THE Severance Indemnity Fund (FGTS) is a very important benefit for Brazilian workers. Created in 1966, its main objective is to protect workers in cases of unfair dismissal, offering a reserve fund for times of financial hardship. However, over the years, the FGTS has had its rules expanded, and it is now possible to use it not only for the purchase of a home but also for the acquisition of land. In this article, we will explore the conditions and requirements necessary to use the FGTS to purchase land.

What is the FGTS?

Before we discuss the possibility of using the FGTS to purchase land, it's important to understand what the FGTS is and how it works. The Severance Indemnity Fund (Fundo de Garantia do Tempo de Serviço) is a reserve fund, consisting of monthly deposits made by the employer on behalf of the employee. These deposits correspond to 8% of the employee's salary and are made into an account linked to the FGTS, which is automatically opened when the employee is hired.

The FGTS (Fund for Severance Indemnity Fund) has several purposes, but one of the best known is enabling workers to acquire their own home, either through a property loan or through the repayment of mortgage installments. However, with changes in the rules over the years, other possibilities have opened up, including land purchases.

How does the use of FGTS work when purchasing land?

Using FGTS funds to purchase land follows specific rules. It's important to note that the land must be urban and located in the same municipality where the worker works or in the municipality where they live. Additionally, there are some requirements that must be met:

  • Work time: The worker must have at least three years of work under the FGTS regime, adding up the periods worked, consecutive or not.
  • Not being a property owner: The worker cannot own any residential property in the same municipality where he intends to acquire the land.
  • Not having active financing: The worker cannot have any active financing within the scope of the Housing Finance System (SFH) in any part of the country.
  • FGTS Regularity: The worker must have all FGTS contributions up to date.
  • Financial agent approval: The financial agent brokering the land purchase must approve the use of the FGTS.

How much can I withdraw from the FGTS to buy land?

The maximum amount that can be withdrawn from the FGTS for the purchase of land is limited to R$40,000.00. This amount can be used as a down payment on the land purchase or to pay off part of the outstanding balance on a mortgage, if applicable.

It's worth remembering that the amount available for withdrawal from the FGTS varies depending on the employee's length of service and the deposits made by the employer. Furthermore, the total balance in the FGTS account must be sufficient to cover the amount to be withdrawn.

Steps to use FGTS to purchase land

If you meet all the requirements mentioned and wish to use your FGTS to purchase land, follow these steps:

  • Check your balance: Access the Caixa Econômica Federal website or the FGTS app to check the balance available in your linked account.
  • Gather documentation: Provide all necessary documents, such as proof of address, a declaration that you do not have active financing with the SFH, among others.
  • Find a financial agent: Contact a financial institution authorized to operate with the FGTS and request an analysis of your situation and approval for the use of the fund to purchase the land.
  • Sign the contract: After approval from the financial agent, you must sign the land purchase contract and make the payment.
  • Make the withdrawal: The FGTS withdrawal is made directly by the financial agent at the time of purchase.
  • Regularize the documentation: After purchasing, make sure that all land documentation is regularized in your name.

What type of property can I buy with FGTS?

The Severance Indemnity Fund (FGTS) allows workers to use funds to purchase specific types of properties. The main categories of properties that can be purchased with the FGTS include:

  • Owned Residential Property: The most common use of FGTS is to purchase a residential property, which can be a house, apartment, or urban land, as long as the land is located in the same municipality where the worker works or in the municipality where they reside. It is important to remember that the worker cannot own any residential property in the same municipality where they intend to purchase the new property.
  • New or Used Property: The FGTS can be used to purchase both new and used properties, as long as they meet the conditions established by law.
  • Off-Plan Property: It is also possible to use the FGTS to purchase off-plan properties, as long as the purchase and sale agreement has been signed and the property is duly registered at the Real Estate Registry Office.
  • Mortgage Repayment: In addition to the purchase, FGTS funds can be used to pay off the outstanding balance of a mortgage loan taken out through the Housing Finance System (SFH). This helps reduce the amount of installments and the total cost of the loan.
  • Payment of Part of the Installments: The FGTS can be used to pay part of the installments of a real estate loan, thus reducing the value of the monthly installments.

It is important to highlight that, regardless of the property category chosen, there are specific rules to be followed, such as value limits for the use of FGTS, regularity in contributions, the absence of active financing in the SFH, among other requirements.

After all, can I use the FGTS to buy land?

Yes, it is possible to use the FGTS (Fund for Severance Indemnity Fund) to purchase land, as long as the requirements and conditions established by law are met. The FGTS is an important tool that can help workers realize their dream of acquiring land and, later, building their own home.

However, it's crucial to be aware of the rules and limits established for using the FGTS, as well as all stages of the process. It's also recommended to seek guidance from specialized professionals, such as real estate agents and lawyers, to ensure everything is done in accordance with current legislation and that your rights are protected.

See also: How to advance your FGTS withdrawal via cell phone: Easy step-by-step guide

September 14, 2023