Countries › Brazil › Guide › 11. Real estate and land › ITBI, the municipal property transfer tax in Brazil: base, rates, the capital contribution immunity and the 2026 national rules

ITBI, the municipal property transfer tax in Brazil: base, rates, the capital contribution immunity and the 2026 national rules

Last verified: 2026-10-27 · Status: Changing

ITBI is charged by the municipality where the property sits on transfers for value of real estate and real rights (except security), and on assignments of purchase rights. Since Lei Complementar nº 227 of 13 January 2026 the National Tax Code defines the base nationally as the price the property would fetch for cash in normal market conditions, estimated by published technical criteria that the taxpayer can contest. Contributing property to a company's capital is immune unless the company mainly deals in or rents real estate, and the immunity covers only the value credited to capital; São Paulo charges 3 percent, paid before the deed.

USD figures use the Banco Central do Brasil PTAX selling rate of R$5.3346 per US dollar for 27 October 2026. Conversions are for orientation only.

Key facts

ITBI general rate, city of São Paulo	3 %Lei Municipal nº 11.154/1991 art. 10 II, as of 2026-10-27 · in force
ITBI base under the National Tax Code	Market value for a cash sale in normal market conditions, by published technical criteria, contestable by the taxpayer CTN art. 38 as worded by LC nº 227/2026, as of 2026-01-13 · in force
ITBI on property contributed to company capital	Immune, except for companies whose main activity is real estate (over 50 percent of revenue) and on value above the capital credited (STF Tema 796) CF art. 156 § 2 I; CTN arts. 36 and 37, as of 2026-10-27 · in force
Share of operating revenue from real estate that removes the capital contribution immunity	50 %CTN art. 37 § 1, as of 2026-10-27 · in force
STF case on ITBI on assignment of purchase rights without registration	Tema 1124 pending merits ARE 1.294.969, as of 2026-10-27 · pending

The rule

1. Municipalities levy a tax on inter vivos transfers for value of real estate and of real rights over it, except security rights, and on assignments of rights to acquire them. The tax belongs to the municipality where the property is located. It does not apply to property contributed to a company's capital, or transferred in a merger, spin off or liquidation, unless the acquirer's main activity is buying and selling, renting or leasing real estate.
Cost to do it: Rate set by each municipal law; see the São Paulo rule below.Constituição Federal of 5 October 1988, Art. 156 II and § 2 I and II, 1988-10-05 official text · verified 2026-10-27

2. National rules after LC 227/2026. The National Tax Code now defines the taxable event as the onerous inter vivos transfer of ownership or useful domain of real estate, of real rights other than security, and the assignment of rights to those transfers. The base is the market value (valor venal), defined as the price for which the property or right would be traded for cash in normal market conditions, estimated by technical criteria considering at least one of: market price analysis, data from notaries, registrars and lenders, the property's location, type, use, standard and areas, or other usual appraisal parameters. Municipalities must publish their criteria, and the taxpayer may contest the value by presenting a contrary appraisal in a specific procedure. Notaries and registrars must share transaction data with the municipality.
Cost to do it: A contrary appraisal by a qualified appraiser is the cost of contesting an inflated municipal value.Lei nº 5.172 of 25 October 1966 (Código Tributário Nacional), arts. 35, 38 and 41 as worded by Lei Complementar nº 227 of 13 January 2026, CTN art. 35 caput and items I to III; art. 38 caput and §§ 1 to 4; art. 41, 2026-01-13 official text · verified 2026-10-27 · changed: Lei Complementar nº 227 of 13 January 2026 rewrote CTN art. 35, added §§ 1 to 4 to art. 38 (market value definition, technical criteria, publication and contest), reworded art. 41 and revoked art. 39.

3. Capital contribution immunity and its limits. The tax does not apply to property transferred to a company as payment of subscribed capital or in a merger, unless the acquiring company's main activity is selling or renting real estate or assigning purchase rights. That main activity exists when more than 50 percent of the company's operating revenue in the 2 years before and the 2 years after the acquisition comes from those transactions; for a company that starts activity after the acquisition or less than 2 years before it, the test uses the first 3 years after acquisition. If the test is failed, the tax is due on the value at the acquisition date. The Supreme Court held (Tema 796) that the immunity does not cover the value of contributed property that exceeds the capital to be paid in.
Cost to do it: Contributing property at above its capital credit value creates ITBI on the excess.
Example: Property worth R$2,000,000 contributed to a holding company, with only R$500,000 credited to capital and R$1,500,000 to a capital reserve: ITBI is due on the R$1,500,000 excess under Tema 796 (R$45,000 at 3 percent in São Paulo). / Excess of US$281,183, ITBI of about US$8,435.Lei nº 5.172 of 1966 (CTN) arts. 36 and 37; STF RE 796.376 (Tema 796 of general repercussion), final 15 October 2020, CTN art. 36 I and II; art. 37 caput and §§ 1 to 4, 1966-10-25 official text · verified 2026-10-27

4. Courts on the base and timing. The Superior Court of Justice held, under the repetitive appeals procedure (Tema 1113, REsp 1.937.821/SP, judged 24 February 2022), that the ITBI base is the market value of the property in normal conditions and is not tied to the IPTU base, that the value declared by the taxpayer is presumed to match market value and can be rebutted only by the municipality in its own administrative procedure, and that municipalities cannot set the base in advance by a reference value fixed unilaterally. Separately, the Supreme Court has recognized general repercussion (Tema 1124, ARE 1.294.969) on whether ITBI can be charged on the assignment of rights under a purchase commitment without a registered transfer; the merits are pending.
Cost to do it: No direct cost; these rulings shape what the municipality can charge and when.STJ REsp 1.937.821/SP (Tema 1113); STF ARE 1.294.969 (Tema 1124), Tema 1113 thesis; Tema 1124 status page, 2022-02-24 official text · verified 2026-10-27 · changed: LC 227/2026 now writes the market value concept and a contest procedure into CTN art. 38; how it interacts with the Tema 1113 presumption will be settled by the courts.

5. São Paulo. In the city of São Paulo the base is the value for which the property would be traded for cash in normal market conditions, with no deduction for debts on the property, and the rate is 3 percent. For properties up to R$600,000 financed in the SFH, PAR or HIS housing programs or through consórcios, 0.5 percent applies to the financed amount up to R$100,000 and 3 percent to the rest. The tax is paid before the act if it is a public deed, and within 10 days if it is a private instrument.
Cost to do it: 3 percent of market value, paid by the buyer, whom São Paulo law makes the taxpayer (art. 6 I); each other city sets its own rate.
Example: Purchase at R$2,500,000 in São Paulo: ITBI R$75,000. / Purchase of about US$468,639, ITBI of about US$14,059.Lei Municipal de São Paulo nº 11.154 of 30 December 1991, art. 7 as worded by Lei nº 14.256 of 2006 and art. 10 as worded by Lei nº 16.098 of 2014 and Lei nº 17.719 of 2021, Art. 6 I; art. 7 caput and § 1; art. 10 I and II; art. 12, 1991-12-30 official text · verified 2026-10-27

Worked example

Buying in São Paulo. A buyer pays R$2,500,000 (about US$468,639) for an office. Before signing the public deed, the buyer pays ITBI of R$75,000 (about US$14,059) (Lei Municipal nº 11.154 arts. 10 II and 12). If the municipal system shows a higher reference value, the declared price is presumed to be market value (STJ Tema 1113) and, under the new CTN art. 38 § 3, the buyer can also contest with a contrary appraisal.
Holding company structure. A family contributes a building worth R$4,000,000 to a new company that will rent it out. Because renting real estate will be its main activity, more than 50 percent of revenue in the first 3 years (CTN art. 37 §§ 1 and 2), the immunity does not apply and ITBI is due, in São Paulo R$120,000 (about US$22,495).

Step by step

1. Check the rate and payment rule in the municipal ITBI law of the city where the property sits.
2. Compare the agreed price with the municipality's published value and criteria (CTN art. 38 § 3); prepare an appraisal if the municipal value is higher.
3. Generate and pay the ITBI guide before the public deed (São Paulo art. 12).
4. For capital contributions, test the 50 percent revenue rule and make sure the full value is credited to capital (Tema 796).
5. Keep the receipt; the notary must record it in the deed (Lei nº 7.433 art. 1 § 2).

Common traps

Crediting part of the property value to a capital reserve. ITBI is due on the excess over capital (STF Tema 796).
Using a rental company for the immunity. Real estate rental as main activity removes the immunity (CF art. 156 § 2 I; CTN art. 37).
Assuming the rate is the same everywhere. Each municipality fixes its own rate by law.
Assignment of purchase commitments. Whether ITBI is due before registration is pending at the Supreme Court (Tema 1124); municipal practice varies.

Sources

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