A Guide to buying a Property or Real Estate in Italy
Capital Gains tax does not exist for certain properties – check with your Solicitor/Laywer for your particular property
There are no restrictions on Foreign Ownership.
Real Estate Prices in Italy
Range Varies, for example:
From £20,000 / €28,000 for a small property in need of extensive development.
From £35,000 / €50,000 for an apartment.
From £50,000 / €70,000 for a rural home.
Generally speaking, Italy is fast becoming popular as an alternative to the like of Spain/France and as aresult property is starting to increase quite quickly in certain areas especially in Tuscany and the coastal areas.
There is a great deal of variety in the landscape in Italy, although it is characterized predominantly by two mountain chains: the Alps and the Apennines. The former extends over 600 miles from east to west.The Alpine foothills are characterized by large lakes: Lake Maggiore and the lakes of Como, Iseo and Garda. The principal islands are Sicilia, rising up to the great volcanic cone of Etna (10,860 feet) and Sardinia.
Living Costs in Italy
The northern and central regions are quite expensive while the southern part of Italy is generally less expensive to live in. The major cities are similar in terms of costs of living to Britain. Luxury goods like cars and white goods can be expensive. Wines and alcohol are relatively cheap throughout the country.
Buying Property in Italy
The majority of residential property in Italy is freehold and generally a 10% deposit is sufficient to secure your property.
When buying real estate in Italy, you will first sign a preliminary contract, this can be drawn up by the vendor, agent or a solicitor/lawyer. The preliminary contract may be preceeded by a binding ‘buying proposal’ called a compromesso, where the buyer is legally bound to buy, but the vendor and agent are free to consider other offers.
The preliminary contract contains the details of the sale like the purchase price and financing, plus the completion date which is normally six to eight weeks. The sale will be completed before a public notary when the final deed or conveyance of transfer is signed. The notary issues a certified copy of the deed of sale and registers the original document with the land registry, which makes you the legal owner of the property. There are two kinds of deeds in Italy; a private deed and a public instrument, this provides more protection and costs slightly more. When a property is bought by private deed and is subsequently found to have a charge against it, such as a mortgage, the notary isn’t responsible. When buying by public instrument you can seek legal action against the notary for professional misconduct.
Solicitor / Lawyer
Wherever possible, try to enlist the services of a local Lawyer or Solicitor to act on your behalf, preferably one who speaks English. They will be responsible for drawing up your contracts, contacting the Notary, paying any taxes and registering the property with the land registry in Italy. They will normally charge between 1 – 2% of the sale value of the property.
Total fees for buying a property in Italy are usually between 10-15% of the purchase price. Registration tax/stamp duty should be 10% of the declared price for urban property, up to 17% for agricultural property, with a reduced rate of around 4% for first time buyers. If you’re planning on becoming a resident, you should to do so before purchasing your home in Italy.
The declared property sale figure should also agree with the official value in the Land Registry, which is usually over half of the purchase price. Notary fees vary depending on the price of a property and are higher as a percentage on cheaper properties. They are generally about 4% of the declared price. Legal fees are usually around 2% of the purchase price. A surveyor’s fee will vary according to the price of the property and will be upwards of €150. The real estate agent’s fee and who pays it varies considerably, although it’s usually shared between the vendor and buyer, a buyer contributing about 2% of the purchase price, the vendor about the same. VAT(Value Added Tax) is payable on new homes from 9-19% depending on the registries rating and is included in the price.
It’s important to deal only with a qualified and licensed agent, and to engage a local lawyer, before signing anything or paying a deposit. A local surveyor may also be necessary, particularly if you’re buying an old property or a property with a large plot of land. Your lawyer or surveyor will carry out the necessary searches regarding such matters as ownership, debts and rights of way. Enquiries must be made to ensure that the vendor has a registered title and that there are no debts against the property like mortgages or taxes and check the property has the relevant building licences, conforms to local planning conditions and changes have been authorised. Check for selling consent of all family registered owners and water supplies for countryside properties.
Income tax (IRPEF) is high in Italy and ranges from 10%-60%. Non-residents must submit a tax return stating the details of their Italian property, even though there’s no tax to pay if no income is derived from rental etc. The standard rate of VAT is 19%, with reduced rates to a minimum 4%. VAT is payable on new properties at 9% for non-luxury property and 19% for luxury property. The local community tax or rates, ICI, (‘Ichy’) is paid by anyone who owns property or land in Italy, whether they are a resident or non-resident. It’s levied at between 0.4% – 0.7% of a property’s value, the actual rate being decided by the local authority depending on the size of the property, location, class and category. If a property is unfit for habitation it could qualify for a 50% reduction. ICI is paid in two instalments in June and December.
These are available from Italian banks but can be lengthy to approve, and usually you can obtain better terms from foreign financial institutes with borrowed amounts against purchase price of up to 80%. Remember to declare any funds brought in to your Italian bank. Maximum loans from Italian banks on property are usually 50-60% of buying price for second homes and nearer 75% for your main residence, usually up to 15 years. For more details visit our Mortgages Page
For more information on buying property in Italy, please contact the Real Estate Agent or visit the Italian Governments website: www.esteri.it
This guide is not meant to represent a full guide on buying property in Italy but it will give you an insight to the procedures to follow.
Italian Embassy in London
Embassy of Italy in the United Kingdom
- 14, Three Kings’ Yard
Tel: +44 (0)207 312 2200
Fax: +44 (0)207 499 2283