The Superior Court of Justice (STJ) has decided – under the repetitive appeals rite, in this case THEME 1,113, judged by the First Section of the Superior Court of Justice – that the basis for calculating Real Estate Transfer Tax (ITBI) is the value of the property transferred under normal market conditions.
The rapporteur, Justice Gurgel de Faria, explained that, according to article 38 of the National Tax Code (CTN), “with regard to the calculation basis, the expression ‘fair market value’ must be understood as the value considered under normal market conditions for real estate transfers”. He added that, although it is possible to define an average value for real estate on the market, the appraisal of each property can fluctuate positively or negatively, depending on specific circumstances.
Gurgel de Faria also highlighted that the generic plan of values is established by law in the strict sense of the word, for the exclusive purpose of determining the IPTU (Urban Property Tax) tax base and cannot be used as an objective criterion for establishing the tax base of another tax, which, according to the principle of strict legality, depends on a specific law.
Finally, the rapporteur made it clear that the taxpayer’s statement is presumed to be in good faith.
The STJ has established three theses regarding the calculation of ITBI in purchase and sale transactions:
- the ITBI calculation basis is the value of the property transferred under normal market conditions, and is not linked to the IPTU calculation basis, which cannot even be used as a tax floor;
- the value of the transaction declared by the taxpayer carries a presumption that it is consistent with the market value, which can only be overturned by the tax authorities by means of a proper administrative procedure;
- the municipality cannot previously arbitrate the ITBI tax base based on a reference value that it establishes unilaterally.
The tax team at Ronaldo Martins & Advogados is at your disposal for any clarification you may need on the subject, as well as to check the possibility of a refund of amounts unduly paid as ITBI.
