Alana Dahrouj
Lawyer at Marcos Martins Advogados
In a decision handed down by the São Paulo Court of Justice (TJSP), the collection of Real Estate Transfer Tax (ITBI) using the property’s venal reference value as the calculation basis was definitively ruled out.
The practice used by municipalities, including those in São Paulo, was to create a reference sales value that bore no relation to the market value or sale value of the property, and was extremely higher.
The decision established the understanding that the basis for calculating ITBI must correspond to the property’s market value – that used as the basis for calculating IPTU – or to the value of the real estate transaction carried out, whichever is greater.
The ruling also stated that when it comes to the ITBI calculation basis , it is illegal to establish a new sales value different from the one used for IPTU purposes.
The decision, which limits the actions of the municipal tax authorities, is very significant for taxpayers, as it provides greater legal certainty and clarity in terms of paying what is actually owed.
Marcos Martins Advogados makes its tax team available to answer any questions on the subject.
