Under Complementary Law No. 214/2025 and the regulations published in 2026 (Decree No. 12,955/2026 and CGIBS Resolution No. 6/2026), the rental, paid assignment, and leasing of real estate are now subject to specific rules under the special real estate tax regime, distinct from those governing property sales and real estate development.

The general rule under the special regime provides for a 50% reduction in IBS and CBS tax rates for real estate transactions in general. However, rentals, paid assignments, and leases benefit from an even greater reduction of 70%. In practice, this brings the effective tax burden on rental income to approximately 8.4%, substantially below the estimated 14% applicable to property sales when the system is fully implemented.

In addition to the rate reduction, residential rentals benefit from the Social Reduction: a fixed monthly amount per property, adjusted according to the IPCA, which is deducted from the tax base before the tax is applied. The aim is to preserve access to housing and reduce the tax burden on lower-value residential rentals.

Unlike property sales, which follow the logic of delivery or supply, IBS and CBS on rental income are calculated when the rent is paid, under a cash-basis system. This requires landlords, whether individuals or legal entities, to closely monitor the actual cash flow received each month rather than relying solely on the amounts stipulated in their contracts.

The regulations have also clarified issues that the law had left open. Property-related taxes, condominium expenses, annual ground rent, and occupancy fees passed on to the tenant generally fall outside the landlord's tax base, provided there is unequivocal proof of payment and evidence that the amounts do not constitute the landlord's own revenue.

Conversely, when the tenant pays for improvements, renovations, or upgrades that serve as a form of indirect compensation to the landlord, these amounts are included in the rental tax base, even if no money changes hands. The tax base must reflect the total economic value received by the landlord, including any non-monetary consideration.

Because rental activities often involve individuals who hold a limited number of properties as a store of wealth, specific rules determine when landlords become IBS and CBS taxpayers. This issue is explored in greater detail in a separate article on individuals under the new tax system. It is worth emphasizing, however, that not every recurring rental activity automatically turns a property owner into a regular taxpayer.

Short-term rentals, typical of digital platforms, when contracted for periods of up to 90 consecutive days, generally fall under a specific accommodation tax regime rather than the general real estate rental regime. This results in tax treatment that differs from traditional residential rentals. Those operating short-term rentals on a larger scale should carefully assess this distinction.

Rental agreements entered into before the Tax Reform may qualify for specific transitional rules, with taxation at a reduced fixed rate for as long as the contract remains in force, provided formal registration and timing requirements are met. Landlords should review their portfolio of active agreements during 2026 to determine whether these requirements are satisfied.

For real estate developers, construction companies, and investors with income-generating property portfolios, the reform reshapes the economics of rental activities. Tax rates will be lower, but stronger controls over cash flow, documentation of reimbursed expenses and improvements, and careful assessment of individual taxpayer status will be required. Those who organize these processes in advance will enter the new system with greater predictability. Those who do not risk disputes over the tax base during the first months of full implementation, starting in 2027.