Are you wondering if this is the right time to sell your property in Brazil given the recent economic and political troubles in the country? The Brazilian government has been under a lot of pressure to correct the impression that there is no transparency in the country.
The government has been working hard to cut down corrupt practices in the economy as well as in the real estate sector, where a web of secretive companies operate and indulge in speculative investments.
Brazil is learning how to deal with this issue from the British government. There was a big problem in London in the early 2000s, when a number of prime London real estate was bought by offshore shell companies that did not pay tax in the UK. This led to accusations of money laundering, and other criminal activities.
The British government was able to bring such practices to a stop in recent years. Their Brazilian counterparts are looking up to them for advice on how to tackle this problem before it becomes any more serious. After all the Petrobras corruption scandal has already cost ex-President Dilma Rouseff her job. The current government in power in Brazil is very concerned that there might be another corruption scandal blowing in the winds.
Do you have a property for sale in Brazil? You would no doubt be worried about the fact that Brazil ranks very high in the Transparency International rankings for the world’s most corrupt countries. Corruption and lack of transparency is a real problem in Brazil’s real estate market.
Consider the fact that an estimated $2.7 billion worth of real estate in São Paulo is owned by highly secretive offshore companies. Over 3400 properties are controlled by just 236 companies, most of which are based in tax havens such as Panama, Macau and the British Virgin Islands.
These countries have a reputation for money-laundering. It is considered illegal for companies based in these tax havens to buy property in Brazil. This is not to say that just because a property is held by an offshore company there is something wrong with it. The problem arises when these companies are secretive about their ownership and lack any measure of transparency.
Real estate is after all the favoured investment vehicle for money launderers. It is very hard to identify the owners of offshore companies generally, as the Panama Papers scandal in which a number of leading politicians, businessmen and celebrities were implicated shows so well.
In Brazil there is a growing cry for transparency in all areas of business and politics. This includes real estate. If you are looking to buy property in Brazil, you will be tempted to bribe the low level bureaucrats to speed up the process; as it takes a long time for the ownership of the property to be transferred because of all the regulations. But you are best advised to desist from such temptations, as that can work against you in the long run.