The Tax Reform on Consumption was sold with the promise of simplification by replacing five taxes (PIS, Cofins, IPI, ICMS, and ISS) with only two (IBS and CBS), in addition to implementing full non-cumulative taxation and uniform rules throughout the country.

However, for real property transactions, the practical result has gone in the opposite direction. The sector gained a specific regime with several exceptions and decision deadlines that, in many cases, are irrevocable.

The Federal Constitution allows for differentiated treatment for transactions involving real property (Article 156-A, §6, II), and Complementary Law No. 214/2025 extensively utilized this authorization: it reduced the standard rate by 50% on the sale and by 70% on the lease of real property, established rules for equating individuals to IBS/CBS taxpayers, and created a mechanism for monitoring the reference value of the property.

The complexity of the new tax system is further explored in the so-called adjustment reducer. Created to prevent the new regime from taxing transactions that have already indirectly borne the tax burden under the previous regime, the adjustment reducer functions as a deduction from the IBS/CBS tax base on the sale of the property, linked to the initial acquisition value of the property, and transferable to the buyer under the regular regime, transaction by transaction.

There are three distinct ways to calculate the adjustment reduction, depending on whether the property already belongs to the taxpayer on December 31, 2026, it is already under construction on that date, or it was acquired as from 2027. In addition, there are specific rules for transfers between taxpayers, extinction in sales to non-taxpayers, and composition that includes ITBI (Property Transfer Tax), a historic property transfer fee (laudêmio), and urban development contributions.

For taxpayers under the regular IBS/CBS regime who already own properties on December 31, 2026, or who intend to acquire properties by that date, Complementary Law No. 214/2025 provides two options for the adjustment reduction: (i) the acquisition value of the property, updated by the IPCA (Brazilian Consumer Price Index), or (ii) the reference value of the property, which tends to reflect the market value. The date for calculating the adjustment reduction is the next December 31st.

For taxpayers under the regular IBS/CBS regime who acquire property after this date, the adjustment reduction will be the value at which the property was acquired, updated by the IPCA (Brazilian inflation index), and will not be changed in future sales (i.e., it will remain at the value of the first acquisition by a non-taxpayer).

Previously treated simply, individuals can now be equated to taxpayers based on combined criteria of income earned, number of properties, and length of time the property remains in its personal assets, with specific eligibility rules for rental and sale. Once the limit is exceeded, the individual becomes subject to the same ancillary obligations as a legal entity (including the obligation to issue invoices).

Real estate developers using the Special Tax Regime (RET) benefit, land developers, and residential and commercial leases contracted before the Consumption Tax Reform have their own transition regimes, with fixed rates, prohibition of credits, and irrevocable agreements on different deadline dates.

As a result of the changes indicated above by way of example, the coexistence of regimes, adjustment reductions, reference values, and transition rules requires an individualized mapping of each property, operation by operation, and the taxpayer’s situation.

For taxpayers in the real property sector, the promise of simplifying the tax system has not materialized. Now, it is time to analyze the portfolio and investment expectations in new properties, identify the irrevocable decisions closest to maturity, and plan ahead.