If you bought a property in the last five (5) years and paid the ITBI (real estate transfer tax) based on the value assessed by the municipality rather than the actual purchase price, this article is for you!
We have been closely following an important discussion concerning how the ITBI is calculated, particularly within the City of Rio de Janeiro.
In practice, what we frequently see is the Municipal Treasury applying a one-sided assessment base, often unrelated to the value actually agreed upon in the real estate transaction, which ends up resulting in a tax charge significantly higher than what is actually owed.
For example, if you paid R$ 500,000.00 for a property and the Municipal Treasury assessed and charged ITBI on R$ 1,200,000.00, you are entitled to a refund of the amount overpaid!
See the math:
Price: R$ 500,000.00
ITBI owed: 3% – R$ 15,000.00
Value assessed by the Municipal Treasury: R$ 1,200,000.00
ITBI charged: 3% – R$ 36,000.00
Amount to be refunded: R$ 21,000.00
The core of this discussion has already been addressed by the Superior Court of Justice (STJ), in its ruling on Topic 1,113 (Tema 1.113), which established that:
- the value declared by the taxpayer is presumed to be accurate;
- any discrepancy must be assessed through a proper administrative procedure;
- the Municipality cannot pre-set an assessment base using “reference values.”
Despite this, the administrative practice continues to be used, leaving room for these charges to be reviewed by the courts.
In this context, our firm has been acting strategically in filing lawsuits seeking the refund of amounts improperly overpaid and, so far, every case we have filed has been decided in favour of the taxpayer.
This represents a significant opportunity, especially for companies and individuals who carried out real estate transactions in recent years and may have been affected by this assessment method.
We remain available to assess specific cases and determine the feasibility of recovering these amounts.
