How can i buy house in italy

The rules to buy a property in Italy for foreigners.
Taxes and duties to pay for buying a property in Italy.

The first thing to consider is that not all foreigners can buy property in Italy.

To buy a house in Italy, foreigners have to fulfill these conditions:

  • Foreigners residing in Italy. In this case, it is necessary for the residence permit or the residence card. It is the same thing for the foreigners’ family members staying in Italy and stateless for less than 3 years. Plus, it is essential to have the Italian social security number;
  • Foreigners not-living in Italy. In this case, the purchase is more complicated. There has to be an international treaty that allows the purchase. In order to be applicable, the international treaty has to allow the principle of reciprocity. The Italian subject has to be allowed to buy a property in the same foreign country as well. In order to ascertain whether there is a valid agreement, it must be checked the situation on the ministry of Foreign Affairs website. To have the Italian social security number is fundamental in this case as well.
  • EU or EEA citizen. In this case, the purchase is always possible. The same applies to the stateless subjects for less than 3 years residing in Italy. The first step is to understand if you are a foreigner allowed to buy a house in Italy. It is crucial to rely on professionals specialized in various fields and able to verify the different technical aspects. I refer to the building compliance for all the necessary authorization, from a construction, technical, plant, etc. point of view.

Buy a House in Italy: the acquisition process to follow

The Acquisition Proposal

When you decide to buy a house in Italy (or if you want to buy it from abroad) you have to provide an acquisition proposal after having chosen the building.

The acquisition proposal is a firm offer containing the main terms of the transaction between buyer and seller.

I refer in particular to the following aspects:

  • Full name of the parties;
  • Date and place of birth;
  • Description of the house;
  • Land registry documents;
  • Year of construction;
  • Urban development and planning regulations Conformity;
  • Habitability;
  • Agreed Price;
  • Deposit Amount etc.

The seller may accept or deny the offer as appropriate.

The conclusion of the sales contract

Once the acquisition proposal is accepted, the next step is the preliminary purchase agreement.

It is a preliminary agreement in advance to the purchase with which the buyer make a formal commitment.

Indeed, the payment of an earnest is usually provided for in the contract. The amount may range between 10% and 30% of the property value.

The preliminary agreement shall be in writing. It shall contain the conditions established by the parties in the acquisition proposal. It is intended to require all the parties to transfer the ownership of the building at a certain point. Anyway, there is no obligation to purchase.

The Stipulation of the Purchase Deed

The final purchase contract is the final deed. It is a deed outlined in front of a notary who will proceed transcribing it after reading it and inviting the parties to sign it.

The notary – as a public official - is required to transfer all the information on the purchase to the official body of the competent State and the county recorder's office to register it.

The Italian final deed needs to be followed by a certified translation in line with the Italian text provided by an official translator. It could be the notary as well if he knows the foreign language – unless the foreigner buyers declare to fully understand and read the Italian language.

Purchasing of residential property: VAT rates

In order to determine the VAT rate to be paid, it should be noted that the sale of residential properties (not having the characteristics of luxury homes) carried out by the construction companies are subject to VAT rates at 10%.

Indirect taxes related to property taxation to purchase a house in italy

The foreigners buying a building in Italy have to know that they must pay the property taxes in addition to the indirect taxes.

These are taxes due solely on the fact that the owner of a right in rem to the dwelling is entitled to them.

The Law 147/2013 has merged all the indirect taxes originally planned for the house under a single item IUC (single municipal tax). This tax includes three taxes: the IMU, the TASI, and the TARI.

  • IMU: is the single municipal tax due by a property owner unless it is a non-luxury main residence for which it is not due.
  • TARI: is the waste tax charged to those who actually use the building for a fee or free of charge.
  • TASI: is the indivisible services tax intended to cover the costs incurred by the City to provide services such as lighting, streets, and gardens.

The IUC declaration must be submitted within June 30th of the year following the date on which the ownership/detention of the building begins. Of course, you will need the help of an experienced accountant to manage these aspects.

Buy a house in italy: some advice to reduce taxation

At this point in the article, you may be thinking that there are many taxes to pay. However, it is possible in some case to reduce these taxations. If you are willing to buy a house in Italy – and it is your first house, not to be confused with the term “main house” -, you can access a series of tax benefits. Those benefits may reduce the indirect taxes amount to be paid when you buy a building.

Eligible foreign buyers can enjoy first-home taxation benefits.

When buying:

  • If you buy your first house from a private individual, a non-construction firm or a construction firm (or renovation) after 4 years or more from the completion of the work, you have to pay a 2% registration tax of the house’s land registry value. In addition, you have to pay the mortgage and cadastral flat-taxes (€50 each);
  • If you buy from a construction firm within 4 years from the completion of the work, you pay 4% VAT. The registration, mortgage, and cadastral fees are fixed at € 200 each.

Conditions to receive the first-home taxation benefits in Italy

To receive the first-home taxation benefits, the purchase must concern a property that:

  • It is classified as a house, and therefore, land registry classified between categories A/1 and A/11;
  • It is not classified as a "luxury" building according to Ministerial Decree 218/1969;
  • It is located in the municipality where the buyer has or intends to transfer his/her domicile within 18 months. The benefits may also be applied to the property appliances. However, there is a limit of one for each of the cadastral categories C/2 (cellar or attic), C/6 (garage or garage) and C/7 (open or closed roof).

In addition to the property's features, the buyer:

  • Within 18 months from the purchase, the buyer undertakes to establish the domicile in the territory of the municipality where the property to be purchased is located, if it does not already have its domicile there;
  • is not the exclusive owner or joint owner of property rights, usufruct, use and dwelling rights of another dwelling house in the territory of the municipality where the property to be purchased are located;
  • is not the owner, throughout the country, of property rights, usufruct, use, housing and bare ownership of another dwelling house purchased by the same person or by his or her partner. This is done by taking advantage of the tax breaks that have followed one another over the years.

Foreign citizens and emigrants abroad will be able to take advantage of the first-home benefits. It should be specified that taxpayers who do not have Italian citizenship can buy a property taking advantage of the first home benefits if the requirements are met.

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Davide Rigatti

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