The Brazilian Federal Revenue's new program for the updating of movable and immovable properties, known as Rearp (Regime Especial de Atualização e Regularização Patrimonial), has a deadline for adherence ending this Thursday, September 19. This initiative is specifically applicable in certain cases, raising questions about the strategic value of participating in the program. The Folha newspaper has detailed examples to help potential participants understand when it may or may not be worth paying the tax in advance to potentially minimize future capital gains tax liability upon selling the property.

Under the Rearp program, properties and vehicles acquired by December 31, 2024, whether located in Brazil or abroad, can be revaluated. To facilitate this process, a reduced income tax rate of 4% for individuals and 8% for legal entities will apply to the difference between the new value and the original purchase price. This represents a significant tax incentive for individuals looking to manage their property taxes proactively, particularly since the traditional capital gains tax can be as high as 22.5% for individuals and more for corporations.

However, the program's structured benefits may not be universally applicable, leading to questions about its overall effectiveness. Not all property holders will find it to be a financially prudent decision to participate, especially in light of the examples provided by the Folha which illustrate potential pitfalls. The importance of careful evaluation in each situation is underscored when considering long-term financial implications and the timing of potential property sales.