To buy a property in Italy we need make three most important steps:
1. PURCHASE OFFER
Having found a suitable property in Italy a buyer signs a purchase offer, valid for 3-7 days, which sets out the details of what is being purchased, the timing of payments and any conditions that the buyer or seller has agreed to. A small deposit is normally requested at this time. This is usually a binding contract if also signed by the seller. If the seller does not accept the offer, the latter loses its legal validity.
2. THE PRELIMINARY CONTRACT
This is a standard agreement that is signed by both parties on acceptance of an offer. At the point of signing normally 30% of the purchase price is being paid. The document is legally binding, setting out the terms of the sale, including a date of completion for the purchase. If the buyer withdraws they forfeit their deposit. Should the vendor withdraw they would have to repay double this amount. Wharf Invest Real Estate highly recommends all of the preliminary contracts to be drawn up by a public notary* and signed in front of the latter. In this case the preliminary contract will be registered and transcribed in the state property register – to fully protect both the buyer and the seller.
3. FINAL NOTARY DEED
This is the formal sale and purchase completion process – the final stage which takes place in front of a public notary*. It is when the full payment is made, transaction taxes are paid and the ownership passes to the buyer. The notary, who acts independently for both parties, ensures all the necessary documentation is complete and accurate; all aspects of the sale and purchase are legally satisfactory.
*Notaries in Italy are public officers, appointed by the state whose role is to authenticate and attest all legal acts. They act as a representative of the government, and not to represent the individual interests of either the buyer or seller.
Neither party requires separate legal advice, although it is quite normal for purchasers to engage an internationally-oriented Italian lawyer (see the page bottom) to guide them through the earlier stages and ensure that everything the notary requires is in place.
THE PURCHASE COSTS:
1. Purchase registration tax and legal fees
2. Notary fee
3. Real estate agent’s commission
PURCHASE REGISTRATION TAX AND FEES
Please note the purchase tax in Italy is calculated on the basis of the property cadastral value. Cadastral values, defined by the Land Registry and based on number of rooms, location, floor area etc, are always significantly lower than the current market value; this effectively results in a lower tax bill. For example, a property being purchased for €1.5m might have a cadastral value of €300,000. So the tax calculation will be based on €300,000, rather than the full purchase price.
Purchase registration tax is a registration tax payable on a property changing registered ownership.
– If it’s your first home (thus you are planning to bring your residency in Italy), the tax is levied at 2% based on the property cadastral value.
– If it’s your second home (your summer residence), the tax is levied at 9% based on the property cadastral value.
Each single property has its own cadastral value, stated in the property official records.
WHEN THE VAT IS APPLIED:
Buyers of new properties** do not pay registration tax and instead are liable to pay VAT based on the declared market price, which ranges from 4% to 22%.
– VAT is levied at 4% for first-home resident buyers
– at 10% for second-home and nonresident buyers,
– at 22% on luxury homes with a rating of A1 in the Property Register.
**New properties are defined as those dwellings sold within five years of completion of construction or restoration.
The notary fee varies depending on the property price, normally 0.5%-1.5%, payable when you sign the final contract. There are widely varying estimates and a lot depends on the notary who valuates the deal for each single transaction.
REAL ESTATE AGENT’S FEES
These are normally charged at 3% + VAT to the buyer and 3% +VAT to the seller.
If you speak no Italian an official translator is obligatory to both translate the written contracts (both preliminary and final notary deed) and be present during the signature. The price depends on the contract length but €700 per deed might be typical.