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The Tax Reform Introduces Two New Taxes That Will Apply to Rentals in Specific Situations, with Reducers and Exceptions. Landlords and Tenants Will Need to Adapt to the Changes Starting Gradually in 2026.
Starting in 2026, the tax reform will affect real estate rentals with the creation of the Tax on Goods and Services (IBS) and the Contribution on Goods and Services (CBS).
The new taxes, established by Complementary Law No. 214/2025, apply in specific situations and bring relevant reducers, with gradual implementation until 2033.
Who Will Be Affected Among Individuals
Individuals who rent properties will continue to pay personal income tax (IRPF), as they do today.
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However, they will be considered contributors of IBS and CBS when classified as “habitual” landlords under the law.
This generally occurs if in the previous year rental income exceeded R$ 240,000 and there are more than three rental properties.
There is also a second trigger: even with fewer properties, anyone exceeding R$ 288,000 in rental income in the same calendar year becomes a contributor that year.
These conditions are outlined in Article 251 of LC 214/2025 and have been detailed by specialists and industry entities.
In practice, those who do not meet these criteria remain only subject to IRPF.
The aim of the new classification is to capture economic rental activities at a business standard, without taxing small occasional landlords.
What Changes for Legal Entities
Companies engaged in rentals were already subject to PIS/Cofins and, depending on the regime, to IRPJ/CSLL.
With the reform, PIS and Cofins on rental income will be replaced by IBS and CBS.
Although the estimated standard rate for the new dual VAT is in the range of 25% to 28%, the rental sector enjoys a 70% reduction in the applicable rate.
This reduces the effective rate of IBS/CBS to a level close to 8% to 10%, according to estimates released so far.
Reducers and Calculation of Rental Value
LC 214/2025 provides for a 70% reduction in the rates of IBS and CBS in operations of rental, onerous assignment, and leasing of real estate.
Additionally, it created the so-called social reducer for residential rentals: R$ 600 per property deducted from the rental value used as a reference for calculating the tax.
The reducer is updated monthly by the IPCA, preserving its purchasing power.
In other words, the tax applies to the rent minus R$ 600, and with the IBS/CBS rate reduced by 70% for this type of operation.
An example cited by specialized vehicles: in a residential rental of R$ 2,600, R$ 2,000 is considered for the purpose of IBS/CBS after deducting R$ 600.
On this base, the reduced rate of the new taxes is applied.
Seasonal and Short-Term Rental
The seasonal rental (up to 90 days) is treated more similarly to hospitality, with a lower reduction compared to traditional residential rentals.
This tends to increase the relative burden in this niche when compared to long-term rental.
The rule seeks to avoid competitive distortions between seasonal platforms and the hotel industry.
Pass-Through to Tenant
Although IBS and CBS apply to the owner’s income, the trend is that part of the cost will be passed on to the tenant in new contracts and during the renegotiation of current ones.
In interviews, the Vice President of Real Estate Management and Condominiums at Secovi-SP, Moira Toledo, said that “the tax will be charged in a way that the tenant knows exactly how much they will pay,” reinforcing transparency in the formation of the rental price.
Implementation Timeline
Implementation begins in 2026, with test rates of 0.1% for IBS and 0.9% for CBS.
This period serves to adjust systems and comply with accessory obligations in the new model.
The transition will continue until 2033, when the regime will be consolidated and the old taxes — such as ICMS, ISS, PIS, and Cofins — will have been completely replaced.
Special Regime for Old Contracts
Contracts for non-residential rentals entered into until January 16, 2025 may opt for a transitional special regime, with a total rate of 3.65% on gross income.
The reference is close to the old cumulative PIS/Cofins.
This is an option designed to ensure predictability and gradual adaptation of existing contracts.
Income Tax and Estimated Total Burden
The Income Tax has not been changed by LC 214/2025 for rental income of individuals, which continue to follow the progressive table.
In scenarios with higher exposure, independent analyses suggest that the total burden (IR + IBS/CBS) may approach 35.9%.
This occurs when the individual taxpayer is subject to both new taxes and the full IR rates.
The figure is a technical estimate based on the projected standard rate and the sectoral reducer, and may vary depending on income bracket and deductions.
Points of Attention for Landlords and Tenants
Landlords who are near the limits of R$ 240,000 in the previous year or R$ 288,000 in the same year need to monitor their income and the number of rented properties.
Being classified as a contributor to IBS/CBS changes obligations: issuance of a tax document, separate calculation, collection, and possible credit utilization in the case of legal entities.
Tenants, in turn, should follow the pass-through clause and the breakdown of taxes in the contract and receipts. This tends to gain standardization with the reform.
In light of this new framework, how do you evaluate the possibility of renegotiating contracts or adjusting the form of taxation to mitigate impacts in 2026?
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