Understanding Property Classification: Rural or Urban? Which Tax Should I Pay?

Have you ever wondered whether your property is classified as rural or urban? This is a crucial question that can directly affect the taxes you have to pay. But, contrary to what many people think, this classification doesn't just depend on the physical location of the property.

With the constant growth of cities and the development of rural areas, this distinction is often not as simple as it seems. So how do you know which tax should be paid on your property: Rural Property Tax (ITR) or Urban Property Tax (IPTU)?

The answer involves several factors, including the concept of "urban perimeter", defined in each municipality's Master Plan. This perimeter delimits the urban area of the municipality and, by exclusion, the rural area. However, it is not enough to be outside the urban perimeter for a property to be considered rural.

One of the factors that determines whether a property is considered urban or rural is the use to which it is put (art. 4, item I of the Land Statute). Urban properties are used for building improvements and the land itself is not productive. It is not uncommon to find urban properties in rural areas, i.e. outside the urban perimeter.

An important point to consider is the intended use of the property. Urban

properties are mainly used for building improvements, while rural properties are used for agricultural, livestock, extractive, forestry or agro-industrial activities.

For example, a school or a gas station located in rural areas can be considered urban due to their intended use.

Likewise, rural properties can be found within urban areas if their main activity is agriculture, livestock, plant extraction, forestry or agro-industrial (art. 4, CF), even if they are found within urban areas, i.e. outside the rural perimeter.

If you still have doubts about the classification of your property or which tax should be paid, don't hesitate to seek professional advice. Our specialized lawyers are available to help you understand your tax obligations clearly and precisely.

We hope this article has clarified some common doubts about the classification of real estate and its associated taxes. Stay tuned to our blog for more information and useful tips!

SOURCES:

JUSBRASIL. Como funciona o Processo de Descaracterização de um imóvel rural para urbano? https://www.jusbrasil.com.br/artigos/como-funciona-o-processo-de-descaracterizacao-de-um-imovel-rural-para-urbano/884358505

JUSBRASIL. Meu imóvel é rural ou urbano? https://www.jusbrasil.com.br/artigos/meu-imovel-e-rural-ou-urbano/619440844#:~:text=De%20modo%20geral%20um%20im%C3%B3vel,%3A%20ITR%20%E2%80%93%20Imposto%20territorial%20rural.