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Buying real estate in Italy
Population: 58m
Currency: Euro
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There is no capital gains tax except
on accrued gains pre-dating 1993, when property is sold up until 2000. There are no restrictions on foreign real estate ownership in Italy.
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Real Estate Prices in
Italy
Range Varies Greatly from location to location, for some examples from a few years back:
From €150,000 / $185,000 for a rural home.
The Lakes, Resorts
and Tuscany always remain popular, with apartment prices starting somewhere
around €100,000 / $124,000; small farmhouses can easily be over
double this. Large villas and country estates vary and can easily go well into the
millions. Apartments in Venice start somewhere around €250,000 /
$300,000 and in Rome somewhere around €150,000 / $185,000.
Locations to buy real estate in
Italy
Italy has many different appeals, its two
mountain ranges, the Alps and the Apennines, and the lakes like Garda.
Northern Italy has extensive areas of woods and farmland, while the south is
more arid. Italy's principal islands are Sicily (with active volcano,
Mount Etna), Sardinia and Capri. Other popular areas include Tuscany,
Liguria and Lombardy, all north of Rome. The Italian Riviera is more
popular for winter home retreats while the cities always have that mixed
cosmopolitan feel.
Living Costs in Italy
Differs greatly between the prosperous
north and central regions of Italy, and the relatively poor south. The
cost of living in the major cities is similar to Britain, France and
Germany. Luxury goods like cars can be expensive. Alcohol can be more expensive, although Italian produced
alcohol is less expensive than the northern countries of the European Union.
Buying real estate in
Italy
Most Italian properties are freehold and a
deposit of around 10% is usually accepted. When buying
real estate in Italy, you will first sign a preliminary contract. This can
be drawn up by an agent and/or a solicitor/lawyer. If the
vendor decides not to sell after signing the preliminary contract, they
must pay double the deposit back. The preliminary
contract is binding.
The preliminary contract
contains the details of the sale like the purchase price,
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.
Solicitor / Lawyer
You will need to hire the services of a
solicitor/lawyer to draw up your initial contracts and instruct the
notary. Click Here for Professional Assistance
Fees
Total fees for buying a property in Italy
are usually between 7-20% of the purchase price, depending largely on the property itself and the buyer's particular situation.
Registration tax/stamp
duty should be 10% of the declared price for residential and urban property, up to 17% for
agricultural property, with a reduced rate of around 4% for first time
buyers.
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
€250 / $300. The real estate agent's fee is usually split between the vendor and buyer and averages
from 6-12% of the purchase price, depending on the location of the property.
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. He or she will also 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.
Property
Tax
The standard rate of VAT (Value Added Tax) (or sales tax) is 20%, with
reduced rates for first time buyers to 4%. VAT is payable 10% for
non-luxury property and 20% for luxury and business property, again with
reduced rates for first time buyers to 4%.. This is also referred to above under "Fees" as
registration tax/stamp duty.
The local community tax rates, or 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 is 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 of each year.
Some Municipalities raise additional taxation in relation to the services that they supply to people in the area. These may include rubbish collection, cleaning of the streets and beaches etc. Municipalities also have the right to raise a charge for the use of a vehicle in their area. Not all do so. The amounts of these charges are not generally high, and should be between €100 and €250 per year.
A person not resident in Italy for tax purposes must still make an annual declaration for income tax. The Italian Authorities are only concerned with the income you derive from activities in Italy, not your world-wide income. Typical examples of this will be interest on any money you have on deposit with a Italian bank or income you derive from renting your Italian property. If you rent your Italian property, you will have to declare the income received. You will be able to offset certain expenses against that income – repairs, management expenses, local taxes etc. The remaining is taxed at between 19% and 46%, depending on the amount. For most people it will be about 30%. As this income is part of your world wide income, it will have to be declared to the country where you live, but double taxation relief does exist as a result of a Treaty between the two countries. You do not need to file a tax declaration if you have no income in Italy. Individual situations vary considerably and it is best to seek specialist advice from a tax consultant who has knowledge of the Italian tax system.
Mortgages
Mortgages are available from Italian and EU banks, but
can be lengthy to approve with borrowed amounts against purchase price
of 80-100%. Maximum loans from Italian banks on property are now usually 50-75% of buying
price for second homes and close to 100% for your main residence, usually for
15 - 25 years, although banks are becoming more flexable these days and starting to give 30 year mortgages.
For more information on buying property in Italy,
please contact a Real Estate Agent or visit the Italian Governments
website: http://www.esteri.it/
Our guide will not cover
all the legal and full financial information for your Real Estate purchase
but should enable you to get an idea into the financial
involvement.
Italian Embassy
Embassy of Italy in the
United Kingdom
n. 14, Three Kings' Yard
London W1Y 2EH
Tel: +44
(0)207 312 2200
Fax: +44 (0)207 499 2283
Email: emblondon@embitaly.org.uk
Embassy
of Italy
Whitehaven Street
Washington, DC 20008
Tel: (202)
612-4400 3000
Fax: (202) 518-2154
Email: italyemb@yahoo.com
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