Brazilian developers' association Abrainc estimates that a hypothetical 5% IOF on LCI and LIG notes could raise real estate financing rates by 0.7 percentage point, while the government says no decision has been made.
According to Portas (Notícias), citing a report by Valor, a study by the Brazilian Association of Developers (Abrainc) models a hypothetical 5% tax on financial operations (IOF) applied to Real Estate Credit Notes (LCIs) and Secured Real Estate Notes (LIGs). Abrainc estimates that such a charge could raise the real estate financing rate by 0.7 percentage point and cut around 1.4 million middle-class Brazilians off from home ownership. The figures are the association's projections for a scenario reportedly being floated by the government, not an adopted measure. The topic matters because LCIs and LIGs now account for 58% of the funding sources for middle-class real estate lending, up from 21% five years earlier, according to Abrainc. Over the same period, the SBPE savings system recorded net outflows of R$ 326 billion. If the notes were taxed, banks might have to offer investors higher returns to keep them attractive, which would raise funding costs and tend to feed through to the rates paid by buyers. In its simulation, Abrainc says reduced credit supply would lower housing production, with a potential impact of R$ 46.9 billion on GDP and the loss of 611,000 jobs, counting direct, indirect and induced effects. The association calculates that the tax would raise R$ 1.8 billion, but that weaker activity would cost about R$ 2 billion in other public revenue, leaving a negative net fiscal result under its assumptions. The government has not confirmed any such plan. National Treasury Secretary Daniel Leal said on 29 October that there was no ready measure to charge IOF on securities that are currently exempt; the subject was still under discussion, and the use of this tax had not been defined. For anyone financing property in Brazil, this is a development to watch rather than a settled rule.