BUYING PROPERTY IN ITALY
Italy is one of the safest countries in which to buy a house thanks to its legal system, requiring strict procedures for property transfer. However, foreign buyers can encounter difficulties in understanding these procedures. For this reason, the team at Properties in Italy will provide you all the necessary assistance to thoroughly understand all of these procedures before taking the decision to buy a property in our country.
Buying a property in Italy is usually arranged in three stages:
· The first stage consists of searching, visiting and selecting the property with the assistance of an estate agent (called: Mediatore or Agente immobiliare). Once the property is selected, the buyer may be asked to sign a buying proposal (Proposta d'acquisto), and leave a deposit with the agent (approximately 5,000€ depending on the value of the property).
· The second stage. If the buying proposal is accepted by the vendor, the next step is to sign and exchange a contract (contratto preliminare or compromesso). This is normally a legally binding agreement to complete the purchase by a public sales act drawn up by a notary and to pay the balance of the agreed price on a future specified date. The preliminary sales agreement (compromesso) is a private agreement between the buyer and seller, where the "promising" buyer and the "promising" seller commit themselves in transferring the title of a property. This agreement can be drawn up by the vendor, agent or a solicitor/lawyer. Since it is a complex legal document, it should always be submitted for advice to, or drawn up by a specialized Italian lawyer.
· The third stage consists of the completion formalities. The sale will be completed by a public notary when the final deed (atto finale di compravendita or 'rogito') or conveyance of transfer is signed. The notary issues a certified copy of the deed of sale and registers the original document with the land registry, which makes the buyer the legal owner of the property. In Italy only a notary is entitled to validly transfer title to property. The notary drafts the Purchase Deed, ensures its proper execution, registration, and payment of all Italian taxes connected with the completion.
The notary usually charges up to 1.0% of the declared sales price (depending on the purchase price).
Solicitors and estate agents
In view of the legal and practical difficulties involved in buying a property in Italy, it is highly advisable for foreign buyers to obtain the assistance of a specialized Italian lawyer, preferably one who can speak fluent English, to act on their behalf. They will be in charge of drawing up contracts, contacting the Notary and giving all necessary legal advice, and, most of all, perform an unbiased due diligence on the buyers' behalf. The lawyer would check that the title deeds are in order, that the property is legally registered and that it has no illegal buildings.
The lawyer usually charges up to 1.0% of the declared sales price (depending on the purchase price).
See also our page 'legal advice'.
Registry taxes (stamp duties) for buying a property in Italy are usually between 2-9% of the declared purchase price:
2% for residents in Italy (only for their main and first residence)
9% for non-residents (or for second houses)
18% for agricultural property
In case you buy a residential property from a private person, the registry taxes will be calculated on the "cadastral value" (tax value in the Land registry which is usually much lower than the market value: 1/4-1/3).
If the property is bought from a construction company (new developments or properties restored by the company) you will pay VAT instead of registry taxes. VAT is 4% for residents, 10% for non-residents and is applied to the property value declared in the public Deed of Transfer.
In Italy is therefore moch more convenient (from a tax point of view) to buy property from a private person.
First time buyer benefits
To take advantage of the first time buyer benefits (lower purchase taxes for residents, see above), you need to declare in the conveyance deed that you will establish residence within 18 months from the date of purchase, in the municipal territory where the property is located. You should not own other residential properties in the same municipality or any other property bought with the first time home buyer benefits throughout the entire Italian territory.
Non Residents owning a property in Italy have to pay the following taxes:
· Income tax (IRPEF). Non-residents must submit a tax return stating the details of their Italian property. If they rent out the property (long or short term), they should declare also the yearly rent, otherwise they should only declare the cadastral rental (usually quite low) and pay the income tax on the total income they have in Italy. Income tax is progressive and the tax rate increases per income bracket.
· The local community tax (IMU) which is about 1.0% of a property's cadastral value (official value in the Land Registry, usualloy 1/4-1/3 of the market value), to be paid in two yearly installments. The local community tax is not due on a property where buyers establish their residence.
Restoration or construction
In order to proceed with the restoration or the construction of a building, it is necessary to obtain the services of a licensed surveyor (Geometra), or an Architect. All major construction or restoration works require the presentation of a request for authorization to the local municipality, signed by the owner of the property and a licensed technician. In the case of light restoration works (wall painting, new doors, new floorings/tiles etc.) they are considered as 'manutenzione ordinaria' (ordinary maintenance) and there is no need to report them. In the case of more demanding works (moving internal walls, new installations, window and door frames etc.) it is sufficient to present a particular request called CILA (comunicazione di inizio lavori asseverata) or a SCIA (segnalazione certificata di inizio attività) in case the works involve structural parts of the building, both signed by a technician. In the case of a new construction or total restoration a building permit (Permesso di costruire) should be submitted by a technician, subject to the approval of the local municipality.
It is currently reasonably cheap to get a loan from Italian banks which lend amounts against purchase prices of up to 70%, depending on your monthly income and the country (and currency) where your income is produced. If you wish a quote, just contact us providing all information about the property you wish to buy and the terms you look for.
If you need any other information about the above subjects, please feel free to contact us.