The New Taxation on the Leasing and Sale of Real Estate by Individuals: Challenges and Strategies after the Tax Reform

1. A new chapter in real estate taxation

The 2025 tax reform, implemented through Complementary Law No. 214, redesigned the foundations of taxation on goods and services in Brazil. Among the many changes, one of the most impactful concerns leasing and sale transactions involving real estate carried out by individuals — which, in certain situations, now fall under the scope of the Tax on Goods and Services (IBS) and the Contribution on Goods and Services (CBS).

Traditionally, renting out and selling real estate fell outside the scope of consumption taxes. The ISS (municipal service tax) did not apply to leasing, and the sale of real estate was taxed only through the ITBI (real estate transfer tax), when it involved an onerous transfer of ownership. Under the new dual VAT model (IBS + CBS), the legislation broadened the reach of taxation to include transactions involving tangible assets and rights — which expressly covers real estate activities carried out on a regular basis.

This change directly affects investors, entrepreneurs, and wealth managers, who will need to reassess their structures and strategies in the real estate market in order to avoid tax surprises and optimize their overall tax burden.

2. When an individual becomes an IBS and CBS taxpayer

Complementary Law No. 214/2025 establishes objective criteria to determine when an individual becomes a regular taxpayer of these new taxes. Broadly speaking, this classification depends on the scale and frequency of the transactions carried out, taking into account both the volume of income earned and the number of properties involved.

Leasing of real estate

An individual who earns annual rental income exceeding R$ 240,000 and rents out more than three properties simultaneously will be considered a taxpayer subject to IBS and CBS. Both criteria must be met for the obligation to arise.

The R$ 240,000 threshold — equivalent to a monthly average of R$ 20,000 — will be adjusted monthly according to the IPCA (Brazil's official consumer price index), as expressly provided for by the law itself. This automatic adjustment reflects the legislator's intent to keep the parameter aligned with inflation and market conditions.

In practical terms, this new classification means that leasing, previously regarded merely as a form of passive income, is now viewed as an economic activity when carried out on a significant scale or in a systematic manner.

Sale of real estate

With respect to sale transactions, the law establishes that an individual who sells more than three properties within the same year will be treated as an IBS and CBS taxpayer, regardless of the amount involved.

However, there is an important time limitation: only properties acquired less than five years earlier are included in this count. The intent is to distinguish occasional sales — typical of estate reorganizations — from resale or development activities that reveal a business-like nature.

In the case of properties built by the owner themselves, the treatment is even stricter: if the taxpayer builds and sells more than one property within a period of less than five years, they will also be subject to taxation. The underlying rationale is that this practice characterizes productive activity rather than mere asset management.

3. Transactions carried out within the current year and the habitual nature of the activity

In addition to looking at historical activity, the legislation also considers the situation within the current fiscal year. In other words, if rental income during the year exceeds R$ 288,000 — a value equivalent to 20% above the reference threshold — the individual is automatically classified as a taxpayer, even if they have not rented out more than three properties.

Similarly, selling more than three units within the same year, or selling more than one self-built property, is enough to trigger taxation of the transaction.

This analysis reinforces the principle that the relevant criterion is not merely the financial volume, but also the habitual nature and economic character of the transaction. The reform, therefore, brings the taxation of individuals operating in the real estate sector closer to the business-oriented logic applied to legal entities.

4. Short-term rentals and their equivalence to the hotel sector

One of the most sensitive aspects of the new legislation is the equivalence drawn between short-term rentals — those lasting up to 90 days — and hospitality services.

Under Complementary Law No. 214, the short-term leasing of residential properties will be treated in the same way as hotel services, subjecting the individual lessor to IBS and CBS regardless of the number of properties involved or the income earned.

This rule directly affects property owners who use digital hospitality platforms such as Airbnb and similar services, reinforcing the trend toward the formalization and taxation of the sharing economy. The habitual nature of short-term rentals therefore receives tax treatment similar to that applied to companies in the tourism and hospitality sector.

5. Economic implications and wealth management strategies

The changes brought about by the tax reform require individuals to rethink how they organize and manage their real estate assets. The impact is not merely fiscal, but also strategic and operational.

Entrepreneurs and investors need to assess whether holding properties in their own name remains the most advantageous option, or whether the time has come to structure a holding company for asset management purposes.

Setting up a specific legal entity to centralize real estate operations can offer advantages such as:

Better accounting and tax control over income and expenses;

The ability to take advantage of IBS and CBS credits on acquisitions and services related to the activity;

Greater ease in succession and estate planning, reducing future risks and bureaucratic burdens.

That said, this decision should be preceded by detailed legal and tax planning, taking into account the specific profile of each transaction, the number of properties involved, and the investor's objectives.

In addition, it becomes essential to maintain organized and up-to-date records, both to prove the origin and nature of the income and to demonstrate that the activity does not exceed the thresholds that trigger IBS and CBS liability.

A lack of proper documentation can lead to tax assessments and penalties, especially in a scenario where the Brazilian Federal Revenue Service tends to intensify the cross-referencing of asset and financial data.

6. The role of preventive legal counsel

In an increasingly complex context, the support of specialized professionals becomes essential. Preventive legal counsel makes it possible to assess in advance the tax classification of each transaction and to identify legal opportunities for tax optimization.

Close support from tax attorneys and accountants also helps avoid improper classifications that could result in tax assessments, fines, or future restrictions.

Preventive action, therefore, should be understood not only as a form of protection, but as part of the strategic management of one's assets — especially for entrepreneurs and families with diversified real estate portfolios.

7. Final remarks

The inclusion of real estate transactions within the scope of IBS and CBS represents a new regulatory milestone for the sector. The individual investor, once far removed from the tax obligations typically borne by companies, is now viewed through a business-oriented lens, subject to the same requirements as any active taxpayer within the system.

Understanding the new rules, the thresholds that trigger tax liability, and the available planning opportunities is not merely a matter of legal compliance, but of financial intelligence.

The future of real estate wealth management in Brazil will become increasingly technical and strategic. Those who adopt a proactive stance, supported by ongoing legal and tax planning, will be better positioned to navigate this new landscape with security, predictability, and long-term sustainability.