Context and Rationale for the Change
The Municipality of São Paulo has announced a comprehensive revision of the Generic Value Map (PGV), the instrument used to determine the taxable base of the Urban Property Tax (IPTU).
This update, which will take effect beginning in the 2026 tax year, aims to align the assessed values of properties with the reality of the São Paulo real estate market, which—according to the municipality—had been outdated for more than a decade.
According to the municipal administration, the values currently used for IPTU calculation no longer reflect the actual appreciation of several neighborhoods, particularly those that have undergone significant densification and urban improvements in recent years.
The new PGV therefore seks to restore proportionality between market value and applicable taxation, with the goal of increasing tax fairness and revenue efficiency for the municipality.
Expected Effects on the Tax Base and IPTU Amounts
The revision of the PGV is likely to produce substantial increases in the taxable base in highly valued neighborhoods such as Jardim Paulista, Itaim Bibi, Pinheiros, and Vila Mariana, where market values have risen sharply.
In some cases, a strict update of the taxable base could result in adjustments of up to 90% in a property’s assessed value.
However, the Municipality itself acknowledged that passing the full variation on to taxpayers in a single year would be unfeasible.
For this reason, the proposal includes annual increase caps, with the following maximum limits:
- Residential properties: increases limited to 10% per year;
- Commercial properties: increases limited to 15% per year.
These caps operate as a transitional reducer, cushioning the immediate impact of the reassessment and spreading its effects across subsequent years.
Adjustments and Benefits in the Exemption Thresholds
Alongside the revision of the tax base, the Municipality has proposed raising the IPTU exemption and discount thresholds to mitigate the impact on low-income families and lower-value properties.
Under current rules, properties with an assessed value of up to approximately R$ 120,000 are exempt from IPTU.
The proposal raises this threshold to R$ 150,000, with the possibility of expanded exemption up to approximately R$ 260,000 for taxpayers who own only one residential property in the municipality.
The stated objective is to preserve the benefit for taxpayers who traditionally fall within the exemption range, preventing the PGV update—by artificially increasing assessed values—from unintentionally removing lower-income taxpayers from the exempt group.
Impacts by Taxpayer Profile and Region
The magnitude of the practical effect will depend on the type of property and its location:
- Areas of high real-estate appreciation: properties in upscale regions with strong commercial expansion and renewed infrastructure tend to experience the largest increases in taxable base. However, the 10% and 15% caps will prevent abrupt increases in the immediate tax burden.
- Intermediate or peripheral regions: where appreciation has been more moderate, the effects will be neutral or even beneficial, due to the expansion of exemption thresholds.
- Taxpayers with a single property: in many cases, they may maintain their exemption or face only symbolic increases.
- Businesses and commercial properties: although subject to a higher cap (15%), these may experience more noticeable effects, especially in areas with high rental and resale values.
Review Procedures and Possible Challenges
Once the new assessed values are published, taxpayers must carefully verify cadastral information and square footage indicated in the IPTU/2026 assessment notice.
Any inconsistency regarding construction standards, built area, or property use may justify filing a request for cadastral review or an administrative challenge.
Additionally, properties eligible for the new exemption thresholds should have the benefit applied automatically, but taxpayers must check the tax bill to ensure the update has been correctly implemented.
In case of errors, a request for revision may be submitted to the Municipal Department of Finance within the deadline established in the Municipal Tax Code.
Legal and Tax Considerations
From a tax-legal perspective, the change in the PGV and in exemption parameters must be approved by municipal law, preceded by technical studies and impact assessments.
Although periodic revision is legitimate, potential flaws in the calculation methodology or disproportionate differences between similar properties may be challenged in court based on the principles of ability to pay and tax equality (Article 145, §1 of the Brazilian Constitution).
Furthermore, while the annual increase limits represent a measure of fiscal and social balance, they do not prevent the accumulated rise in taxes over the next years until the taxable base reaches the new full level.