Is it better to pay in cash or in installments?

The year has begun, and soon the bills are knocking on the door. With them, the question arises: is it better to pay the urban and regional property tax (IPTU) and the vehicle and land vehicle ownership tax (IPVA) in cash or in installments? The first few months can be financially difficult. Is it worth benefiting from the discounts offered to those who pay in one installment? explains Ibmec-RJ Professor of Accounting Sciences Paulo Henrique Bigas, an expert interviewed for the report.

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The key point for decision making is whether the person responsible for the asset has the amount on hand or not. If the required amount is invested in an investment fund or savings account or if the saved money does not reach the full value or is for emergencies, this will carry a lot of weight in the evaluation.

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IPVA 2024: Payment in cash or in installments?

Just like last year, drivers in the state of Rio de Janeiro who choose to pay the IPVA in one payment will receive a 3% discount on the total tax amount. The first due dates, depending on the end of the card, will be from January 22 to February 2 (see below for full calendar). Another possibility is to divide the amount into three payments, without deduction. A new feature this year is the tax is, on average, 4.39% cheaper

— It seems like a small opponent, but it is not. If we analyze it, it is a discount on the next two installments, since the first installment must be paid in any case on the same due date as the one installment as indicated. When doing the math, and looking at the interest rate, the investment would have to make 3% to break even on that amount, and we haven't found one like that – Pegasus compares.

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IPTU 2024: Payment in cash or in installments?

IPTU has a 7% discount, when paying in cash, for the city of Rio. The tax can be split into ten instalments, with the first installment due on the same date as the individual portion, February 7 (see full calendar below). In Niteroi, a municipality also in the Rio metropolitan area, the drop was even higher: 10%.

— Here we follow the same logic as IPVA, but the discount will depend on the city. Since it is 7% in the capital, I will use it as a basis for teaching an IPTU of R $ 1000. If payment is made in instalments, there will be ten installments of R$100, the first on the same day as the single installment. If the payment is made with a discount, the value drops to R$930, so we can think of the opposite value. With installments, it is as if the remaining amount, R$830, is subject to interest every month, which amounts to 1.7% per month. To compensate for the premium, the value of these nine installments must be applied. In savings, for example, the income is 0.7 per month, which is less than necessary. The best option is to choose to pay in cash, explains the expert.

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The money saved can generate less than the discounts

Professor Paulo Henrique Bigas compares the return on money in investments with the discount offered when paying in one lump sum. The current Selec (about 11% per year), which still includes an income tax deduction, ends up making less than 1% per month. Saving returns are less than this value. If you compare returns to value, it's worth choosing to pay cash to get the discount.

The recommendation is to take money from savings or in an investment fund and make payments. You will not get a loan to pay in cash. This is not worth it. It is difficult to get a loan with an interest rate of less than 3%, calculated based on the IPVA discount.

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The expert highlights a point that must be taken into account before withdrawing savings:

— If you have the money and are confident you won't need it in an emergency, you can get these taxes back and pay them in cash over the next five months or so. If the money is an emergency reserve, and there is no margin, pay it in installments.

Next year may be news

Paulo Henrique Bigas highlights that with the approval of the tax reform, there may be changes to the IPVA, through supplementary laws and state law, and to the IPTU, through municipal decree, for next year. In one of the new features, the text stipulates that IPVA fees can be imposed on yachts, speedboats and aircraft. If this happens, prices will be determined later. The reform also provides for the possibility of updating the property tax calculation base by municipal decree.

Calendar with IPVA 2024 due dates:

End of plate 0

• One share or first installment – ​​January 22
• Second batch – February 21
• Third batch – March 22

End of painting 1

• One share or first installment – ​​January 23
• Second batch – February 22
• Third batch – March 26

End of painting 2

• One share or first installment – ​​January 24
• Second batch – February 23
• Third batch – March 27

End of panel 3

• One share or first installment – ​​January 25
• Second batch – February 26
• Third batch – April 1

End of panel 4

• One share or first installment – ​​January 26
• Second batch – February 27
• Third batch – April 2

Final panel 5

• One share or first installment – ​​January 29
• Second batch – February 29
• Third batch – April 4

Final panel 6

• One share or first installment – ​​January 30
• Second batch – March 1
• Third batch – April 5

End of panel 7

• Single installment or first installment – ​​January 31
• Second batch – March 4
• Third batch – April 8

End of panel 8

• One-time payment or down payment – ​​February 1
• Second batch – March 6
• Third batch – April 9

End of panel 9

• One share or first installment – ​​February 2
• Second batch – March 8
• Third batch – April 11

Check IPTU due dates for Rio

• One session: February 7
• First session: February 7
• Second session: March 7
• Third session: April 5
• Fourth session: May 8
• Fifth session: June 7
• Sixth session: July 5
• Seventh session: August 7
• Eighth session: September 6
• Ninth session: October 7
• Tenth session: November 7