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Starting in 2026, Landlords Will Have a New Way to Pay Taxes with the Tax Reform. Know Who Will Be Most Affected and How the Change Works.
According to information released by the website O Povo, starting in 2026, landlords will undergo significant changes in how they pay taxes.
The new tax legislation, which will be gradually implemented until 2033, introduces a dual VAT model that will replace old taxes such as ISS, PIS, and Cofins with two new taxes: IBS and CBS.
It is important to highlight that utility bills, such as electricity, water, gas, and internet, remain the responsibility of tenants. These personal expenses are not part of the reform.
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New Taxes? How Will Taxation Be for Residential and Temporary Rentals
Currently, individuals renting properties pay a progressive Income Tax, with rates reaching up to 27.5%.
With the reform, rental payments will be taxed under the VAT, with a rate close to 28%.
However, for traditional residential rentals, a 70% reduction will be applied, which lowers the effective tax to around 8.4% of gross revenue.
For temporary rentals, lasting less than 90 days, taxation will be higher.
These rentals will be treated as accommodation services — similar to hotels and digital platforms — with a smaller reduction of 40%, raising the tax to approximately 16.8%.
Who Will Be Affected by the New Tax Rules
The main affected parties will be property owners with four or more rental properties, and whose annual income exceeds R$ 240,000.
Also included are individuals with fewer properties but who receive more than R$ 288,000 annually in rental income.
Additionally, the reform also impacts small builders who sell properties less than five years after completion, as well as those who sell three or more different properties within the same year.
Possible Impacts on Tenants
Although tenants will not have direct changes concerning utility bills, they may feel indirect impacts.
This is because landlords may pass on the higher costs of taxation to rental prices, leading to increases in costs.
Thus, even without being obliged to pay the new taxes, tenants may notice adjustments reflecting the higher tax burden on property owners.
Tax Simplification and New Challenges for the Real Estate Sector
The tax reform’s main goal is to simplify the Brazilian fiscal system, unifying taxes and making the collection more transparent.
For the real estate market, this could mean greater clarity but also the need for adaptation.
Property owners and investors will need to prepare for this new reality, assessing the reform’s impact on their earnings and the rental market.
Overall, the changes that begin in 2026 are significant for those in the real estate sector and for those who rent.
Understanding and anticipating the new rules will be essential to avoid surprises and ensure financial stability in light of the tax reform.
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