Municipal Decree no. 56589/2015 ("Decree") was published in the Municipal Gazette of São Paulo this Wednesday, November 11th. It regulates the collection of yearly-increasing IPTU tax for real property that does not serve its social function.
The Decree establishes that urban real estate no longer serves its social function when it is not occupied by permanent buildings, it is underused or unused, and its owner has been served notice by the Local Municipality, being required to start using the property adequately, within a definite period of time.
If the deadline set by the Local Municipality expires and the owner has not yet started using the property adequately, yearly-increasing IPTU rates will be levied for 5 consecutive years until the maximum tax rate of 15% is reached.
If, after five years from the Local Municipality's notice, the owner does not prove to have at least started taking the required measures, the Local Municipality may start the expropriation process of the property.
The yearly-increasing IPTU may be collected by the Local Government of São Paulo as of 2016.
Please click here to access the Decree.
Our Real Estate and Tax Departments will remain at your disposal should you need any clarification.