Income Tax 2022: real estate funds

If you apply in real estate investment funds, also known as FIIs, you should know that the monthly income paid by these funds works like rental income, but with the advantage of being tax exempt. However, what many people do not know is that the trading of shares in these funds is not exempt. On the contrary, it is subject to a rate of 20% on any net gain at the time of sale.

And the tax must always be paid in the month following the sale of the shares, and not at the time of the Income Tax declaration. That is, maybe you already owe the IRS before you even declare.

All details of the investment in FIIs must be informed in the annual income tax return. The FIIs’ data must be informed in three different forms of the IR program: “Exempt Income”, “Assets and Rights” and “Variable Income”.

See below, step by step, how to fill out the declaration with all the information about this investment and how to pay any late taxes.

FII income is exempt, but needs to be declared

Income paid periodically by the REIF is exempt from tax. However, it needs to be informed in the annual income tax return. The amounts received must enter the “Exempt Income” tab.

Get the proof of income provided by the broker or fund manager and follow the guidelines below.

Locate the “Exempt and Non-Taxable Income” form in the menu on the left side of the declaration filling program screen. Click “New”.

In the “Type of Income” field, select the code “26-Others”. Select whether the investment is in your name (“holder”) or a “dependent” listed on your statement.

Then fill in the “CNPJ” and the “Name of the Paying Source”. Each FII has its own CNPJ. The name of the paying source is the name of the fund.

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In the “Description” field put the phrase “Income received from real estate funds”. And in the “Value” field, enter the total amount of income received from that specific real estate fund.

If you have invested in more than one REIFyou will have to repeat the steps above for each fund, informing the income received from each REIF separately.

FIIs must also be declared on the “Assets and Rights” form

You also need to detail, on the “Assets and Rights” sheet, the number of shares of real estate funds you have at the end of each year, as well as any changes due to purchase and sale operations on the Stock Exchange.

Locate the “Assets and Rights” form in the menu on the left side of the declaration filling program screen. Click “New”.

Stay tuned for changes in this form from the IR 2022 declaration. The Federal Revenue created “groups” and new “codes” for investments.

The FIIs must be informed in the group “07 – Funds” with the code “03 – Real Estate Investment Funds (FII)”.

Then, inform if the fund share was purchased by you (holder of the declaration) or by any of your dependents. Under “Location (Country)”, choose “105 – Brazil”.

In the “CNPJ” field, enter the data referring to the real estate fund. This number must appear together with the name of the fund on the earnings report provided by the brokerage house or the FII administrator.

In the “Discrimination” field, inform the number of shares, the name of the real estate fund and the name of the brokerage company used to purchase the shares. If there was a purchase or sale of shares, detail the operations in this field as well.

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In the fields “Status on 12/31/2020” and “Situation on 12/31/2021” enter the values ​​​​in the income report.

If you already had FII shares in 2020 and held the position in 2021, repeat the purchase amount in both fields. Never update the 2021 field by the market value of the shares. What counts for Income Tax is how much you invested in the fund.

If you did not have the fund in 2020, put zero in “Status at 12/31/2020” and inform how much you invested in 2021 in the “Status at 12/31/2021” field.

If you sold all shares in the last year, put a value of zero in “Status as of 12/31/2021”. If you only bought more or sold part of the shares, update the “Status on 12/31/2021” field with the difference paid or received.

Gain from the sale of FII shares on the Stock Exchange pays 20% IR

What many newbie investors in the real estate fund market don’t know is that trading the shares of these funds on the Stock Exchange is subject to income tax on capital gains.

The tax is 20% on the net gain, that is, on the difference between the sale price and the purchase price, already considering costs, such as stock exchange and brokerage fees.

For example, if you bought 10 shares of an FII at R$80.00 each (total of R$800), already including brokerage and Exchange fees, and sold the same shares for R$100 each (total of BRL 1,000), so your profit on the trade was BRL 200 (BRL 1,000 minus BRL 800). The tax due will be 20% of this amount, that is, R$ 40.

On the other hand, it is possible to offset any losses recorded on the sale of shares in one month, deducting the gains in the following months, as in the stock market.

This strategy helps to reduce the tax base to be paid, but it is up to you to carry out all this monthly control.

Tax must be paid in the month following the sale of shares

As with shares, the tax on the net gain from the sale of shares in real estate funds must be collected until the last business day of the month following the sale.

For example, if you sold FII shares in March and made a profit, the tax must be paid at the bank by the last business day of April, through the Federal Collection Document (Darf).

The Darf code for paying tax on the sale of shares in FIIs is the same as the tax on the sale of shares and other securities traded on the Exchange: 6015.

Add up the tax amounts due each month on each of these types of investment on the Exchange and pay a single Darf with the total amount for the month.

If you have late payments, see here how to issue Darf with interest and correction. If you leave the accounts with the Federal Revenue Service only at the time of delivery of the annual statement, the fine and interest will be higher.

Trading of FIIs has a specific sheet in the declaration

The monthly results of negotiations with shares of real estate funds must be informed in a specific form of the annual income tax return.

Locate the “Variable Income” folder on the menu on the left side of the IR 2022 filling program screen. Click on it and select the “Operations in FII or Fiagro” tab.

Choose the “owner” tab to inform the operations performed by you and the “dependent” tab to detail operations performed by them.

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Enter in the column “Net income for the month” the net gain or loss recorded in each month. In case of loss, do not forget to put the negative sign (-) in front of the number. If you did not sell shares in a given month, set the value to zero.

In the column “negative result until the previous month”, inform in the “January” line the possible loss accumulated in the previous year with the negotiation of shares of FIIs. For this, it is important to consult the previous year’s income tax return. In this field, you must not put the negative sign before the number.

In the column “Tax paid” enter the amount paid in Darf for that month. Remember that the Darf paid, for example, in April refers to the tax due in March. That is, enter this amount on the March line.

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