Understanding U.S. Taxes for Brazilian Investors

For many Brazilians investing in real estate in the United States, understanding how U.S. taxes work can feel like the most confusing part of the process. But ignoring tax obligations—or handling them incorrectly—can lead to unnecessary costs, legal issues, and lost profits.

The good news is that with the right structure and planning, you can fully comply with U.S. tax laws and still build a profitable, dollar-based real estate portfolio.

Here’s what Brazilian investors need to know about U.S. real estate taxes in 2025—and how to handle them the smart way.

💼 1. Yes—You Must Pay Taxes in the U.S.

If you own rental property in the U.S., you are considered a non-resident alien for tax purposes and are required to file U.S. tax returns and pay taxes on:

• Rental income

• Capital gains when selling the property

• Other taxable income generated in the U.S.
  

💡 Many Brazilians mistakenly believe that paying taxes in Brazil is enough—but the IRS requires U.S.-source income to be reported locally, even for foreign investors.

🏠 2. Taxes on Rental Income

As a Brazilian investor, you generally have two options for how rental income is taxed in the U.S.:

A. Gross Income Withholding (Default Rule)

• 30% tax is withheld on gross rental income (without deductions).

• Example: If you earn $3,000/month, you pay $900/month in taxes.

B. Net Income Taxation (With IRS Election)

• Tax is paid on net income after expenses (mortgage interest, repairs, management, etc.).

• Requires filing IRS Form W-8ECI and annual tax returns (Form 1040-NR).

• Typically results in much lower tax liability.
  

💡 Most smart investors choose the net income method by working with a tax advisor who files the proper election.

💰 3. Capital Gains Tax When Selling

When you sell your property for a profit, you may be subject to capital gains tax, calculated as:

• 15%–20% (long-term capital gains, after 1 year of ownership)

• Up to 37% (short-term, if held less than 1 year)

Plus, as a foreign owner, your sale is subject to FIRPTA (Foreign Investment in Real Property Tax Act), which requires:

• 15% withholding on the gross sale price

• You can recover overpaid taxes by filing a U.S. tax return post-sale
  

💡 A good CPA can help you reduce your tax burden and recover part of the FIRPTA withholding when eligible.

🌎 4. What About Taxes in Brazil?

Brazilian investors may also owe taxes to Receita Federal when:

• Bringing profits back to Brazil

• Reporting capital gains from foreign property

• Declaring foreign assets (above US$100,000)

The good news? The U.S. and Brazil have no tax treaty, but Brazilian law allows you to claim foreign taxes paid as a credit to avoid double taxation.

💡 Work with a Brazilian contador or international tax specialist to stay compliant on both sides.

🧾 5. Key Tax Forms for Foreign Property Owners

If you're a Brazilian investor in U.S. real estate, expect to deal with the following forms:

• W-8ECI: Elects to pay tax on net rental income

• Form 1040-NR: U.S. tax return for non-residents

• Form 5472: Required for foreign-owned U.S. companies (LLCs)

• Form 8288/8288-A: FIRPTA withholding when selling property

• ITIN Application (Form W-7): For investors without a U.S. Social Security Number
  

💡 A U.S. tax advisor or CPA with experience in foreign ownership is your best ally.

📌 6. How a U.S. Company Affects Your Taxes

If you invest through a U.S.-based LLC or Corp, your tax obligations may shift:

• LLCs are typically treated as pass-through entities (profits go to you personally)

• Corporations may be taxed separately, with different rates and filing requirements

• Entity structure also affects estate planning and asset protection
  

💡 Choosing the right structure from the beginning can make a big difference in how much you pay—and how much you keep.

🔑 Final Thoughts

U.S. real estate is one of the best ways for Brazilians to grow wealth in dollars, protect assets, and diversify globally. But to make the most of your investment, you need to understand the tax rules—or work with professionals who do.

At Dreams N Fun, we help Brazilian investors build a tax-smart real estate strategy from the start. From choosing the right structure to connecting you with trusted CPAs, we make sure your investment is fully legal, fully optimized, and fully stress-free.

📩 Need help navigating U.S. taxes as a foreign investor? Contact Dreams N Fun today and let’s plan your next move with confidence.