Purchasing in Italy
Property purchasing in Italy
The legislation of Italy is one of the most liberal in Europe and lets foreigners to invest in business and property along with Italian citizens.
At the moment of purchase the buyer must be on the territory of Italy legally, must have a tax code (codice fiscale – the equivalent of the Russian INN which is given on notary’s request with tax authorities or in the Italian consulate abroad).
The property may be bought also in investment purposes (for the following renting).
After choice of the property (be ready that it can be delayed, because all the property in Italy is individual and all the advertisements are full of superlatives) the process of buying begins. The process of buying the poperty in Italy, as a rule, includes 3 stages:
1. Proposal to purchase (Proposta d’acquisto).
After the buyer’s decision about purchase, a document on his behalf is prepared, where all the parameters, location and price of the chosen property are provided, and also terms and conditions of payment. At the same time a deposit is made, that is usually 5% from the claimed price of the property. The cheque is wtitten on the name of the seller.
The agent offers for the seller’s consideration a proposal to purchase with attached cheque. If the proposal is acceptable, the seller sign it. In this case the agency transmits the cheque to the seller.
If the seller requests for modification of the proposal (price, method of payment, terms, etc.), the buyer can either accept the seller’s modifications or not. In the case of failure, he gets the cheque back. If the seller agrees, but the buyer chnged his mind, according to the general rule of the deposit, he doesn’t get his money back.
Agent service ispaid at the time of acceptance of the proposal to purchase by the buyer.
As a rule, the cost of agency service starts from 3% and is paid by the buyer.
2. A preliminary contract (Preliminare di compravendita).
In a few days after acceptance of the proposal to purchase (according to the Italian tradition – it may be a rather long term) a preliminary contract of sale is concluded. In this, the buyer pay the seller about 20% of the project cost. From this moment the client has the exclusive right to purchase this property and the object is removed from the sale. As a rule, form the moment of the first payment and until the end of the transaction 35-40 days pass. During this time the buyer transfers the remaining amount taking into account all the additional costs for registration the property on his account in the Italian bank or solves the issues with credits, and the notary who took the case all the rights of the seller and prepares the documents.
3. A contract of sale of property (Atto notarile di compravendita).
After preparation of the documents (usually 30-45 days) the parties with the participation of agent (agents) meet at the notary to sign the act of purchase (Atto notarile di compravendita), which transfers ownership of the property from the seller to the buyer. The buyer pays the remaining amount by cheque to the seller. The buyer also pays for notary service on rewriting the property in Registry. After the signing of the act at the notary the buyer receives the keys, a copy of the act, after that the act passes the state registration in the department of Property Registry. Usually it takes up to 45 days without the participation of the buyer. After the act registration the buyer gets another document – the extract from the Property Registry and becomes a full owner of the purchased property.
In comparison with Russia the buyer has on his hands only a copy of the sales contract. The original is kept at the notary.
Additional cost (transaction cost)
The final contract (Contratto notarile di compravendita) must be signed in te presence of the notary, the cost of notary services depends on the complexity of the act and price of the property (the higher the price is, the less percentage is). On average, the cost of notary services is not more than 3% (1.5% – services + 1.5% registration in the Registry of owners).
Tax payments at property registration:
If the housing (flat, villa) is bought from the construction company (primary market of new buildings) the buyer should pay
1. VAT = 10% of the cadastral value (it is usually below market)
2. a fixed mortgage tax of 168 Euro (for the overwrite of the property in the Registry)
3. a fixed cadastral tax of 168 Euro
4. a stamp duty of 168 Euro
Total: 10% of sale price + 500 Euro
(If you have a residence permit in Italy and the property you want to buy will be your first house that you register in VAT will be 4%)
If the housing (flat, villa) is bought on the secondary market the buyer should pay
1. a stamp duty – 7%
2. a mortgage tax – 2% (for the overwrite of the property in the Registry)
3. a cadastral tax – 1%
Total: 10% of the registration price of the property
All additional payments for registration of the property for any of the purchase options (from the primary or secondary market) with the notary services: 12-13% of the cadastral price + comission of estate agency
Annual cost of the owner:
The property tax ICI. (Imposta Comunale sugli Immobili) corresponds to an average of 0.7% of the cadastral value of the property (tax is municipal and greatly depends not only on the city but even on presence of flowers on the balcony – little slacks are possible).
If the property is leased the income tax on natural persons (IRPEF) on the income of rent is paid.
If the property is not leased and no one is registered in it – the income tax on natural persons (IRPEF) is paid from the inputted income.
The cost of maintenance services of house, villa, flat:
•electricity – on average 15 Euro per month + consumption meter (the rate is about 18 cents + exta fees – it depends on energy supplier);
•water – about 200 Euro per year;
•municipal fee for garbage removal is about 100 Euro per year;
•house maintenance (or the cost of condominium) – ask when buying; •the cost for preparing the declarations on taxes – on average 50 Euro