Insights
Supreme Federal Court Exempts Real Estate Companies from ITBI When Contributing Capital
An Important Ruling for Developers, Real Estate Companies, and Real Estate Holding Companies
On October 19, 2026, the Federal Supreme Court (STF) concluded the proceedings in Constitutional Appeal No. 1,495,108 (General Repercussion Topic 1,348) and ruled, by a vote of 8 to 2, that the ITBI exemption for the contribution of real estate as capital also applies to companies whose primary activity is the purchase and sale, rental, or leasing of real estate.
Topic 1,348: What Did the STF Decide?
The case involved the extension of the ITBI exemption provided for in Article 156, paragraph 2, item I, of the Federal Constitution. According to that provision, “ITBI is not levied on the transfer of assets or rights incorporated into the assets of a legal entity as part of a capital contribution, nor on the transfer of assets or rights resulting from a merger, consolidation, spin-off, or dissolution of a legal entity, unless, in such cases, the acquirer’s primary activity is the purchase and sale of such assets or rights, the leasing of real estate, or financial leasing.”
The controversy centered on whether the waiver of immunity for companies whose primary activity is real estate was limited to cases of corporate reorganizations, or whether it also extended to capital contributions (as the municipalities argued).
The opinion of the reporting justice, Justice Edson Fachin, prevailed, according to which ITBU immunity is waived for real estate activities only in corporate reorganization transactions, but not in capital contributions. This interpretation must be followed by all courts in the country.
The following principle of general repercussion was then established: “The ITBI tax exemption, provided for in Article 156, paragraph 2, subparagraph I, regarding the formation of share capital through the contribution of property and assets, is unconditional and, therefore, not contingent on the company’s primary real estate activity.”
Who benefits from this decision?
The confirmation of broad ITBI exemption for the contribution of real estate to a company’s capital primarily benefits:
real estate companies and developers that receive real estate as a capital contribution;
asset and family holding companies used in estate and succession planning; and
economic groups that reorganize real estate assets among companies.
Be aware of the decision’s limitations!
ITBI exemption, however, is not unlimited.
- Excess value. As decided by the STF in 2020 (Theme 796), the exemption does not apply to the portion of the real estate’s value that exceeds the paid-in capital. Therefore, if the real estate is contributed at a value higher than the subscribed capital, the excess may be taxed.
- Fraud detection. The opinions issued by the STF make it clear that municipalities may demonstrate, upon analysis of the specific case, the existence of fraud or sham transactions to justify the collection of ITBI.
For this reason, each transaction must be structured and documented with careful attention to the value assigned to the properties, the actual payment of capital, and the economic substance of the transaction.
Is it possible to request a refund of ITBI paid?
In principle, yes. Anyone who has paid ITBI when contributing real estate to a company’s capital stock in the last five years may file a refund request. However, the effects of the decision may be modified in any motions for clarification, which could limit the amount recoverable.
How LBM Advogados Can Help
The tax team at LBM Advogados can advise companies and investors on contributing real estate as capital, defending against ITBI assessments, and recovering amounts paid in error, taking into account the applicable deadlines and any potential modification of the decision’s effects by the STF. [Contact our team]
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