Real estate investment has always been very appealing to Brazilian families because of the potential for recurring income, its status as a "real" asset, and the relatively simple estate planning involved. However, tax reform has brought new costs and, for many, a portfolio review.

The change begins with the mechanics of the system. The reform replaces taxes such as ISS/ICMS and PIS/Cofins with a dual VAT: IBS (Tax on Goods and Services) and CBS (Contribution on Goods and Services). In other words, it adds tax to this market.

The timeline is staggered. In 2026, the IBS debuts as a "test year," with 0.1%, and only gradually gains weight from 2029 onwards, while ICMS and ISS are reduced, until the transition ends in 2033. The CBS, in turn, comes into effect in 2027, with a rate of around 9%.

The final size of the combined tax rate is still unknown, but the market is working with a reference point of around 28% - and that's where the specific reductions for the real estate sector come in.

“When we look at rentals, there will be a 70% reduction in the base tax rate. And when we look at the real estate sales sector, this reduction is 50%,” says Camila Bacellar, tax partner at Cescon Barrieu, on Wealth Point, a NeoFeed program.

The reform will now affect those who exploit real estate as a business activity, and this applies to legal entities and, in some cases, also to individuals.

From the individual investor's perspective, a relevant dividing line emerges: the "cut-off line" to differentiate occasional income from regular activity. An investor can become a taxpayer under the IBS/CBS system if they had R$ 240,000 or more in rental income in the previous year, or more than three commercially exploited properties. And the 27.5% income tax rate on earnings remains in effect.

On the side of real estate holding companies, real estate revenue enters the IBS/CBS under the sector's specific regime, with reductions and the logic of VAT credits. This means that the account may vary depending on the type of transaction and the credits available.

In other words, the trend is towards increased load. While some structures currently operate with an effective load of around 14%, the reference rate for full VAT is 28%, although the sector has reductions that, in practice, make it difficult to reach the maximum.

With this, families returned to the spreadsheet: whether it's worthwhile to maintain the legal structure to concentrate real estate, whether it makes sense to transfer assets to the individual, or whether exposure should be handled through financial market vehicles — and, in some cases, whether the real estate portfolio as a whole should be reduced.

This calculation also includes the new taxation of dividends, since holding companies often remunerate the family through this method.

“Investing in real estate has become more expensive, and the analysis has become case-by-case. For families with high dividend payouts, a higher tax rate can reduce the effective tax rate on the rest of the portfolio. Everyone needs to do their own calculations,” says Manoela Vargas, head of wealth planning at TAG Investimentos.