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How To Buy Property In Italy : What You Need To Know

Posted by Expat Homes on September 19, 2020
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The dream of owning a house in the Italian countryside is an unsurprisingly popular one. Not everyone can buy property in Italy, though. 

With the idyllic landscape, the centuries of tradition, the world-class food and wine, and the high quality of life make Italy a desirable destination for just about anyone. There are some unique twists that make the process a little difficult if you aren’t careful, though.

The people who can buy property in Italy without any restrictions are Italian citizens, European Union citizens, European Economic Area citizens (Iceland, Liechtenstein and Norway) or refugees without any citizenship who have lived in Italy for at least three years.

For foreigners living in Italy who do not fit any of the above qualifications, it is still possible to buy property with a valid residence card. The residence card must be issued for one of the following reasons: 

  • Possession of a valid European Commission residence card (available after living in an EU country for at least five years)
  • Study at an accredited school
  • Valid family reasons
  • Italian business ownership
  • Self-employment in Italy
  • Official humanitarian work

The third way it is legally possible for foreigners to buy property in Italy is due to a reciprocal agreement between Italy and the foreigners’ home countries. Basically, you are allowed to buy property in Italy if your country allows Italians to buy property in your country. 

The purchase process

The property search process is similar to what you experience in other countries. There are websites listing properties in different areas, and it’s always wise to work with an agent you trust. In the areas where it’s common for foreigners to buy Italian properties, you should be able to find English-speaking agents. Local agents are extra valuable because they may know about properties for sale that aren’t publicly listed. This page is a good place to start: Homes for sale in Italy

You’ll need to have your codice fiscale (Italian identification number) and an Italian bank account before you write an offer on a property you like. You may also want an Italian lawyer/solicitor to guide you through the process along with the help of your agent. 

The formal purchase offer is called a proposta d’acquisito, and it becomes a legally-binding document as soon as a seller accepts your offer. Once the seller accepts your offer, the contract is called a compromesso (a preliminary contract). It has to be registered with the local government within 20 days in order to be considered valid, which usually costs a few hundred euro.

After the paperwork is official, you will leave a deposit (10% of the purchase price is typical). You will be subject to a penalty of double the deposit amount if you change your mind and cancel the deal after that point. 

Notaries manage the closing process in Italy instead of attorneys, escrow companies or title insurance companies. The buyer is responsible for paying the notaries’ fees.

Once all the documentation is in order, the notary will set a closing date. The buyer, seller, notary and any agents attend the closing. All of the contact paperwork will be in Italian, so be sure you have a translator with you (like your agent or lawyer). The property is yours once the money changes hands and the paperwork is complete!

The renovation process (for brave expats only)

The reality TV shows about renovating houses make it look easy. When it comes to renovating properties in Italy, it’s a little different.

The laws about renovations are the first things to consider. Every region has a different set of laws about what renovations are allowed, what the process looks like and the permits required. As a general rule, permission to do renovations is easier in the rural areas, and difficult or impossible in the historical urban centers. 

It’s also important to remember that the rules are constantly changing. What was true a year ago could be completely different now.

Some renovations don’t require permits if they are seen as regular maintenance on a property, and if they don’t fundamentally change the exterior appearance or footprint of the property. Again, the rules on this vary from region to region. 

There are companies that specialize in renovations. Hiring one of them to handle major renovation projects is recommended. They will know the local laws, understand the permitting process (and related “insider tricks”) and have relationships with local contractors, such as tradespeople, surveyors and architects. 

At the same time, you may find it useful to hire the services of a geometra. A geometra is sort of like a project manager and construction foreman rolled into one. They are your “go-to” person to handle all the aspects of the renovation project. If you don’t speak Italian, a bi-lingual English/Italian geometra will be worth their weight in gold.

You can expect a renovation company to provide a complete plan with drawings that illustrate the work you’d like them to do. They will also be able to give you a rough timeline for the completion of the work and a cost estimate. The costs for renovation projects are quoted “per meter” so you’ll have to do a little math to get the total cost. 

Property taxes

Property taxes in Italy can seem complicated! When you are ready to make an offer on an Italian property, your notary can do the tax calculation for you so you know how much it will cost in the end. There are two tax values given to every property and they are linked for tax calculations. 

One is the rendita catastale, which depends on the age, size and materials used to build the property. The rendita catastale will always be fixed unless a renovation project is completed and a new assessment is made.

The second tax value is the valore catastale. It is calculated based on a formula using the rendita catastale and is usually around 50-70% of the market value of a property. As you can imagine, there are frequent disputes about the true market value of a property when it comes to paying taxes. (There is an appeal process if you disagree with the assessed value).

A property’s designation as a primary residence or secondary residence will also have an effect on the tax calculations. The tax is known as a registration tax (imposta di registro).

Tax when purchasing a primary residence: 9% of the valore catastale

Tax when purchasing a primary residence but you plan to apply for Italian residency in the next 18 months: 2% of the valore catastale instead of 9%. The 2% discount does not apply if the property is considered a “luxury” property.

(Note: If you declare you are going to become an Italian resident and don’t do it within 18 months, you’ll have to pay the 7% difference plus a 20% penalty when they catch you.)

Tax when purchasing a secondary residence: 9% of the valore catastale

Tax when purchasing from a developer or custom builder: 4% of the purchase price if it’s a primary residence, 10% of the purchase price if it’s a secondary residence, or 22% of the purchase price if the property is classified as a luxury property. These numbers only apply if the property is less than five years old. 

Tax when purchasing agricultural land: 12% of the declared value of the land (unless the land surrounds the house, in which case the calculation for the house can apply to both the land and the house).

Annual property taxes

There is an annual tax paid to the local council in two installments (June and December). It is called the IMU tax. Residents do NOT have to pay this tax as long as their property is all classified as their primary residence. Non-residents pay according to a formula based on the rendita catastale and the formula is adjusted once a year by the local council. There are no notices sent for the IMU tax. You have to chase down the amount yourself twice a year.

Collected at the same time as the IMU, there is another tax called TASI. It is also calculated from the rendita catastale and pays for common usage things like road construction work and street lights. There are no notices sent for TASI, either. 

Another tax is the garbage collection tax known as TARI. The rate depends on the number of people living in your residence and the size of the residence. There is a discount for those who have a secondary residence. Each property receives a separate bill (unlike the IMU).

Taxes when selling

When selling a property in Italy, there are some taxes to consider if you have owned the property for under five years. Any profit from a sale of a property held for five years or less will be treated as capital gains and subject to income tax. 

Costs related to renovation of a property can be used to offset any capital gains. It is important to keep records and invoices of any renovation work done to a property to prove how much you spent.

Utilities

Whether you decide to buy property in Italy or start as a renter, you’ll want to get your utilities set up before you move-in. It will be a nasty surprise if you arrive in your dream Italian home and there’s no water or no electricity for you to use. 

Water costs depend on where in Italy you live. Some regions have more water naturally available than others. The water bill comes twice a year and should be about the same amount every time, assuming you don’t go over the standard billed amount (most households don’t go over the limit). There are also special provisions and separate billing if you have a swimming pool, but it’s easy to set it up. 

Electricity is managed by the national power company. They provide a standard amount of power with flat-fee billing to each housing unit. You can request extra power if needed and you will receive a higher flat-fee bill. It’s easy to go over the limit if you use power-hungry appliances like an air conditioner in the middle of the summer, so keep that in mind. After a few months of regular living, you should have a good handle on how much you’ll pay every month. 

If you’re one of those old school types and would like a landline, that’s fairly easy to do as well. Sometimes you can get a combination of a landline and home internet service. BE SURE TO CHECK your local area to see what internet service is available, if it’s available at all! Some rural areas are not wired for high-speed internet to private homes. 

As a stopgap, you can buy a hotspot and load it with a few gigabytes of data to get you started. There are a handful of cell phone companies with storefronts who will be able to help you. It won’t be good for streaming videos, but you can do basic things with it until you get proper internet service if it’s going to take a while (sometimes it takes a while).

This excerpt was taken from our popular guide: Move To Italy…Why Not?! We are a little biased, but we think it is well worth the investment of USD $5. 😉

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