CVM retreats and maintains real estate fund income rule

The CVM (Securities and Exchange Commission) reconsidered the decision taken in January this year on the distribution of income to real estate fund shareholders, which brought relief to investors of this type of investment.

According to a report by analysts from XP, the measure referred to the Maxi Renda fund, “but indirectly it would end up affecting and worrying the market as a whole”, as the change could have an impact on several other funds.

At the beginning of the year, the CVM ordered the suspension of income distribution from the Maxi Renda real estate fund, managed by XP Asset with approximately R$2.3 billion in equity and 515,000 shareholders.

According to the autarchy, this decision had been taken due to the fact that the fund distributes the income based on the result of the cash basis, which is basically composed of the profit with the income from rental of real estate, in the case of the so-called brick.

For funds that invest in paper assets (securities backed by real estate credits, for example), the income from these investments also enters the account as ‘cash income’.

At first, the CVM considered the practice to be incorrect, on the understanding that income should be limited to the result of the accrual basis, also called accounting profit. This result considers the depreciation of the fund’s assets. In the case of real estate, the value of the annual revaluation of the properties.

According to the previous understanding of the CVM, the distribution of amounts to shareholders that exceed the accounting profit should not be classified as income.

Such a position would transform the amount in excess of the accounting profit paid to the shareholder into amortization. When selling the assets, according to the IRS rules, the extra amount would be considered a capital gain, which is subject to IR (Income Tax) taxation of 20%.

The change would therefore affect the competitiveness of FIIs, whose income is exempt from IR.

According to the minutes of the meeting held the day before, the members of the CVM collegiate chose to reconsider the decision, starting to allow again the practice of distributing income based on the cash basis.

Through the most recent decision, the administrator of the FII, BTG Pactual, was instructed to promote improvements that ensure investors are clear about the origin of the distributed income.

“In conclusion, the CVM’s final decision brings benefits to the FIIs segment. The whole imbroglio, it seems, had an initial informational concern, and in the end, the decision brings ways to improve this information, and undoes any legal and mainly fiscal that could happen if the first decision of the collegiate was maintained”, point out the analysts of XP.

They also say that they expect an initially positive reaction from the market, as the uncertainty that hovered over the decision on the dividend distribution regime has been overcome.

At around 2:05 pm, Maxi Renda shares appreciated 2.1%, while the stock exchange’s real estate funds index advanced 0.17%.

“However, we don’t see big triggers [gatilhos] that price major changes, given the current moment of the industry as a whole and the country’s macroeconomic scenario.”