Published on July 10, 2026
How is a Brazilian investor taxed when investing in Texas real estate?
A Brazilian investing in Texas real estate pays U.S. federal tax on rental income and on the gain at sale, but pays no state income tax: Texas is one of the states that do not levy it. On the sale of property by a foreign person, FIRPTA withholding applies, working as an advance on the federal tax.
What Texas does not levy
The United States taxes income at two levels: federal and state. Texas is one of the few states with no state income tax, for individuals or companies. Add population growth and corporate migration into the state, and you get a market that attracts capital without penalizing the return at the state layer.
What the United States does levy (federal)
Rental income and capital gains at sale are taxed at the federal level. For a foreign investor, the effective rate depends on the structure through which the investment is made and on the treaties that apply. That is why structuring comes before the check, not after.
FIRPTA: withholding at sale
The Foreign Investment in Real Property Tax Act (FIRPTA) sets a withholding when a foreign person sells U.S. real estate. This withholding is not an extra tax: it is an advance on the federal tax due, reconciled at the final settlement. Structuring well means, among other things, not leaving capital tied up in more withholding than necessary.
Why the structure decides the number
Two investors can buy the same property in the same state and end up with different net returns, because one built the deal in the right jurisdictions and the other did not. The return begins at purchase and at structure, not at appreciation. At Norton, each cross-border deal is built to preserve the Brazilian investor’s net return.
This piece is informational and does not constitute tax advice. Figures and structures for each deal are presented to qualified investors, in direct conversation.
Frequently asked questions
- Does Texas have a state income tax?
- No. Texas is one of the U.S. states that levy no state income tax, which preserves more of the return at the state layer.
- What is FIRPTA?
- It is the U.S. law that sets a withholding when a foreign person sells real estate in the United States. It works as an advance on the federal tax due, not as an additional tax.
- Why is the effective tax lower than in Brazil?
- Because the deal is structured in the right jurisdictions and Texas levies no state tax. On Norton’s mid-sized structures, withholding is around 15%, against roughly 34% on the equivalent taxed in reais.
Sources