The IPTU (Tax on Urban Property and Territorial Property) is still one of the types of taxes that generate the most controversy, mainly due to a question that hangs in the minds of many people: who must pay the fee is the owner or the tenant? As common as rental property has become in Brazil’s main cities, this issue still causes confusion.
And while it’s a tricky question, of course there are also many different factors that don’t offer a definitive answer. Here we will cover everything you need to know about the IPTU of your property, whether yours or rented.
WHAT IS DEFINED BY THE LAW ABOUT IT?
The Tenancy Law, defined as the main legal reference regarding the IPTU value, states that the property owner can transfer the responsibility for paying the fee to the tenant in a clause in the rental contract, including it together with other accounts, like the condominium, for example.
On the other hand, it is important to reinforce that, according to the National Tax Code, IPTU is a rate of total responsibility of the owner. Thus, if the tenant does not pay the fee, the person who will still be sought out and charged by the City Hall will always be the owner of the property.
In other words: the main burden of this situation will always be on the owner, given that the local city hall will have sufficient autonomy to deal with the situation as it wishes, and may even take the property as a form of reimbursement for the debt generated.
WHAT TO DO IN CASE OF TENANT DEFAULT?
It is extremely important that the owner is aware of the payment of the IPTU payment booklet, especially when he does not have a close relationship with the tenant and does not have guarantees that the amount will be paid. However, if this happens, the landlord can file his case in court to be reimbursed by the tenant.
It is recommended that, after the debt is detected, the owner pays the amount of the property tax and then seeks his rights in court. This is due to the fact that debt will continue to accumulate even with the judicial imbroglio occurring simultaneously. The more months of debt, the higher the amounts and even higher the interest rates.
Once it is confirmed that the fee was the responsibility of the tenant, it can be determined that the previously established contract is terminated, that the tenant will be evicted from the property, or even that the tenant’s property will be confiscated as a form of payment of the debt.
WHAT IF THE TENANT CONSIDERS THE ABUSIVE VALUE AND DOES NOT WANT TO PAY?
With the readjustments that happened in the city of São Paulo in recent years, several regions suffered with values with more than 60% increase, especially in upscale neighborhoods, such as Vila Mariana, Higienópolis and Brooklin Paulista.
In this case, if the tenant feels that the new value is beyond his financial reality and what was agreed with the owner, he can talk directly with him or with the real estate agent responsible for the property, filing an administrative appeal with the Municipal Department of Finance.
Another way to try to solve the situation is to ask for a report from the real estate agency proving that the market price of the property is lower and its property tax must also be lower as a result.