It is important to analyze real estate investment funds (FIIs) as a whole to verify the overall tax impact of the investment.
There are basically 3 important moments in the “life” of a fund: (i) its constitution, with the payment of shares with assets, (ii) the investments made by the fund manager, and (iii) the receipt of income from the FII, the redemption or sale of shares.
Last week we commented here on the tax benefits specifically in relation to the third moment above: the income distributed by the FIIs to the beneficiaries, and capital gain on the sale of the FII quotas.
However, in relation to the second moment, the funds have certain tax characteristics:
(i) The income and capital gains earned by the FIIs are exempt from the Tax on Credit, Exchange and Insurance Operations (IOF) and from the Corporate Income Tax (IRPJ).
(ii) Investments in other FIIs, in Certificates of Real Estate Receivables (CRIs), mortgage bills, and real estate credit bills, are not subject to income tax withholding.
(iii) However, the net income and gains earned by the portfolios of real estate investment funds, in fixed income or variable income investments, are subject to the incidence of corporate income tax at source in accordance with the same rules provided for financial investments of legal entities.
The exemption from taxes in such applications that occurred within the FII ends up making the fund’s equity larger and enabling new applications. This is one of the most attractive benefits for the constitution and an FII by qualified and professional investors.