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How to Buy a House in Italy?

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Italy is a dream country, but if you are planning to move there for a long time or invest in local real estate, it is good to know the rules of real estate transactions.

Rights and Obligations of Foreign Buyers

In Italy, foreigners and locals have equal rights to purchase real estate in the country at the legislative level.

It is allowed to acquire full ownership of all types of properties, including undeveloped land plots and shares of companies owning real estate in Italy. You can purchase real estate as an individual and/or a legal entity.

Buying Italian property of any value does not automatically give you the right to a residence permit.

Foreigners also have the same responsibilities. Any owner must pay annual property taxes and make utility payments.

Property Search in Italy

We recommend that you read about market trends and learn about the features of different regions.

Afterward, you can proceed to the property search: check out apartments and houses for sale in Italy, sort the offers by the chosen parameters and subscribe to updates.

How to Find a Realtor in Italy

The presence of a realtor is not obligatory (unlike a notary, who must register the property). Theoretically, you can search for Italian property on your own. But foreigners rarely decide to undergo the procedure without professional advice.

The activity of Italian realtors is licensed. Also, realtors should insure their professional liability. We recommend that you check the licenses of those specialists with whom you will work. One of the indicators of reliability is participation in professional organizations, for example, the Federation of Real Estate Agencies in Italy.

You can start the search of a real estate agency HERE

Mortgage

On a paper mortgage, non-residents can apply for a mortgage in Italy. But in fact, loans for applicants from countries outside the EU are not approved in 95% of cases. The main problem is the confirmation of solvency. The client gets a loan if they have official income in the Eurozone. Being a wealthy person somewhere else does not work.

How to Get Property in Italy Step-by-Step

Step 1. Preparations

The tax identification code (codice fiscale) is necessary to carry out any transactions with Italian government agencies. You can get it at local tax offices with your passport. You can also apply for a tax identification code at the consulates of Italy in your country.

You also need to open an Italian bank account to transfer the required amount from an account in your country. It is possible to pay utilities from the same account in the future.

Also read: To See Italy and... Move. Cheap Real Estate in Picturesque Italian Towns

Step 2. Property Reservation

All negotiations are conducted in writing. The buyer makes a written purchase offer to the seller (proposta di acquisto). The offer prescribes the desired price of the object and the terms of concluding further contracts.

When the seller accepts the purchase offer, the buyer transfers the deposit to the seller. As a rule, this is 5-10% of the property price.

In the future, if one of the parties breaks the deal, it will entail financial responsibility for her. The purchase offer also describes the penalties.

Step 3. The Contract

The conclusion of a preliminary contract is not mandatory, but if you want one, it is notarized and contains the following information:

  • personal data of the seller and the buyer;
  • the cost of real estate and the payment procedure, including the amount of the deposit;
  • property description, and its cadastral data.

After signing the contract, the notary proceeds to check the documents submitted by the seller. If the check shows that the property has hidden issues, the transaction is failed due to the seller's fault who bears financial responsibility.

After signing the preliminary agreement, the transaction is considered irreversible.

At this stage, the buyer pays for the agent's services.

The main contract of sale (contratto notarile di compravendita) is signed by the seller and the buyer at the notary and is subject to notarization. The notary must read the contract aloud to exclude variability in the understanding of all its points.

If you don't speak Italian, there are two options:

  1. An interpreter and two witnesses who speak two languages are present at the transaction.
  2. A power of attorney for a representative who speaks Italian.

The buyer must pay everything for the property, taxes, and notary fees by the time of the main contract.

Step 4. The Payment

Payments in Italy are usually made by covered checks. You can get them in the same Italian bank where you plan to open an account. The buyer passes the receipt to the seller on the day of signing the notarial contract of sale.

You can also transfer funds from an account abroad directly to the seller or (more reliably) to a notary's trust account, which will transfer them to the seller after compliance with all the contract terms.

The transaction is carried out only in euros.

Step 5. Ownership Registration

After signing the main contract, the state registration of the transaction takes place. The notary transmits all the information to the relevant state authorities.

Ownership registration takes up to three months, depending on the municipality to which the cadastre belongs. However, the ownership itself passes already at the time of signing the bill of sale, along with the keys.

The original contract is received by the new owner after its legal registration. The notary issues a certificate of the transaction immediately after signing.

Taxes and Additional Expenses

Taxes on the real estate purchase

The amount of taxes on the purchase depends on the type of real estate (primary/secondary), the status of the buyer (resident/non-resident), as well as the number of objects in ownership.

Purchase from a private person* of the first home (not luxury real estate) for residents of Italy

Registry tax (imposta di registro): 2%

Cadastral and mortgage tax (imposta ipotecaria e catastale): €50 + €50

* Secondary real estate or an apartment (house) from a developer in a building built more than five years ago or sold by another legal entity.

Purchase from the organization of the first home for residents of Italy

Registry tax (imposta di registro): €200

Cadastral and mortgage tax (imposta ipotecaria e catastale): €200 + €200

VAT (IVA): 4%

Purchase from a private person for non-residents or a second home for residents of Italy

Registry tax (imposta di registro): 9%

Cadastral and mortgage tax (imposta ipotecaria e catastale): €50 + €50

Purchase from an organization for non-residents or a second home for residents of Italy

Registry tax (imposta di registro): €200

Cadastral and mortgage tax (imposta ipotecaria e catastale): €200 + €200

VAT (IVA): 10% (22% – luxury housing)

Please note!

Taxes are much higher for non-residents. But all foreigners have the opportunity to use tax benefits.

All three conditions must apply for benefits:

  1. the object is not a luxury property;
  2. the buyer must not own another Italian property purchased with the application of tax benefits (the requirement of a "first home");
  3. the buyer must register the place of residence at the property address within 18 months from the conclusion of the contract of sale (foreigners from countries outside the European Union will have to issue a residence permit to register at the place of residence).

If the buyer uses the benefit, but does not receive a residence permit and does not register for 18 months, in the future they will have to pay the difference between tax rates and a fine of 30% of this amount.

Please note!

Real estate on the secondary market is charged 9% tax from the cadastral value, which is often several times lower. For example, the cadastral valuation of an elite villa for €3 million may be €500,000, respectively, and taxes will be lower than it seems at first glance. In the primary market, VAT is calculated from the market price.

Realtor's fee

A certified realtor has the right to take remuneration from the seller and the buyer if they helped to conclude the transaction. There are rates of 3-5% + VAT. If several companies participated in the transaction, they divide the commission among themselves.

Notary's fee and fee for the registration of real estate in the registry

The buyer transfers the entire amount to the notary to calculate and pay taxes on the purchase, and state fees for making entries in the register, including the fee.

The amount of the notary's remuneration depends on the value of the Italian property: the larger the transaction amount, the lower the percentage. As a rule, the cost of services ranges from 1.0 to 3.5%, taking into account the costs of registration in the registry.

Connection of communications (only for new buildings)

When buying a new building, the buyer pays for connection to utility networks. The amount of these costs depends on the municipality in which the property is located. As a rule, it turns out about € 2,000.

Conclusion

  • The rights and obligations of local residents and foreign buyers of real estate in Italy are equal.
  • A notary has to participate in all real estate transaction by law.
  • Non-residents pay higher taxes, but can receive some benefits.

Photo by FUTC on Unsplash 

Quoting conditions of Prian.info materials

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