Purchasing a property is undoubtedly one of the most important financial decisions a person can make. However, anyone who thinks that the property purchase costs involve only the amount stated in the purchase and sale agreement is mistaken.
In addition to the down payment and financing installments, there are a number of hidden costs that increase the total cost of the property and often come as a surprise to many buyers, such as bank fees, notary and registry fees, municipal taxes, post-purchase expenses, and others. Therefore, understanding all the costs involved in purchasing a property before closing the deal is crucial to avoiding unpleasant surprises and ensuring a secure purchase that does not compromise the family budget.
At Mozer Advocacia, before closing any deal, our clients receive a detailed spreadsheet with all anticipated costs. Below, we explain exactly what these expenses are.
Keep reading to learn more about the costs involved in purchasing a property and how to organize your finances when buying a home. Find out more!
The Property Price Does Not Represent the Total Cost of the Purchase
Many buyers make the mistake of believing that the property’s contract price represents the total financial investment required to achieve their dream of owning a home. In practice, purchasing a property involves several other mandatory expenses established by law, as well as additional costs associated with the buying process that most people are unaware of.
Depending on the type of purchase, the costs involved in buying a property can reach up to 5% of the property’s value. Therefore, to avoid being caught off guard, it is essential to be aware of the hidden costs commonly associated with this type of purchase. Below, we list each of them:
1. ITBI: One of the Property Purchase Costs That Surprises Buyers the Most
The Tax on the Transfer of Real Estate (ITBI) is a municipal tax levied on the transfer of property ownership between living individuals. Its rate varies depending on the municipality, but it generally ranges from 2% to 5%. The tax base is calculated based on the assessed value or sale price of the property, with the higher amount prevailing.
Payment of the ITBI is essential for the property to be registered in the buyer’s name. Therefore, including this cost in the property purchase budget is essential.
In Rio de Janeiro, the official ITBI rate is 3% of the property purchase costs. However, as we have shown in previous articles, the final amount paid by the buyer may exceed this percentage due to above-market valuations carried out by the City Hall.
2. Public Deed and Property Registration
Expenses related to the property’s deed and registration are other types of property purchase costs that many buyers frequently overlook in their calculations. However, these expenses can increase the final purchase price and put additional pressure on the buyer’s budget.
The public deed is the document that formalizes the sale, while registering the property at the Land Registry Office is what legally ensures the transfer of ownership to the buyer’s name, as provided for in Article 1,245 of the Brazilian Civil Code.
These procedures involve fees that vary according to the property’s value and state fee schedules. The cost of the public deed may range from 1% to 3% of the property’s total value, as may the property registration fee.
To make these property purchase costs easier to understand, consider the following practical example:
When preparing a Public Deed of Purchase and Sale for a property worth R$ 1,000,000.00 (one million Brazilian reais) in Rio de Janeiro, the cost is approximately R$ 6,500.00 for the deed and R$ 6,500.00 for the registration, totaling approximately R$ 13,000.00 in notary and registry fees.
However, properties purchased through the Housing Finance System (SFH) are entitled to a 50% legal discount on property registration fees. And the good news is that, in practice, the savings can often be even greater than 50%. Here’s how it works:
For financed purchases, there is no need to execute a public deed at a notary office because the bank agreement itself has the legal effect of a public deed. For this reason, banks charge administrative fees for issuing the document.
If you purchase a property worth R$ 1,000,000.00, with R$ 800,000.00 financed, the property registration fee will cost approximately R$ 11,600.00. However, if the financing meets the SFH requirements, this amount drops to approximately R$ 4,300.00 (amounts applicable in Rio de Janeiro).
It is worth noting that buyers purchasing properties financed through the SFH must have 20% of the property’s value available as their own funds, although they may use their FGTS balance.
3. Property Purchase Costs Associated with Property Appraisal
Property purchase costs
In addition to taxes and notary and registry expenses, there are other costs involved in buying a property that arise directly from the real estate acquisition process, particularly in situations involving financing. These include:
- Property appraisal expenses – an average fee of R$ 750.00
- Bank fees – approximately 1% of the financed amount
Although some of these costs may be incorporated into the financing, a significant portion must still be paid directly to the bank before the financing agreement is issued. Therefore, taking these expenses into account is essential for effective financial planning.
Certificates and Legal Review of the Documentation
For a safe purchase, it is essential for the buyer to conduct a thorough review of the property’s documentation, as well as the seller’s documents. Depending on the circumstances, it may be necessary to obtain certificates to assess the existence of tax debts, lawsuits, property liens, or other factors that could restrict or jeopardize the purchase.
In this case, relying on the support of a lawyer specializing in Real Estate Law to conduct this legal due diligence is an important step that considerably reduces the risks involved in the transaction.
Renovations, Moving Costs, and Post-Purchase Expenses
Some property purchase costs only arise after the agreement has been signed. In other words, once the buyer receives the keys, additional expenses may become part of the overall budget, including structural or cosmetic renovations, moving expenses, property taxes (IPTU), condominium fees, and others.
These expenses can often consume a significant portion of the budget, especially when purchasing used properties. Therefore, setting aside part of the amount allocated to the purchase is necessary to cover these post-acquisition costs.
Cost Summary
In summary, below is a simulation of the costs involved in purchasing a property worth R$ 1 million. It is important to note that the calculations are based on the fee schedule applicable in the State of Rio de Janeiro as of July 2026. This is an approximate estimate, aligned with common market practices, and does not take into account potential variations in ITBI or financing fees.
Real estate transactions carried out by foreign nationals or Brazilian citizens who are non-residents of Brazil should also take into account exchange rates and IOF (Financial Operations Tax) applicable to the transactions.
| R$1 Million Property | Cash Purchase | Financed Purchase | First-Time Buyer Discount |
|---|---|---|---|
| Down payment – 5% to 10% of property value | R$ 100,000.00 | R$ 100,000.00 | R$ 100,000.00 |
| ITBI | R$ 30,000.00 | R$ 30,000.00 | R$ 30,000.00 |
| Balance paid with own funds | R$ 900,000.00 | R$ 100,000.00 | R$ 100,000.00 |
| Public deed | R$ 6,500.00 | R$ 0.00 | R$ 0.00 |
| Registration fee | R$ 6,500.00 | R$ 11,600.00 | R$ 4,300.00 |
| Bank engineering/appraisal fee | R$ 0.00 | R$ 750.00 | R$ 750.00 |
| Bank financing fees | R$ 0.00 | R$ 8,000.00 | R$ 8,000.00 |
| Total Own Funds | R$ 1,043,000.00 | R$ 250,350.00 | R$ 243,050.00 |
| Additional Fees | R$ 43,000.00 | R$ 50,350.00 | R$ 43,050.00 |
Down payment: The down payment is an amount negotiated between the parties, and there is no legally established percentage. However, the common market practice is between 5% and 10% of the property’s value. This amount is paid upon signing the private purchase and sale agreement.
ITBI: For cash purchases, the municipal tax must be paid at least three business days before the execution of the public purchase and sale deed. For financed purchases, the tax must be paid upon signing the financing agreement.
Own Funds: All amounts paid with the buyer’s own funds must be settled when the public deed is executed or when the financing agreement, which has the legal effect of a public deed, is signed.
Bank Fees: These must be paid before signing the financing agreement, as must the engineering/appraisal fees.
Public Deed: The fee is paid at the time the deed is executed.
Registration of the Deed or Financing Agreement: The timing of payment depends on how the document is submitted for registration. If submitted in person at the registry office, some offices require full payment at the time of filing. For online submissions, payment is generally made after the documents have been reviewed, a process that may take up to 20 days.
Legal Counsel: Buying a property requires careful attention, and prevention is always the best choice. Legal counsel provides the peace of mind needed to protect your investment, reinforcing the well-known saying: “It is better to be safe than sorry.”
Is It Possible to Reduce Property Purchase Costs?
Depending on the financing method or housing program adopted, there may be benefits and discounts on notary and registry fees and other costs that can significantly reduce the final investment amount, such as the first-time buyer discount, discussed in our blog post: How to Get a 50% Discount on Notary Fees When Buying Your First Property.
In addition, having a financial plan in place in advance and relying on specialized legal counsel can help buyers negotiate better rates, compare prices, identify opportunities to save money, and avoid mistakes that could increase the future costs associated with the purchase.
Contact Us:
Looking for a real estate lawyer in Rio de Janeiro? Dr. Gabriela Mozer and her team, specialists in Real Estate Law, offer personalized solutions tailored to your needs. Contact us today!
