FOR A PROPERTY IN ITALY
DETERMINE WHAT YOU
REALLY NEED IN A PROPERTY
The estate market offers various choices of properties for sale in Tuscany, so the real challenge is to find the one who meets your needs. Before searching a property, which requires time and energy, is important to define which kind of property really reflects your needs. A home is not simply a building with rooms, it is the perfect place to relax and spend some quality time with your loved ones: having clear ideas about your needs allows you to save time and be satisfied. What affects the location?
BUYING A HOUSE IN ITALY: THE PURCHASE PROCEDURE
So let’s look at the practicalities involved in the procedure to purchase a property.
A) The offer to purchase When you decide to buy a house in Italy, once you have chosen the property from the many houses for sale, you have to submit an "offer to purchase".
The offer to purchase is an irrevocable offer containing the main terms of the transaction between seller and purchaser. We specifically refer to the following:
- Names and surnames of the parties
- Date and place of birth
- Description of the property
- Land Registry details
- Year of construction
- Agreed price
- Payment terms
- Amount of deposit etc.
The seller may accept or decline the offer as appropriate
B) Drafting the preliminary agreement of sale (Compromesso)
Once the offer to purchase has been accepted, the next step is the preliminary agreement of sale.
This is a preliminary purchase agreement with which the purchaser formally undertakes to purchase the property. In fact, the agreement usually provides for payment of a deposit as confirmation. In most cases this varies between 10% and 30% of the purchase price of the property. The preliminary agreement must be una in writing. and contain all the conditions specified by the parties in the offer of purchase. In it, the parties substantially agree to transfer title to the property by a certain date. However, there is no obligation to purchase.
C) Drafting the Title Deed (Rogito)
Completion is by means of the Deed of Sale (rogito notarile). The deed is drawn up by a notary, who after having read it and invited the parties to sign it, will register the title transfer as required. As a public official, the notary is required to transfer the information regarding the sale to the relevant State authorities and the Land Registry for registration. The Deed of Sale in Italian must be accompanied by a certified translation of the original into the buyer’s native language by an official translator (who can also be an Italian notary who speaks the foreign language). The latter does not apply where foreign purchasers have stated that they are fluent in the Italian language.
PURCHASE OF PROPERTY FOR RESIDENTIAL USE:
REGISTRATION TAX (STAMP DUTY)
The purchase of a property is subject to registration tax (stamp duty) (imposta di registro) or alternatively VAT. In the case of transfer of property for residential use between private individuals (or a non-VAT registered entity), registration tax as well as the Cadastral and Land Registry taxes are applied as follows:
- Fixed €200 each for Registration, Cadastral and Land Registry taxes) in the case of purchases from entities subject to VAT
- 9% of cadastral value where purchase is from private seller or entity exempt from VAT
- 2% of cadastral value where the “principal residence” tax benefit applies.
Purchase of residential property: VAT rates To calculate the amount of VAT due, it should be noted that purchase of residential properties (not classed as luxury dwellings) by construction companies is subject to VAT at 10%.
PURCHASE TAXES IN ITALY
Non-Italians buying a home in Italy should be aware that in addition to the indirect taxes levied on the purchase, they are also liable for property taxes. These are taxes due for the sole fact of having real rights to the property. Act No. 147/2013 merged all indirect property taxes into a single municipal tax (IUC) which includes three taxes known as IMU, TASI and TARI.
- IMU is the single municipal tax due by those who own a property, with exception of non-luxury principal residences, for which it is not levied.
- TARI is the garbage collection and disposal tax payable by those occupying the property, whether as owners or paying/non-paying tenants.
- TASI is a tax due to the Municipality to guarantee “indivisible” services such as street lighting, public parks and gardens, road maintenance etc.
The deadline for presenting the IUC declaration is 30 June of the year following the start date of possession of the property. It is advisable to consult an accountant to help with these aspects.
CONDITIONS FOR TAKING ADVANTAGE OF
THE “PRINCIPAL HOME” TAX BENEFIT IN ITALY
In order to benefit from the tax benefit for the purchase of a principal residence in Italy, the property concerned must:
- Be located in the Municipality where the purchaser has, or intends to establish residency within 18 months of purchase.
The benefit also applies to the appurtenances of the main house, but is limited to one of each of the cadastral categories C/2 (cellars or attics), C6 (garage or C7 (carport or parking space). In addition to the characteristics of the property, in order to take advantage of the benefit, the purchaser:
- Shall, if not already a resident, undertake to establish residency in the Municipality where the property is located within 18 months of purchase.
- Cannot be the owner (either exclusively or jointly with their spouse) of any right to property, usufruct, use or live in another dwelling house located in same Municipality as the property to be purchased.
Both foreign citizens and Italians living abroad may take advantage of the principal residence tax benefit. It should be noted that taxpayers who do not have Italian citizenship may buy with the principal residence benefit if the requisite conditions are met.