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Petr Message Board

  • aco_brasil0192 aco_brasil0192 Dec 4, 2009 9:06 AM Flag

    Musk - Serious Question

    Could you step me through the process that you had to go through to purchase property in Brazil? I assume that neither you nor your wife or any family members are citizens or residents?

    Specific questions:

    1. Did you obtain residency by purchasing the property?

    2. How did you get the CPF?

    3. Who gave you the loan - Brazilian bank, US, or other? If a US bank, how did you work out the agreement?

    4. Did you have to pay high taxes to move the cash into country prior to purchase, or did you somehow open a Brazilian bank account and deposit USD into a US branch of BdB?

    Thanks!

    ACO

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    • What I'm trying to say is that living in an enclave community has probably made you more of a target for exploitation than if you had moved to a more Brazilian community.

      I keep thinking of the contrast of having travelling to Costa Rica (esp Monteverde and Arenal), Cuzco, or San Cristobal (all wrecked by tourism) where every local is trying to extract something from you versus some of the cities already mentioned. One of the things I really like about Brasilia is the total lack of appeal to foreigners. Its so much easier to meld into the culture and build an identity with the place without having people constantly targeting you for tourist excursions or to pick your pocket. Crime levels in the downtown region and inner suburbs have also fallen dramatically, though the peripheral neighborhoods are growing more dangerous.

      In any case, I hope everything works out for you one way or the other. I'm sorry you and your wife are not happier where you are. Of course, I understand that the wave of globalization that has taken root over the last decade especially is rapidly decreasing the cultural appeal and increasing expenses throughout many countries in Latin America.

      GL,
      ACO

    • Aco:

      Thanks for your friendly note....

      I could have sworn the FX tax was a lot higher than 2%. I guess the fact that you deposited the cash in the US-based Brazilian bank instead of carrying it across helped you avoid getting slapped with a heavier load. WE DID NOT -- AND I THINK ONE CANNOT -- DEPOSIT THE CASH IN USA... WE TRANSFERED FROM USA TO THE BDB HERE... AND ON TO OUR ACCOUNT AT CITIBANK BRASIL. MY RECOLLECTION IS THAT THE FEE WAS NOT ONEROUS.

      So, the fact that I would be able to easily obtain permanent residency through my marriage would negate the necessity of creating the "investment" fiction and shell corp - correct? In other words, these were done solely to give you access to a Brazilian "green card"? YES

      FWIW, I think your choice to live in Buzios be getting a warped perspective of Brazil. FOR SURE

      When I visited Buzios 10-years ago, I had the impression that it was possibly the heaviest enclave community in the country - it was the only place that I had been that felt like it had more Europeans than Brazilians. Much like San Miguel de Allende in MX. NEVER BEEN TO SAN MIGUEL, BUT LOTS OF FOREIGNERS HERE... MUCH OF THE BUSINESS COMMUNITY IS FROM ARGENTINA, ALSO FRENCH, ITALIANS, SPANISH, A FEW AMERICANS, SWISS, CANADIANS, ETC... WE HAVE FRIENDS FROM ALL OVER, INCLUDING BRASIL... COOL!

      I really have to wonder if you might have a different outlook had you decided to settle in Florianopolis, Petropolis, or even a good neighborhood in Brasilia? UNDOUBTEDLY

      I would look for a medium size city that has fewer ex-pats, has a relaxed pace, is off the tourist beat, has relatively low crime, and is populated by a lot of middle-upper class locals - GOOD CRITERIA

      I'm not trying to be a d-ick by drawing out our previous debate - I obviously hit a nerve with that thread. Just looking for answers and questioning my own assumptions. NO OFFENSE TAKEN

    • Aco: something weird happened and several posts have disappeared from our conversation... Here is another copy of my most recent response to you....

      so, if i understand correctly, creating the shell enabled you to avoid getting hit with taxes when moving the currency from the us to brazil? no... the corporation is the vehicle for your "investment". there may be other taxes on individuals, but the only tax related to funding your corporation is a fx transfer tax levied by the bdb when you bring money in.

      how did you assure that the documentation was in proper order - through the lawyer? documentation for the corporation was done by the lawyer. i requested the lawyer review (for a fee, of course) the existing documentation on the house when we bought it. She gave it the "green light"... We bought an older house, in an older neighborhood, owned by one wealthy family who had documentation of taxes paid, title dating from the formation of the "loteamento" subdivision, "certidoes de debito negativo" (documented no debts), etc. generally speaking, there is usually some level -- more or less -- of documentation, one just has to know what to look for and where the risks lie and then make some decisions...

      finally, just out of curiousity, what inspired you to move to buzios - had you seen it previously while on vacation? After selling the house in los angeles, my wife and i and our 2 cats travelled extensively... Europe (too expensive), usa (wanted a change), mexico (some awesome places, but the culture a bit church-oriented for our tastes). my wife had worked for club med in bahia and like the culture... I thought it was too far from home... We came and we travelled extensively -- 12 months in 2 years. we tried to buy near petropolis and terasopolis (wife wanted to buy a big property in the mountains -- 10,000sm minimum. Easy to find and, at the time, easy to afford.) but we could not manage to close a deal... buzios has great beaches, a lively center, the appearance of affluence, plenty of gringos to be-friend... So i convinced wife that we should try buzios. we rented for a year... Looked at every house on the market in our range. made offers. finally, one of the sellers cracked... The house listed for r$800k was bought for r$535k... We've done quite a bit of renovation. we think we might be able to get our money back, maybe make a bit of profit. but we are not at the beach and we don't have an ocean view or a pool... Things every gringo with an escapist fantasy wants...

      what we have is 26000sm of mature gardens (mango, papaya, banana, palms, etc., a large master suite, a huge modern kitchen/living/ dining area, a cool 25 seat restaurant, 2 comfortable guest suites, a sauna/jacuzzi/spa structure, an artists studio and a fully functioning astronomical observatory with a 14 inch telescope (largest in the region), totalling about 450sm of covered area.

      we've just completed another round of renovations and want to enjoy the place for a while before we sell it. i imagine we'll be gone by the time the olympics come to rio in 2016. We think our buyer is probably a brazilian family with some older members who need a flat lot and access to rooms on the first floor. or, a foreigner who wants an active retirement...

      see observatoriobuzios.com for more details

    • There are many ways to do this. We used a lawyer and an immigration consultant (money very well spent) to accomplish the following:

      1. We obtained our a CPF in Brazil. You cannot open a bank account without a CPF.

      1. We obtained permanent resident status by "investing" money. This involved buying a corporate shell and funding the corporation with equity. Transfering money into the corporation was an administrative hassle, but not a big problem. Your permanent visa, when issued is placed in your passport... you need to go through a 1 year+ bureaucratic process to get your Identity Card. The visa itself allows you to do some things, the card itself allows you to do more. The Coporation has a Tax ID (CNPJ) distinct from our CPFs.

      3. The corporation which we "own" purchased the house. We paid cash. My sense is that getting a loan on an indiividual property is next to impossible. Loans are wholesaled to developers who use them to fund tge purchase of units within thier projects. Remember... the documentation supporting property ownership is difficult to obtain, and authenticate. Buyer, beware; lender, beware.

      4. We file corporate income taxes and individual income taxes. Niethger are significant. What is significant is our annual accounting bill -- a total rip-off. Property ownership taxes are much lower than in USA, unless you live in the "marina" federally owned, ocean ajacent area. The property tax in this was raised 10x overnight and is not the subject of a lawsuit in which property owners will probably liable for a huge tax increase, but maybe not 10x.

      If you need people to advise you, I can make some suggestions. Your process will be different and gretly simpliified if you are married to a brasiliera whi has mantained her brazilian citizenship.

      Specific questions:

      1. Did you obtain residency by purchasing the property? SORT OF.... SEE ABOVE... I BEVLIEVE THE CURRENT MINIMUM INVESTMENT TO QUALIFY (NEED NOT BE REAL ESTATE) IS ONLY $50K

      2. How did you get the CPF? SEE ABOVE... IF I REMEMBER, YOU APPLY AT THE POLICIA FEDERAL. YOU MAY BE ABLE TO HAVE AN AGENT DO THIS FOR YOU.

      3. Who gave you the loan - Brazilian bank, US, or other? If a US bank, how did you work out the agreement? NO LOAN, AS ABOVE.

      4. Did you have to pay high taxes to move the cash into country prior to purchase, or did you somehow open a Brazilian bank account and deposit USD into a US branch of BdB? UNLESS THINGS HAVE CHANGED: ONE MUST TRANSFER THE MONEY INTO A BANK ACCOUNT IN BRAZIL AND CANNOT DO IT AT A BDB BRANCH OUTSIDE... THE BDB CHARGES A FEE (TAX)... MAYBE 2% IF I REMEMBER CORRECTLY.

      HOPE THIS HELPS...

      MUSK

      • 1 Reply to musketeernumberone
      • Thanks Musk. Much appreciated. I'm really just thinking for the future. My wife and child are both Brazilian cits and my brother-in-law is a lawyer in Brazil.

        So, if I understand correctly, creating the shell enabled you to avoid getting hit with taxes when moving the currency from the US to Brazil?

        "Remember... the documentation supporting property ownership is difficult to obtain, and authenticate."

        This is probably my number one concern with doing any type of property transfer in Brazil. This crap applies with cars as well. I know that my in-laws frequently buy and sell houses with inproper documentation and usually take a bath on the transactions - my father-in-law establishes a lot of charity creches in impoverished neighborhoods. How did you assure that the documentation was in proper order - through the lawyer?

        Finally, just out of curiousity, what inspired you to move to Buzios - had you seen it previously while on vacation?

        ACO

 
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