First Panel confirms that exemption from income tax on property sales

First Panel confirms that exemption from income tax on the sale of real estate is valid for financing settlement.

The First Panel of the Superior Court of Justice (STJ) confirmed that the capital gain resulting from the sale of residential property used to pay, in whole or in part, the financing of another residential property in Brazil. The collegiate dismissed the appeal of the National Treasury because it considered the restriction imposed by normative instruction to the exemption hypotheses of Law 11.196 / 05 to be illegal.

The decision unifies the understanding of the two STJ public law classes. In October 2016, the Second Panel had already adopted the same understanding when judging Special Appeal 1,469,478, which had Judge Mauro Campbell Marques as rapporteur for judgment.

According to the process judged in the First Panel, a couple sold the house where they lived in March 2015 and, in the same month, used part of the money obtained to settle housing debt with Caixa Econômica Federal. Understanding to be entitled to the exemption provided for by law, the couple paid the IR on the capital gain related to the sale of property only on the amounts not used to pay the financing.

The Federal Regional Court of the 3rd Region (TRF3) recognized the right not to collect IR on the profit obtained on the sale of the home, in the part used to acquire another property, as provided for in article 39 of Law 11,196 / 05 .

The National Treasury questioned the decision, based on the restriction provided for in Normative Instruction 599/05, of the Federal Revenue Secretariat, which states that the exemption does not apply to the sale of real estate to settle the remaining debt for the acquisition of property already owned by the seller.

Clear illegality

According to the rapporteur of the case in the First Panel of the STJ, Minister Regina Helena Costa, the exemption provided for in Article 39 of Law 11.196 / 05 - known as the Lei do Bem - reaches the hypotheses in which the profit obtained from the sale of property by an individual is intended, totally or partially, to settle or amortize the financing of another residential property that the seller already owns.

The rapporteur said that, when Law 11.196 / 05 is compared with the Federal Revenue's normative instruction, it is clear that the restriction imposed by the tax authorities is unlawful by removing the IR exemption for payment of the debit balance of another property already owned, or whose purchase and sale promise is already concluded.

“Thus, article 2, paragraph 11, item I, of Normative Instruction SRF 599/05, by restricting the enjoyment of the tax incentive with a requirement of a requirement not provided for by law, violates article 39, paragraph 2, of Law 11.196 / 05, therefore suffering from illegality ”, he explained.

Real estate sector

For Regina Helena Costa, in intending to promote real estate transactions, the Lei do Bem gave prestige to the use of resources generated in the real estate sector, in a more comprehensive and reasonable conception than the acquisition of a "new" property, as advocated by tax authorities.

“In effect, the law has nothing to do with chronological primacy in the conclusion of legal transactions, much less excludes the discharge or amortization of financing from the exempt hypothesis, provided that the 180-day term is observed and the income tax is paid proportionately. to the amount not used in the acquisition ”, explained the minister.