Brazilian Real Estate ownership by foreign persons

Several media coverages have shown recovery of the real estate market in some Brazilian regions. After four years of decrease, the numbers of the second half of 2019 and of the first two months of 2020 indicate that the Brazilian real estate market has left its negative stage behind. On the other hand, the Brazilian Real (BRL) has reached its lowest price in comparison with the dollar and euro.

These two elements combined (a newly recovered real estate market and a low BRL) make real property in Brazil attractive to foreigners once again, especially in the Southeast region (which embraces São Paulo, Rio de Janeiro, Minas Gerais, and Espírito Santo), where the economic recovery is more palpable.

The Brazilian legal system has specific rules concerning the acquisition of real estate by foreigners, whether onerous or gratuitous. Federal law # 5.709/1971, inspired by principles such as sovereignty and internal defense, sets forth specific rules for foreign persons (whether individuals or legal entities) who intend to acquire rural property. The general purpose of the law is to avoid that foreign persons control a significant part of the territory, or even areas of public interest, such as borders, and areas considered to be relevant for military purposes.

As a general guideline, limits are stricter in relation to legal entities than they are as to individuals, and the ranges are calculated upon the extension of the area, based on a measure referred to as “rural module”. Such rural module varies from 5 to 100 hectares. In the State of São Paulo, for example, a rural module equals 10 hectares. Tables below indicate the ranges for authorization in case of acquisition of rural properties by individuals and legal entities:

Table 1: individuals

Table 2: legal entities