Recently, the São Paulo State Court of Justice (TJSP) issued rulings relevant to the real estate market by recognizing the application of the 10% cap on the annual increase in the IPTU in the Municipality of São Paulo.
This limitation is set forth in Municipal Law No. 15,889/2013, which stipulates that the IPTU may not increase by more than 10% compared to the previous fiscal year for residential properties and properties with duly licensed construction projects in progress. With the enactment of Law No. 18,830/2025, this protection was extended to non-residential properties starting in the 2026 fiscal year.
Despite the explicit provision in the legislation, the City has not always applied this limit, especially in cases involving real estate development projects. In these disputes, factors such as changes to the property’s registration and the existence of documents proving that the construction work is properly licensed end up being decisive.
Given this scenario, developers and other taxpayers have turned to the courts to ensure compliance with the legal cap on rate adjustments. In such cases, it is necessary to assess whether the property’s classification with the City remains the same or has undergone any registration changes, as well as whether the company possesses documents capable of proving the project’s licensing.
In cases addressing this issue, the courts typically conduct a case-by-case analysis based on the property’s specific characteristics and, in general, have dismissed tax assessments arising exclusively from registration errors by the public administration. Thus, any technical difficulties in the municipal system cannot prevent the taxpayer from enjoying the benefit provided by law.
This issue takes on particular relevance in light of the recent update to the Generic Valuation Schedule (PGV) enacted by Law No. 18,830/2025, which has impacted the assessed value of numerous properties in the Municipality of São Paulo and is already giving rise to legal disputes regarding the illegal increase in property tax (IPTU).
Although recent discussions have focused on the city of São Paulo, it is important to note that other Brazilian municipalities may also have similar legal mechanisms limiting IPTU adjustments or specific rules regarding the updating of property assessed values. Therefore, taxpayers located in other cities should also monitor any legislative changes and property registry revisions implemented by local governments.
In a context of revisions to generic valuation schedules and increasing tax pressure, staying abreast of developments in this area has become a competitive advantage for companies in the real estate sector.
This content is provided for informational purposes only and does not constitute legal advice. The application of this information depends on the analysis of each specific case.