How to buy a property in Italy
If you want to buy a property in Italy for investment or to move, you need to know the bureaucratic and fiscal steps.
ITALIAN FISCAL CODE
The Italian fiscal code is the tax code in Italy composed by an alphanumeric code of 16 characters and calculated with surname, name, the place and the date of birth. It is used for natural persons who act as parties in private contracts, or for uniquely identifying individuals in the health system.
REAL ESTATE PROPOSAL
After choosing the property you want to buy, the transaction requires a formal proposal or offer in writing.
The seller’s acceptance must be also written.
Once the seller signs for accepting the offer, and the buyer is informed, the seller agrees not to sell the property to anyone else until a certain pre-established date: thus protecting the buyer from the loss of the property.
LAND REGISTER DOCUMENTATION
Before buying a property, it is advisable to check the documentation of the property at the “Land Registry”, in the offices used for this. This step is useful to verify that the property is registered, is assigned to the seller and that it is regular.
After the seller accepts the offer, the deal becomes binding on both parties. The preliminary purchase contract is drawn up by the seller with his real estate agent and must contain the sale price, the amount to be paid as a deposit, the date of completion, the boundaries land and the details of the property, and any other relevant clauses.
With the signing of the compromise, it must be paid the deposit of 10% or 20% of the sale price, depending on what has been agreed. In the event that the prospective buyer changes his mind and does not want to buy the property, the deposit is lost or the seller could bring legal action.
On the other hand, if the seller withdraws, he will be required to pay double the deposit amount.
When all the documentation is in order and available, the deal can be concluded with a notarial deed. The notary must perform due diligence – although chosen by the seller, he acts for both parties. At the time of the act you have to pay the final balance and sign the deed. To do this you need the identity document and the fiscal code.
The notary issues a copy of the deed and must submit the copies to the tax office and the land registry. The necessary governmental duties must be paid for the sale to be officially registered.
Transaction costs apply to buy a property in Italy:
Real Estate Agent’s commission
If you go to a real estate agency to find your property, you will pay a commission equal to about 3% of the purchase price + VAT of 22% of the rate. Usually this percentage is not divided between buyer and seller, but everyone has to pay a commission of 3% + VAT.
It is not mandatory to use a real estate agent but it is highly recommended, because he will help you in the negotiation, with the documentation and to carry out all the technical checks to be sure of buying a regular property.
The registration tax is 2% for those who buy their main home in the town of residence and for properties that are not classified as luxury.
The registration fee for non-residents and for those who buy second homes is 9%. The tax is calculated on the declared value of the property and not on the purchase price.
If the seller is a company with sales subject to VAT, the buyer will have to pay the value added tax, calculated on the sale price, equal to 4% for main home, 10% for second homes, 22% for luxury home.
Land registry tax and Cadastral Tax
They are fixed taxes of € 50.00 each if the seller is a natural person, or € 200.00 each if the seller is a construction company.
A fee is paid to the notary for the preparation of the deed. Usually only the buyer pays the notary fees.
This cost can change from city to city and is calculated based on the declared value of the property, the difficulties of the deed and ownership. The notary is chosen by the buyer.
They may include the help of a lawyer for legal matters or an architect for the technical inspection of the property. Also consider bank commissions in case you need to establish a mortgage.
Annual Taxes of a Property
In Italy there is an annual tax on properties consisting of three elements: IMU (you do not pay for the first home unless it is a luxury home), TASI (tax on municipal services, such as street maintenance or lighting and street cleaning, etc.), TARI (waste tax). All homeowners, both resident and non-resident, must pay these taxes. Payment is divided into two installments.
These taxes are calculated on the property value and determined coefficients and can change for each city.
This is a fee assessed to cover the maintenance, repair and safety costs of buildings and common areas in the condominiums. The amount of the tax usually represents a proportional share of the total expenses based on the size of the condominium unit.