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Italy

Legal Aspects of Buying Off-Plan Property in Italy:

  1. Preliminary Contract (Compromesso): This legally binding agreement outlines the terms and conditions of the sale and usually requires a deposit (typically 10-30% of the purchase price).
  2. Public Deed (Atto): The final contract signed in front of an Italian notary, it confirms the property’s change of ownership. It also outlines the agreed payment method, and after this, the outstanding balance is usually paid.
  3. Registration: Once the Atto is signed, the notary registers the sale, ensuring the buyer is the official owner in the Italian Land Registry.

Fees to Consider when Buying Off-Plan Property in Italy:

  1. VAT (IVA): If buying a new property directly from a developer or builder, you’ll need to pay VAT. As of the last update, for primary residences, the VAT rate is 4%; for non-primary residences, it’s 10%.
  2. Registration Tax: For resale properties, instead of VAT, buyers pay a registration tax. It’s 2% for primary residences and 9% for non-primary residences of the declared property value in the deeds.
  3. Notary Fees: Fees are for the notarial deed, which can range between 1-2% of the declared property value.
  4. Land Registry Tax (Imposta Catastale): This is a fixed fee for new properties, usually around €50-€200.
  5. Legal Fees: Hiring a lawyer, especially when navigating the process as a foreigner, can be beneficial. Fees are typically around 1-2% of the purchase price.
  6. Surveyor (Geometra) Fees: If you choose to employ a surveyor to oversee the transaction and ensure the property matches local building regulations, fees can range from 1-2% of the purchase price.
  7. Banking Costs: If you’re transferring money internationally or securing a mortgage in Italy, account for bank fees and potential currency exchange rate fluctuations.

IMPORTANT DETAILS AND FACTORS WHEN BUYING A HOME IN ITALY.

1. Codice Fiscale (Tax Code):

Before starting the property purchase process, foreigners must obtain an Italian tax code (Codice Fiscale), which is essential for various transactions including opening a bank account and signing a purchase agreement.

2. Financial Arrangements:

Determine your budget and how you will finance the property purchase, considering whether you’ll pay cash or need a mortgage.

3. Legal Representation:

It is highly advisable to appoint a legal representative or a notary who is fluent in your language and is familiar with Italian property law to assist with legal proceedings and documentation.

4. Property Selection and Inspection:

Once you identify a property, inspect it thoroughly, preferably with a surveyor, to assess its condition and value, and to ensure there are no legal disputes or debts attached to it.

5. Proposta d’Acquisto (Purchase Proposal):

This is an initial agreement where the buyer makes an offer, and if accepted by the seller, the property is taken off the market. A deposit is usually paid at this stage.

6. Contratto Preliminare (Preliminary Contract):

Once the proposal is accepted, a preliminary contract is drawn up, detailing the sale conditions, final price, and transaction timeline. Another deposit is usually paid, bringing the total to around 20-30% of the purchase price.

7. Closing (Rogito):

The final agreement is signed before a notary, the balance is paid, and ownership is transferred. The notary registers the deed, making the buyer the official owner.

8. Taxes and Fees:

Buyers are subject to various taxes and fees, including registration tax, mortgage tax, cadastral tax, notary fees, and legal fees, usually amounting to approximately 9-10% of the purchase price for residents and 10-11% for non-residents.

Ownership and Residency:

  • No Ownership Restrictions: Foreigners, both EU and non-EU citizens, can buy property in Italy with no significant restrictions.
  • Elective Residency Visa: Italy offers an elective residency visa for non-EU nationals purchasing property, provided they have sufficient income.

Tax Considerations:

  • Foreign owners must pay annual council tax (IMU) and may be liable for income tax if renting out the property.
  • If the property is sold after 5 years of ownership, any profit is exempt from capital gains tax.