Guide to buying a property in Italy
The Italian property market is open to buyers from countries with reciprocity agreements, allowing individuals, corporate investors, trusts, SIPPs, etc., to purchase property in Italy.
Timeframes for completion vary depending on the property type and any issues affecting financing or title. Below are key legal and procedural considerations:
1.
The Deed of Sale, Completion, and Payment
1.1 The Deed of Sale
The purchase deed must be in writing and certified by an Italian notary, who confirms ownership can legally transfer. All contracts must be in Italian. Upon transcription into the public register, ownership is officially granted.
1.2 Completion and Power of Attorney
If a buyer doesn’t understand Italian, they must either:
- Translate the entire contract and use an interpreter; or
- Grant power of attorney (PoA) to an Italian speaker. PoA can be executed in Italy (in front of a notary, with witnesses and interpreter) or abroad (at an Italian Consulate or with apostille).
1.3 Payments and Italian Bank Accounts
Opening a local bank account is recommended for:
- Payment via banker’s draft at sale completion.
- Paying utilities and local taxes post-purchase.
2.
Finance
Italian banks typically offer up to 60% financing, secured by a mortgage. The mortgage and sale contracts are usually formalized in the same notarial act.
3.
Preliminary Contract and Early Steps
3.1 Preliminary Contract
Used when the property isn't immediately purchasable. It obligates both buyer and seller.
3.2 Confirmatory Deposit (Caparra Confirmatoria)
Ensures commitment. If the buyer defaults, the seller retains the deposit. If the seller defaults, they repay double.
3.3 Purchase Proposal
A unilateral offer from the buyer, possibly with conditions (e.g., subject to survey). It must include a validity date.
3.4 Deposit
A simple deposit shows intent but offers less legal protection if the deal fails.
4.
Protection for the Buyer
4.1 Preliminary Contract Registration
Registration grants the buyer priority over other potential claims against the property.
4.2 Warranty and Insurance (D.lgs. 122/2005)
Applies to properties under construction. Builders must provide a bank guarantee against third-party claims and bankruptcy.
5.
Required Professionals
- Notary: Mandatory. Verifies legality and certifies the contract.
- Lawyer: Optional but advisable for complex deals or foreign parties.
- Accountant: Advisable for tax matters and ownership via company structure.
- Surveyor: Advisable for structural checks and planning compliance.
- Architect: Useful for redesign or structural changes.
- Geologist: Advisable for large or rural properties.
6.
Insurance
Not compulsory, but strongly recommended (and required by banks for mortgages). Covers fire, theft, damage.
7.
Inheritance
In the absence of a chosen applicable law, Italian law applies, favoring protected heirs. Specialist legal advice is recommended.
8.
Costs
- Notary: Approx. €3,500 for a €500,000 property.
- Lawyer/Accountant: Varies by fee structure.
- Estate Agent: 2–5% per party, usually due at the final notary deed.
9.
Tax implications
Double taxation agreements typically prevent buyers from paying tax both in Italy and their home country. Residency, not citizenship, determines tax liability.
9.1 Property Purchase Taxes
Buyers need a "Codice Fiscale" (tax code) or "Partita IVA" (VAT number).
9.1.1 Buying from VAT-registered Sellers
- VAT: 10%
- Fixed registration, mortgage, and catastale taxes.
With "prima casa" benefit:
- VAT: 4%
- Fixed taxes: €168 each
9.1.2 Buying from Private Sellers
- Registration tax: 9%
- Mortgage tax: €50
- Catastale tax: €50
With "prima casa" benefit:
- Registration tax: 2%
- Mortgage & Catastale tax: €168 each
Land purchases have higher taxes (building: 8%, agricultural: 15%).
10.
Periodic Taxes
- IRPEF: Based on "reddito catastale" even if unused. Rental income influences IMU and waste tax.
- TARSU: Local refuse tax paid to the municipality.
This guide provides a comprehensive overview of legal and tax matters related to buying property in Italy.
Always consult with professionals tailored to your specific case.