Buying a property is an important step for a family which does not occurs many times in life, this is what has driven us to write this guide, trying to give an answer to all your questions concerning the purchase, for any other information you can safely send us an email, we will reply quickly and for free.
The numerous documents, easements, various rights that weigh on the property to be purchased, land registry details, long time bargaining concern you and does not let you sleep?
For this, you need to be aware of what you should do when you buy a property in Italy, in this way you will avoid errors and omissions that could really cost you dearly.
These are some of the important and fundamental steps and precautions to be taken in order to avoid surprises and quickly face all the buying process:
1) CHECKLIST
Once you have selected and visited various buildings, having identified the best one for your needs and you decide to proceed with the purchase of one of them, following checks are needed:
– Check that there are no loans, mortgages, foreclosures, lawsuits in progress or transcriptions. - verify that the cadastral certificates it is properly addressed to the rightful owner, ask for the cadastral plan verifying that this matches the current condition of the property you are buying.
Check the purchase act, who is the rightful owner, eventual rights or easements that may encumber on the property.
2) PURCHASE PROPOSAL
After the preliminary checks, the negotiation with the purchase proposal can start.
Before signing the proposed purchase, always ask if there are ancillary costs in addition to the price offered and possibly what they are and in what amount.
The proposed purchase must be made in writing, should contain the property data, the price offered, the manner and timing of payment, timing of delivery of the property, in addition to the period of validity of the proposal. When signing up for the validity of the proposal, a security deposit must be paid. Generally varies between 2 and 5% of the price offered with a minimum of €. 5,000, and will be made with a check made out to the seller that will be cashed only at the time of signing the preliminary contract.
Except for special cases (the owner is unlikely to be reached in given period) never signed a proposal for a very long time of validity, this must not exceed 7/10 days and during this period the successful acceptance of the agreed proposal manner must be communicated, in this way the deal has been finalized.
Once the seller accepts and signs the proposal, accepting the price offered and the stated conditions, this undertakes not to sell the property to anyone else until a certain date. In this way, the buyer is protected, so do not risk losing the property purchase, all the guarantees to make the purchase are safely written, price and terms of payment are fixed without surprises.
3) TAX CODE “Codice fiscale”
The first thing you need to get familiar with is the tax code so called CODICE FISCALE. If you are thinking to purchase a property in Italy. So the first step is to go to the local revenue office so called “agenzia delle entrate” and apply for the tax code namely “codice fiscale”.
The tax number is an alphanumeric code of 16 characters, based on the surname, name, place and date of birth, which is used to identify natural persons for tax purposes on the Italian territory.
4) OPENING OF A BANK ACCOUNT
Buying a property in Italy it is essential to open a bank account in Italy not only to transfer there the funds for the completion (as the final payment normally happens in Italian bankers drafts) but also to get the various utilities paid automatically, avoiding nasty surprises such as interruptions of utilities supplies because the bills went lost.
5) PRELIMINARY AGREEMENT
The next step is the signing of the preliminary sale contract also called “compromesso”. This is the agreement by which the parties, the buyer and seller are obliged to sign in front of the Notary ahead of the final contract namely “atto di compravendita”. Signing the preliminary contract does not transfer the ownership of the property yet, but it obliges to make such a transfer with the simultaneous delivery of the property by a certain date. The preliminary contract must contain the essential elements of the subsequent definitive contract. The final notarial deed will then be drawn up and implemented in a period of one to three months after the compromise. For
various reasons, perhaps in order to do some works or other needed updates for compliance with the urban planning necessary for the definitive act, may the deadline for signing be more than three months. There is also to remember that the signed and accepted purchase proposal, already creates a legally binding contractual relationship between the parties. At the time of signing of preliminary sale contract, a deposit of around 20% of the agreed price has to be paid, subsequently, if the seller decides to withdraw, the purchaser must return the deposit already paid plus an amount equivalent to the deposit itself.
Example: After paying a deposit of €. 10,000, the seller will reimburse the €. 10,000 of the deposit plus another €. 10,000.
Vice versa, in case the buyer had to withdraw loses the entire amount paid as a deposit. In any case, the performing party, both the seller and the buyer, can still choose to apply for legal execution or termination of the contract, asking for damages.
Moreover, one must remember that the sum paid as a deposit can vary depending on many factors, typically lower will be the price agreed for the property, the higher the value of the deposit to be paid, and vice versa.
In some cases, instead of paying a "deposit" or to integrate the same, the buyer shall pay a sum as a "down payment" that is considered an advance on the agreed sale price.
The preliminary contract must be registered within twenty days of the signing. For registration are due:
the registration tax of 200 Euros, independently from the sale price the stamp duty, amounting to EUR 16 every 4 pages and in any case every 100 lines. If the preliminary agreement was signed with a deed, recording is performed by the Notary within thirty days.
In all cases when the preliminary contract provides for a payment, It is due to the proportional registration tax as follows:
- 0.5% on the sums provided as a deposit. - 3% of the sums provided as a deposit on the sale price. In these cases, the tax paid to register the preliminary contract it will be deducted from the tax due for the recording of the final contract of sale. Summarizing, there are two types of Preliminary Contract, the first is a public document, the other a private contract. The Notary can either draw up the public document or authenticate the private contract.
6) THE PURCHASE AGREEMENT
The notary deed (also called rogito notarile) or final contract, is the final act of the property purchase agreement. This is the ultimate, true sale act, or, the time at which the final transfer of ownership of the property from the seller to
the new owner occurs.
It is prepared by the buyer’s trusted notary and it contains all the necessary elements to identify the property in question (Which should already be contained in the preliminary agreement).
In some cases, it is possible that the parties choose to proceed with the final purchase contract without making a preliminary agreement.
It is possible that the property you are purchasing has multiple owners, being formed a co-ownership, the sales contract, as well as the preliminary agreement, they must be signed from all the co-owners, or, as a representative which has been conferred a notarized power of attorney.
The Notary checks by law the non-existence of previous mortgages, or liens or foreclosures at the territorial revenue Agency's in addition to urban regularities and cadastral registry of real estate. The notary must verify, furthermore, that the property subject to sale is not subjected in particular disciplines eg. in terms of public housing (Existence of subjective requirements of the acquirer or price constraints), or a preemptive right in favor of certain individuals or if it concerns property of historical, artistic and archaeological interest.
The Notary will transcribe the purchase agreement in the public register, while the original is kept in the acts of Notary itself.
RUNNING COST OF YOUR PROPERTY:
1) Purchase Costs
The total fees for buying a property in Italy are approximately 10 to 20 per cent of the purchase price. Anyway, it may vary from case to case.
• Agent’s commission
In case you rely on a real estate agency to find your home in Italy, you will pay a commission which is around 3% of the purchase price + VAT (I.V.A.) 22% of the fee. Once the deal is closed thanks to the intervention of the real estate agent, according to article 1755 Civil Code, he/she is entitled to a commission from both parties.
• Stamp duty (Imposta di Registro) – Land registry tax (Imposta Ipotecaria) – Cadastral Tax (Imposta catastale)
These are the 3 main taxes you have to pay when you purchase your home in Italy in addition to other minor taxes.
The “cadastral value” of the property on the Rogito (deed of sale) usually represents the basis (base imponibile) upon which the these 3 taxes are applied, and it can be considerably less than the commercial value since the latest appraisals go back to many years ago. But the government is currently updating these values. However, the “rule of the cadastral value” is not
always applicable. For instance, if the buyer purchases a property as a company and not as a private entity, the base upon which taxes are applied is represented by the commercial price of the property.
The amount of these 3 main taxes varies depending upon the type of property as well as the subjective characteristics of both the seller and the buyer:
A) Deeds of purchase stamped at the appropriate stamp duty: those in which the selling party is: a private; or an enterprise that has not built or renovated the building; or a developer or restructuring company that sells after 5 years from completion of work and opts out of the VAT regime.
1. Stamp duty:
- 2% for purchase with benefits primary home (always applied on the cadastral value) - 9% for second home applied on the cadastral value if the buyer is a private entity, or applied on the purchase price if the buyer is a business entity or an individual who buys as the holder of individual firm or as an independent professional);
- €1,000 is its minimum payment due.
2. Land registry tax: €50 (fixed rate); 3. Cadastral tax: €50 (fixed rate); 5. Duties: €230 (fixed rate); 6. Land registry fee: €35 (fixed rate); 7. Cadastral fee: €55 (fixed rate);
B) Purchase subject to VAT (Value Added Tax): if the seller is a DEVELOPER or RESTRUCTURING COMPANY that sells within 5 years from completion of work or that sells after 5 years from completion of work and opts to charge VAT on the sale:
1. VAT (applicable on the purchase price agreed and stated in the act by the parties): - 4% for primary home; - 10% for second home; - 22% for luxury home.
2. Stamp duty: €200 (fixed rate) 3. Land registry tax: €200 (fixed rate) 4. Cadastral tax: €200 (fixed rate) 5. Stamp Duties: €230 (fixed rate) 6. Land registry fee: €35 (fixed rate) 7. Cadastral fee: €55 (fixed rate)
- This summary it is valid as a general rule, but before buying a property it is always recommended to check the exact amount of taxes and fees payable to avoid unpleasant surprises at the time of the act.
• Notary Fee
A fee is paid to the Notary for the preparation of the Rogito but note that notary fees can also be requested for the preparation of the preliminary agreement of sale if the parties involved decide to also produce the “compromesso” with the notary in order to register a certified copy of the deed with the Land Registry. The amount of legal fees are calculated based on the purchase declared value of the property deed.
• Other fees They may include the help of a lawyer for legal issues; a surveyor
or an architect for the property inspection; a translator and a moving company; Utilities transfer etc...
2) Annual Taxes on the Ownership of a Property
• IUC (Imposta Comunale Unica) It is an annual tax including 3 elements: IMU (it won't be charged on primary homes unless it is a luxury home), TASI (tax on municipal services, such as road maintenance or street lighting and cleaning, etc.) and TARI (refuse/garbage tax). All home owners, whether resident and non-residents, must pay for these taxes. The payment is divided into two/three deadlines.
>> IMU is applied on the cadastral value of the property plus a revaluation of 5%. The amount must be further multiplied by the coefficient corresponding to the cadastral category. The basic rate for second homes is 0.76%, but the municipalities have the authority to decide to increase or decrease up to a maximum of 0.3%.but the municipality may decide to decrease or increase it by 0.3%.
>> Also TASI is applied in a similar way. Bear in mind that the total amount of TASI and TARI cannot exceed a tax rate of 1.6%. >> TARI is calculated from the property square meters.
IMU is applied on the cadastral value of the property plus a revaluation of 5%. The amount must be further multiplied by the coefficient corresponding to the cadastral category. The basic rate for second homes is 0.76%, but the municipality may decide to decrease or increase it by 0.3%.
Also TASI is applied in a similar way. Bear in mind that the total amount of TASI and TARI cannot exceed a tax rate of 10.6%. TARI is calculated from the property square metres.
• Utilities
Electricity, water, gas/oil etc for heating, phone: usually a small fixed fee every two months, plus payment for utilities used. At the moment of the sale deed you might ask for the last bills of each of the various utilities which should to be transferred on your behalf, this is also needful to verify that there are no pay backlog that may well block the contract registration on your behalf, risking of having to pay for it to end the voltura in your name.
• Condominium expenses:
If you buy a property which is part of a group of properties which share some communal areas - gardens, driveway, swimming pool, tennis court etc. then you will be required to pay condominium expenses. They vary as to the type and size of communal areas on the property. At this point, check with the administrator the annual ordinary expenses, that there are no installments to be paid, and above all that there are no approved service work.
Facilitation first home for citizens enrolled AIRE
For Italian citizens emigrated and living abroad it is possible to buy a property located in any town of the Italian territory in the subsidized regime The condition of emigrated abroad can be documented with a certificate of registration to the Italian registry office residing abroad (Aire), or self-certified by the person with special substitutive declaration (Circular 38 / E 2005).
The AIRE registration involves not only the opportunity to take advantage of the benefit, but also the absence of the need to move the residence within 18 months in the municipality in which the property is situated (Circular 19 / E 2001). The other conditions provided by the regulations of course remain firm,
in particular that the buyer is not the holder, either exclusively or in communion, of any real right of another house situated on the national territory, purchased by the same person or the spouse and already benefiting of the "First Home" facilities.