News

The Brazilian Federal Supreme Court (STF) will analyze whether the tax base for the Real Estate Transfer Tax (ITBI) may be linked to the market value used to levy the Property and Urban Land Tax (IPTU), that is, the value assigned by the municipality to the property for tax purposes, pursuant to Extraordinary Appeal No. 1,412,419/SP.

The dispute concerns how ITBI, a tax levied on real estate purchase and sale transactions, should be calculated. Currently, the Superior Court of Justice (STJ) understands that the tax should be calculated based on the property’s market value, without being linked to the market value used by municipalities to levy IPTU.

The appeal was filed by the Municipality of São Paulo, which seeks to reverse this understanding. If the STF recognizes general repercussion, in addition to deciding whether the matter is relevant beyond the parties involved, the Court will be responsible for analyzing the merits of the dispute and determining whether the understanding adopted by the STJ will be maintained or revised.

Until the STF rules otherwise, the understanding established by the STJ in Repetitive Theme No. 1,113 remains valid.

The matter deserves attention due to the impacts it may have on companies, investors, and other taxpayers involved in real estate transactions. In addition to influencing the calculation of the tax, the future decision may affect tax planning and administrative and judicial disputes related to ITBI.