opportunity (and could actually lead to a loss) when taking into consideration the aggregated procedural costs and encumbrances.  This has emerged as a notable pattern when buying off-plan property to “flip” (a strategy undertaken by a number of investors in recent years).

A simulation was undertaken by lawyer Carlos Eduardo Fujita (“Turci Advogados”) – based on the purchase of an off-plan (na planta) property valued at R$ 400,000 and resold for R$ 500,000 in the city of São Paulo – as demonstrated in the info-graphic below:

It should be noted that ongoing costs – such as IPTU (the Brazilian local authority tax), condominium fees and interest paying paid on the loan used to purchase – have not been included in these calculations (the magnitude of which is determinable by the amount of time the units take to sell on the open market).

Source