Real estate funds (FIIs) versus buying property directly

You have an amount to invest and want exposure to real estate. One option is to buy an apartment or an office and rent it out. Another is to buy shares of a fundo de investimento imobiliário (FII, Brazil’s listed real estate investment fund) on the stock exchange. Both depend on the same market, but they work in very different ways.

This article compares the two based on the legislation and rules checked on October 8, 2026. It does not say which is better: the answer depends on your time horizon, the amount available, the time you can dedicate and how much risk you accept.

What you own in each case

Whoever buys a property directly becomes its owner when the title is registered. Brazil’s Civil Code, Art. 1,245, says that ownership is transferred between living persons “upon registration of the transfer deed at the Real Estate Registry.” A deed without registration is not enough.

In an FII, the situation is different. Law No. 8,668/1993 defines the fund as a closed-end condominium, with no redemption of shares (Art. 2), and establishes that the shareholder “may not exercise any property right over the real estate” of the fund (Art. 13). You hold shares, which are securities (Art. 3). The properties are held in the administrator’s name, on a fiduciary basis.

In practice:

• with direct property, you choose the asset, the tenant, the rent and when to sell;
• in an FII, these decisions belong to the administrator and the manager, within the fund’s rules; you vote at shareholder meetings and decide when to sell your shares.

An FII may also own no building at all. Normative Annex III of CVM Resolution 175 (CVM is Brazil’s securities regulator) allows it to invest in real estate receivables certificates (CRI), mortgage notes, shares of other FIIs and other assets linked to the sector (Art. 40). Before comparing, it is worth reading the fund’s rules to know what it actually holds.

Entry amount and diversification

A property requires the full value of the asset, or a down payment plus financing, which brings interest and the risk of indebtedness. With the same money, you generally end up with a single property, at a single address, with a single tenant.

On the exchange, the standard lot for an FII is one share, according to B3’s page on FIIs (B3 is the Brazilian stock exchange). A fund may have several properties or several tenants, which reduces dependence on a single contract. This does not eliminate risk: a fund may be concentrated in a single asset or sector.

Liquidity and price

To exit an FII, you sell the shares to another investor. B3 states that settlement occurs in T+2, that is, two business days after the trade. There is no redemption: if there are few buyers, you may have to accept a lower price or wait.

The share has a public price, which changes every trading session. This provides transparency, but also exposes you to swings that do not always follow the value of the fund’s properties. Changes in interest rates, for example, alter the comparison between the fund’s income and that of other investments; the mechanism is covered in The Selic rate: how it reaches credit and the economy.

Direct property has no daily quote. This does not mean its value does not fluctuate; it means you only discover the real price when you try to sell. The sale usually takes weeks or months and involves brokerage, paperwork and, for the buyer, transfer tax and registration.

Costs and work

With direct property, costs appear at purchase and over time:

• at purchase: the real estate transfer tax (ITBI), which the Federal Constitution assigns to municipalities (Art. 156, II), plus deed and registration;
• during ownership: IPTU (municipal property tax), condominium fees while the property is vacant, maintenance, a property manager if used;
• operational risks: vacancy, default, renovations and disputes with tenants.

In an FII, these costs exist, but they stay inside the fund and are shared among shareholders. Added to them are the management fee and, where applicable, the performance fee, plus brokerage to buy and sell shares. The fund must distribute at least 95% of the profits calculated on a cash basis, based on a semiannual balance sheet (Law 8,668, Art. 10, sole paragraph).

As for information, the FII administrator must publish a monthly report within 15 days, a quarterly report within 45 days and audited financial statements annually (Annex III, Art. 36). With direct property, the information is whatever you produce yourself.

Income tax: rules in force on October 8, 2026

The rules below were checked against the consolidated texts of the laws on the Planalto (Brazilian presidency) website. Provisional Measure No. 1,303/2025, which proposed taxing FII distributions, appears in these texts with the note “validity ended.” The previous rules remain in force.

FII distributions. Law No. 11,033/2004, Art. 3, III, exempts individuals from income tax on distributions paid by FIIs whose shares are traded exclusively on an exchange or organized over-the-counter market. The exemption has conditions (Art. 3, § 1, as amended by Law No. 14,754/2023):

• the fund must have at least 100 shareholders;
• it does not apply to anyone who holds 10% or more of the shares or is entitled to more than 10% of the distributions;
• it does not apply to a group of related individuals who together hold 30% or more of the shares or distributions.

The B3 page consulted on the same date still mentions a minimum of 50 shareholders, a figure that predates Law 14,754. The text of the law prevails.

Sale of FII shares. The gain on the sale of shares is taxed at 20% (Law 8,668, Art. 18), without the R$ 20,000 monthly exemption that exists for stocks.

Rent from direct property. Rent received from individuals goes into the carnê-leão, the monthly tax payment made by the taxpayer themselves. The Receita Federal (Brazil’s federal tax authority) states that taxes and fees on the property, collection expenses and condominium fees may be deducted when paid solely by the landlord. The tax is calculated month by month.

Sale of direct property. Capital gains for individuals are taxed at 15% up to R$ 5 million of gain, with brackets of 17.5%, 20% and 22.5% above that (Law No. 13,259/2016, Art. 1). Law No. 11,196/2005 provides for gain reduction factors (Art. 40) and an exemption when the proceeds from selling a residential property are invested in another residential property in Brazil within 180 days, a benefit that can be used only once every 5 years (Art. 39).

The rules have details and exceptions. Check the Receita Federal’s guidance for your case or consult a professional.

Risks of each path

In both cases it is possible to lose money. In an FII, the share can fall due to vacancy, tenant default, credit problems in the portfolio’s CRIs, rising interest rates or simply a lack of buyers. In extreme cases, the loss can be total.

With direct property, the risk is concentrated: a tenant who does not pay, a property vacant for months, unexpected repairs or a declining neighborhood affect your entire investment. If there is financing, the debt remains even without rent.

To understand the difference between assets with contracted returns and assets with uncertain returns, see fixed income and equities: risks and characteristics. If the question is about platforms that sell digital “fractions” of properties, the comparison is in real estate tokenization versus real estate funds.

Key takeaways

• With direct property, you are the owner through registration and control the decisions, but you take on concentration, work and low liquidity.
• In an FII, you hold shares of a CVM-regulated fund, with professional management, periodic disclosure and exchange trading, but you have no rights over the properties and are exposed to the share’s daily price.
• Tax differs on each path and depends on legal conditions; as of October 8, 2026, the exemption on FII distributions for individuals remains in force, with requirements.