Complementary Law No. 214/2025 establishes criteria for adopting an optional tax regime for real estate transactions.

On January 16, 2025, Complementary Law No. 214 was published, establishing regulations for the recently approved Tax Reform. Among its provisions, we highlight the possibility for CBS and IBS taxpayers (companies and individuals who economically exploit real estate under the terms described below) to adopt a transitional and alternative tax regime. Given the prospect of a future increase in the tax burden, opting into this optional regime has become a key consideration in the wealth and tax planning of taxpayers who carry out real estate transactions.

Who will be considered a CBS and IBS taxpayer in real estate transactions?

Individuals and companies subject to CBS/IBS taxation are those who economically exploit real estate as follows:

For lease, paid assignment, and rental transactions, individuals will be considered CBS and IBS taxpayers if, in the previous calendar year, they earned revenue that was (i) higher than R$ 240,000 and (ii) derived from the economic exploitation of at least 3 different properties. An individual will also be considered a taxpayer if, within the current calendar year, the transaction exceeds the above threshold by 20% (that is, when it surpasses R$ 288,000).

For the sale or assignment of rights over real estate, individuals will be considered CBS and IBS taxpayers if, in the previous calendar year, they either (i) sold or assigned rights over more than 3 different properties, or (ii) sold or assigned rights over a property built by the seller/assignor themselves within the 5 years prior to the sale/assignment date. An individual will also be considered a taxpayer if, within the current calendar year, they exceed the aforementioned thresholds (that is, when selling/assigning rights over more than 3 different properties or more than 1 self-built property within the same calendar year).

Who may opt into the alternative regime?

Under the Complementary Law, taxpayers who carry out lease, paid assignment, or rental transactions involving real estate arising from fixed-term contracts may opt to pay IBS and CBS based on gross revenue received, at a fixed rate of 3.65%.

For contracts with a non-residential purpose, the regime may be adopted for the original term of the contract, provided that: (i) it was executed by the publication date of the Complementary Law, with that date evidenced by a notarized signature or electronic signature; and (ii) it is registered with the Real Estate Registry Office or the Registry of Deeds and Documents by December 31, 2025, or made available to the Brazilian Tax Authority (RFB) or the IBS Management Committee.

For contracts with a residential purpose, the regime may be adopted for the original term of the contract or until December 31, 2028, whichever occurs first, provided that it was executed by the publication date of the Complementary Law, with that date evidenced by a notarized signature, electronic signature, or proof of rent payment made by the last day of the month following the first month of the contract.

When will the alternative regime take effect?

The alternative regime will only apply once the new taxes begin to be collected (CBS will only be charged starting in 2027, and IBS starting in 2029). Therefore, even if a taxpayer opts for the alternative regime, amounts arising from real estate transactions will continue to be taxed under PIS/Cofins at a rate of 3.65% during 2025 and 2026.

Limitations of the alternative regime — the risk of a "one-size-fits-all" solution

Taxpayers who opt into the transitional regime set out in the law will not be able to claim IBS and CBS credits related to the real estate subject to the special regime. Payment of taxes under the alternative regime will be considered final and, therefore, does not produce any right to refund or offset.

Although appealing, opting into this optional regime will not necessarily be the most advantageous alternative for every taxpayer. It is important to consider, above all, that adopting the regime will prevent the recovery of tax credits, which, in the long run, could result in higher costs for the company or individual. Given this context, we recommend caution when defining the best tax planning strategy for your holding company or personal situation, as opting into the alternative regime will not always result in future tax savings.

Lorusso & Partners continues to monitor all updates regarding the regulation of the Tax Reform and remains available to clarify any questions.