Starting in 2026, the rental of real estate will be governed by a new taxation model outlined in Supplementary Law No. 214/2025. The tax reform significantly expands the taxes levied on income derived from the rental of real property, affecting both individuals and legal entities.
Currently, legal entities pay PIS and COFINS on rental income at a combined rate of either 3.65% or 9.25%. Under the new reform, they will be subject to IBS and CBS at an estimated rate of 26.5%. Individuals who currently pay Income Tax on rental income through the monthly carnê-leão system may also fall within the scope of the new IBS and CBS, depending on the number of properties rented and their annual income.
Below are the main aspects of the tax reform applicable to the rental of real property.
- Taxable Events
For individuals, IBS and CBS will apply when:
- Annual rental income exceeds BRL 240,000, assuming the owner has more than three rented properties; or
- Annual rental income exceeds BRL 48,000, if there is only one rented property.
For legal entities:
- PIS and COFINS will no longer be charged; and
- Rental revenue will be subject to IBS and CBS.
- Tax Base
The tax base for IBS and CBS will consist of the total rental income received, minus:
- any taxes and fees levied on the real property;
- condominium fees; and
- a social deduction of BRL 600.00, capped at the tax base amount for residential properties.
- Tax Rates
- In the context of real estate leasing, the IBS and CBS rates will be reduced by 70%.
- A Senate Resolution will establish reference rates for these taxes, but the combined rate is currently estimated at 26.5%.
- For taxable events occurring throughout 2026, test rates of 0.9% for CBS and 0.1% for IBS will apply.
- While these test rates are provided for in the Supplementary Law, the actual collection of these taxes is contingent upon the issuance of specific rules governing payment, offsetting, and refunds.
- Transition Phases
- 2026–2027: implementation of the IBS and CBS test rates;
- From 2028 onward: gradual increase of IBS and CBS rates, coupled with a proportional reduction of PIS and COFINS, as well as other consumption taxes (ICMS, ISS, and IPI);
- 2033: repeal of current taxes and full implementation of the new tax system.
Outcome: Taxpayers who currently pay only Income Tax on rental income, such as individuals, will see an effective increase in their overall tax burden during each phase of the transition.
- Simulations – Before and After the Tax Reform
- Individual – 4 Residential Properties
| Item | Before the Reform (IRPF) | After the Reform (IRPF + IBS/CBS) |
| Annual revenue | BRL 240,000.01 | BRL 240,000.01 |
| Monthly revenue | BRL 20,000,00 | BRL 20,000.00 |
| Standard deduction | BRL 564.80 | BRL 564.80 |
| IRPF base | BRL 19,435.20 | BRL 19,435.20 |
| IRPF | BRL 4,448.00 | BRL 4,448.00 |
| Social deduction (BRL 600 per property) | — | BRL 2,400.00 |
| Adjusted IBS + CBS tax base | — | BRL 17,600.00 |
| Estimated IBS + CBS rate | — | 26,5% |
| Redutor da alíquota (locação) | — | 70% |
| IBS + CBS | — | BRL 1,399.20 |
| Total Taxes | BRL 4,448.00 | BRL 5,847.20 |
| Effective tax burden | 22,24% | 29,24% |
Legal Entity (Presumed Profit Regime) – 4 Properties
| Description | Before the Reform (Leasing) | After the Reform (Non-Residential Leasing) | After the Reform (Residential Leasing) |
| Gross monthly revenue | BRL 20,000.00 | BRL 20,000.00 | BRL 20,000.00 |
| Annual revenue | BRL 240,001.00 | BRL 240,001.00 | BRL 240,001.00 |
| Presumed tax base (32%) | BRL 6,400.00 | BRL 6,400.00 | BRL 6,400.00 |
| Corporate Income Tax (15%) | BRL 960.00 | BRL 960.00 | BRL 960.00 |
| CSLL (9%) | BRL 576.00 | BRL 576.00 | BRL 576.00 |
| PIS (0,65%) | BRL 130.00 | — | — |
| Cofins (3%) | BRL 600.00 | — | — |
| Social deduction (BRL 600 per property – residential) | — | BRL 2,400.00 | |
| Adjusted tax base | — | BRL 20,000.00 | BRL 17,600.00 |
| Estimated IBS + CBS rate | — | 26,5% | 26,5% |
| Rate reduction (70%) | — | Yes | Yes |
| Reduced rate (IBS + CBS) | — | 7,95% | 7,95% |
| IBS + CBS due | — | BRL 1.590,00 | BRL 1.399,20 |
| Total taxes (after the reform) | BRL 2.266,00 | BRL 3.126,00 | BRL 2.935,20 |
| Effective tax burden | 11,33% | 15,63% | 14,68% |
| Advantage under the reform | There will be a right to claim IBS/CBS input tax credits on the acquisition of real estate | ||
- Short-Term Rentals (e.g., Airbnb, Booking and Similar Platforms)
- Supplementary Law No. 214/2025 provides specific treatment for short-term rental agreements lasting up to ninety days. In these cases, the rental will be treated as a lodging service, resulting in a 40% reduction in the applicable tax rate.
- Even with this reduction, the overall tax burden will significantly increase compared to the current framework, requiring a careful assessment of profitability.
Simulation
Taxation After the Reform – Legal Entity (Airbnb Leasing / Hospitality Rules)
| Description | Amount / Information |
| Gross monthly revenue | BRL 20,000.00 |
| IRPJ/CSLL (7,68%) | BRL 1,536.00 |
| Base rate (CBS + IBS) | 26,5% |
| Reduction (Art. 281, Complementary Law No. 214/2025) | 40% |
| Reduced rate (CBS + IBS) | 15,9% |
| CBS + IBS due | BRL 3,180.00 |
| Total taxes (CBS + IBS + Corporate Income Tax / Social Contribution) | BRL 4,716.00 |
| Effective tax burden | 23,58% |
- Fixed-Term Leasing
For fixed-term lease agreements, the lessor may choose to collect IBS and CBS at a 3.65% rate until the end of the contract or until December 31, 2028, whichever comes first, in the case of residential property leasing.
This benefit is conditional upon the contract:
a) being entered into by the date of the publication of Supplementary Law No. 214/2025 (January 16, 2025), with proof of execution through notarized or electronic signatures; and
b) being registered with the Real Estate Registry Office or the Registry of Deeds and Documents by December 31, 2025.
For residential leasing, evidence of the contract may also be provided through the payment of rent on or before the last day of the month following the publication of Supplementary Law No. 214/2025 (January 16, 2025).
By opting for this special regime, the taxpayer will not be entitled to:
- claim IBS and CBS input tax credits related to real property transactions; or
- apply the social deduction of BRL 600.00.
The tax team at LBM Advogados is available to provide strategic guidance on these matters.