Would you like to buy a property in Italy, but you have no idea where to start? Here is a good guide to understand how it works!
Purchasing a property in Italy is not impossible, don't worry. But you need to have all the information to know how to move around step by step.
BUYING PROPERTY IN ITALY
How sales work in Italy:
This information has been updated as of November 2014
– Italian bureaucracy changes frequently so you might wish to check that the situation has not changed in the meantime..
We will however attempt to keep this information updated.
General information to consider:
1) In Italy, Multiple shared listings are very difficult to come by. Milligan & Milligan is a member of a group of more than 80 agencies in Tuscany and have collaborators in other parts of Italy, which makes us an exception.
2) Buying a house in Italy is not something you do in a weekend. Plan a minimum of 10 days to find the right house and get the feel of the land. You will then need at least one more trip to Italy to actually deal with the deed etc. We also offer the service of representing you if you cannot return to Italy. In this case it is necessary to sign a copy of a power of attorney or “procura” in front on an Italian Notary.
3) Calculate your budget- include travel costs + 10% – 15% to be considered in taxes, and other closing costs
4) Find an agent you trust who is legally registered as a realtor at the local “Camera di Commercio “. – keep in mind that an agent can represent both the buyer and the seller in which case he is acting as an intermediario or intermediary and will be paid by both parties. In other words BUYERS PAY agency fees in Italy.
5) Another option is to choose an English speaking agency and ask them to be your “mandatario” in which case they represent only you and will be paid only by you. This choice may cost you a higher fee but you will be shown a much wider range of properties. This is the case in a property search or with multiple shared listings. You must have an agency represent you BEFORE seeing houses. Once you have contacted an agency or private owner about a property you can no longer ask another agency to represent you and will be obliged to pay fees to the agency that showed you the property.
6) Almost all the taxes will be based on the cadastral value and not on the real price of the property. The cadastral value (this is a value that has been established but is not consistent with the real value of the house- it is almost always much lower than the real value) at which the property is registered at the local “catasto”. This value is what determines both one time taxes when you buy a property as well as half yearly property taxes.
The half yearly owners tax, paid in June and November, is the cadastral value multiplied by the yearly coefficient. At present first homes ( permanent residences) are exempt, but this may change. The cadastral price is one of the issues you may wish to ask the seller when considering a property. Exception is made for properties bought from companies such as construction companies in which case the taxes at the sale will be based on the real price.
7)The agency and notary are paid according to the real price. Taxes on the sale and future property tax will be calculated on the cadastral value.
8)To buy a property it is necessary to apply for your “Codice Fiscale” or Italian Tax number –as it is required to sign any official document in Italy . Milligan and Milligan can obtain it on your behalf. A form signed by you and copy of a valid passport are necessary, cost is Euro 50 per person.
9)Once you have a tax number is also necessary to open an Italian bank account as all transactions must have a traceable source through an Italian bank.
10) Have a look at our properties to have an idea of prices and what to expect.
11) Send us a wish list and we will add you to our newsletter so you will receive an email with new listings as they come in!
1) Find the house you want
2) Take a “geometra” -surveyor or “architetto”-architect to see the property if you need help in deciding the condition and the real costs of renovation. Do not sign anything or put down money until you are sure of the condition of the property.
3) Make an offer (Italians are notorious bargainers ) usually 5% below the asking price is acceptable if the asking price is “trattabile” or negotiable. If it is stated that it is “non trattabile” or not negotiable you can always try.
4) Upon presenting an offer, you are usually asked to leave a (5-10%) deposit of goodwill. If the seller accepts – this sum goes to him – if you change your mind you will lose this deposit. For this reason it is important to check the property with an expert before making an offer. If the house is a particular bargain it is best to put down a large sum so the seller will not be inclined to take a better offer. If he backs out after signing acceptance of your offer and receiving the deposit he has to pay back double the deposit paid by you.
5) If the initial offer you made is refused – the seller may make a proposal. You can accept this or make a counter proposal. If you feel this is “your house” you may decide to spend some time finding an acceptable agreement. Keep in mind that besides the price, the date of the deed ,if financing will be used to buy the property and other conditions should be written up in the offer. The agent representing you will then register the accepted offer at the tax office and pay the taxes on the deposit . As the deposit is part of the final price of the property part of this sum will be deducted from your taxes paid at the Deed. Part are fixed fees(at present 200Euros) . The agent will then ask you for reimbursement.
6) At this point you are ready for the “compromesso” or promissory contract. This is not a mandatory step -one can go directly to the “rogito” or final contract. Often this contract is necessary to have time to draw up papers, define details and get financing. At the compromesso 30% of the total is usually paid to the seller and all the conditions finalized. This contract is usually signed in the presence of a “Notaio”. The compromesso is usually registered at the tax office and more advance tax payments made and reimbursed to the Notary.
7) Keep in mind that withdrawing from the contract at this point – means that will you not only lose your down-payment, but you could be forced legally to comply with the contract. On the other hand if the seller withdraws from the contract (both after accepting the offer and receiving the goodwill deposit or after accepting the down payment made at the compromesso) he must return double the sums received as promissory deposit.
8) The “rogito” or deed contract is when the property actually changes hands- this is always signed in front of a Notaio. The Notaio is a government official who checks all the documents, registers the contract, pays the taxes on the contract and legalizes financing documents and the mortgage on the property. Final payment is made in his presence with or without financing. Keys are often exchanged at this point and agreements made for changing utility bills (water, electricity, gas etc). The buyer usually has the option of choosing the Notaio.
9) At this point you own a house. Keep in mind you will owe the half yearly property tax mentioned above as well as income tax on any rentals. You may also have a garbage collection tax or other municipal taxes. All these are relatively low.
10) A capital gains tax in Italy was re-established in 2006 – 20% on the difference between buying and selling price if it is sold within 5 years. No capital gains tax is due over 5 years of ownership, or on first “resident” homes.
11) Insurance – some mortgages require life insurance, You may also consider 3rd party insurance and theft insurance
12) Taxation on property sales is a complex topic as there are many factors involved: permanent versus second home, seller being a builder versus private owner, the cadastral value of the property, money up front versus financing etc, etc, etc, It is best to get a quick calculation on those properties that you really like .
After having read through this you may have realized that there is a lot of BUREACRACY which is why it is so important that you have a reliable English speaking agent to help you through the process.
Notaio – official who checks the veracity of documents and registers the various contracts – he will pay the taxes on the deed on your behalf. He represents both the seller and the buyer and is a public official – licensed by the Italian government. The buyer usually chooses the Notaio and pays his fees. The only fee that the buyer is not responsible for is the extinguishing of an existing mortgage – this the seller is responsible for.
Compromesso – promissory contract with a down payment of 30% usually stipulated in front of a Notaio.
Rogito – final act and deed when the ownership of the property changes- this is also stipulated in front of a “Notaio” and balance of price is paid to the seller directly or through financing. This deed will be registered at the local tax office.
Geometra – surveyor
Architetto – architect (usually more costly than a surveyor)
Procura – mandate or power of attorney – usually signed in front of a “Notaio” in Italy or in front of your local Italian consul – this gives power of attorney to a lawyer or agent to sign papers, etc. in your absence.
Intermediario – intermediary
Tassa di registro – registration tax (for contracts)
Tassa di ipoteca – Tax for depositing the act at the local property archive office
Catasto – cadastral registry office (usually provincial)
Compratore – buyer
Venditore – seller
Avvocato – lawyer
Atto – deed
Contratto – contract
Codice Fiscale – Italian tax number
Agency as intermediary – most agencies charge 2-6% of the real price of the property plus Vat tax of 22% of the fees. This will vary depending on the area of Italy, type of agency and the property itself. You will also be reimbursing the agent for any advance tax payments made on your behalf.
If you are not buying with a mandate , you will have the cost of a translator both for the documents and during the deed transaction at the notaries office.
Milligan & Milligan charges 3% buyers fees plus 22% Vat tax . In case of power of Attorney , legal translation for the sale or for financing, as well as drawing up documents or engaging professionals such as a lawyer , architect etc consider extra costs.
Codice fiscale : Free if you go and apply yourself. Milligan & Milligan charges a fee of Euro 50 to apply for this document on your behalf.
If you have signed a mandate with Milligan & Milligan personalized tours of areas in Italy can be organized to see real estate.
Group tours are organized at least once a year.