See how to increase the value of the property in Income Tax

Taxpayers obliged to declare the Income Tax 2022 who own properties cannot fail to inform the tax authorities, even if they are financed. The question, however, is about the value that should be informed, since houses and apartments have appreciated over the years.

The IRS rules determine which goods must be declared at their purchase value and do not allow updating according to the market. However, there are two ways to increase the cost of the house or apartment without breaking the law: when renovations are carried out or when the property is financed.

The deadline to declare the IR goes until 11:59 pm on Tuesday (31)​. Whoever is obliged and does not deliver the document pays a minimum fine of R$ 165.74, limited to 20% of the tax due in the year. Until 4 pm this Wednesday (25), the Revenue received almost 27 million statements from the expected 34.1 million.

According to the tax authorities, all improvements made to the property made on a permanent basis add value. To declare them, however, you must have the invoices for the services. If you have the declaration withheld in the fine mesh, you will need to present the documents that prove the reforms.

In the case of the financed property, the taxpayer must inform, in the year of purchase, the amount that he gave down, the installments paid in that year, how much he used from the FGTS (Fundo de Garantia do Tempo de Serviço) and may also include the ITBI ( Property Transfer Tax).

According to Marcos Hangui, IR specialist at King Contabilidade, and Sandro Rodrigues, accountant at Attend Assessoria, Consultoria e Auditoria S/S, year after year, as the installments of the financing are paid off, the citizen adds the amount to the total previously paid, increasing the value of the good.

How to declare financed property

According to consultant Richard Domingos, from Confirp Consultoria Contábil, the properties must be declared in the Assets and Rights form, in the property group. It is necessary to inform the total amount of expenses, updating the amount year by year.

See what to do:

1. On the Assets and Rights tab, click on New at the bottom right
2. Choose group 01, real estate. If it is home, the next code will be 12; for apartment, the code is 11
3. Inform, in “Discrimination”, data such as date of purchase, total amount, how much was used from FGTS, bank where the financing is, number of installments and type of contract
4. If the property was purchased in 2021, leave the “Status at 12/31/2020” blank
5. In “Situation on 12/31/2021”, enter the total amount paid for the property in the year, adding installments, down payment, FGTS and other amounts
6. If you are declaring an asset financed in previous years, in the “Situation on 12/31/2021”, the taxpayer must inform the value of 2020 added to the installments paid in 2021, to increase the value of the property
7. It is also necessary to declare the total area, the registration number of the property and the name of the registry office.

How to declare property renovation

1. Open the Assets and Rights tab and click on New; choose group 01, real estate. If it is home, the next code will be 12; for apartment, the code is 11
2. The reform must be declared in the “Discrimination” field, where all the purchase data go
3. Keep the original amount paid for the property, specifying the FGTS you used at the entrance, other loans that were necessary and other expenses
4. In the same field, detail the reform data. Inform if they are improvements that added up to a total in the year, between material and labor and discriminate the expenses with these two items
5. If the property was purchased in 2021, leave the “Status at 12/31/2020” blank
6. In “Status on 12/31/2021”, enter the total amount paid for the property in the year, adding to what you spent on the renovation
7. If you are declaring an asset financed in previous years, in the “Situation on 12/31/2021”, the taxpayer must inform the value of 2020 plus the installments of 2021 and the expenses with the improvements in the property
8. It is also necessary to declare the total area, the registration number of the property and the name of the registry office.

Check the expenses that increase the value of the property in the declaration

It is allowed to declare expenses with:

• Construction, expansion and renovation, provided that the projects have been approved by the competent municipal bodies;
• Small works, such as painting, tile repairs, plumbing, floors, walls;
• Carrying out public works such as laying curbs, gutters, paving roads, installing sewage and electricity networks that have benefited the property.

How to prove the value of improvements

According to Rodrigues, to prove the expenses with renovations, it is necessary to have the invoices for the materials and labor. If the service is provided by individuals, the Revenue accepts the receipt. The documents must be kept for up to five years after the property is sold. “They lend themselves to proving the acquisition cost, essential information to calculate the capital gain in the sale of property”, he says.

The consultant adds that the sum of renovation expenses to the value of the property is important, because with it it is possible to reduce the difference between the purchase cost and the sale value, reducing the capital gain and the IR payable, if case.

IT IS OBLIGED TO DECLARE THE INCOME TAX IN 2022 THE TAXPAYER WHO:

• Received taxable income above BRL 28,559.70 in 2021

• Received exempt, non-taxable or taxed exclusively at source income above BRL 40,000

• Obtained a capital gain on the sale of assets or rights subject to tax

• Was exempt from capital gain tax on the sale of residential property, followed by the acquisition of another residential property within 180 days

• Performed operations on Stock, Commodity, Futures and Similar Exchanges

• Had, on December 31, 2021, possession or ownership of goods or rights, including bare land, above R$ 300 thousand

• Obtained gross revenue from rural activities in an amount greater than BRL 142,798.50

• Who wants to compensate, in 2021 or following years, for losses from rural activity from 2021 or previous years

• The taxpayer who became resident in Brazil in any month and was in that condition on December 31