Navigating the Italian property market can be challenging for those considering to purchase real-estate in Italy.
our Italian practice team of advisors consist of bi-lingual legal and real-estate professionals. we provide our clients with valuable support every step of the way — from the northern Alps to the southern mediterranean..
Buying Property in Italy
The Italian property market is currently full of unique opportunities for those considering purchasing property.
Combined with various financial incentives, such as low-interest mortgages and generous tax-credits for renovating properties — Italy is truly a dream destination.
How do I purchase property in Italy?
Purchasing property in Italy can vary depending on the location and experience of the buyer. In many cases, it involves similar parties of other countries. For example, you have agents on representing the seller & buyer, the involvement of the banks for applicable financing (i.e. mutuo) as well as transactional professionals, such as real-estate lawyers.
Unlike many other countries — Italy requires a notario (i.e. Notary), which adds a formal level of certification to the property purchase. It is a formality, but can be expensive if you don’t choose the right one. It can be especially challenging if you do not speak Italian.
Can I purchase property in Italy?
This depends. In fact, not every foreign-national is able to purchasing property in Italy. Purchasing real-estate for residential purposes is restricted to those countries that maintain the full property-purchase rights & privileges for Italian nationals abroad — i.e. “reciprocity”. In other words, there are a handful of foreign-nationals that may face challenges in acquiring property in Italy, including India.
Citizens from the United States, United Kingdom and all EU nations do not have restrictions, and maintain full access to the Italian property market.
How do I purchase property in Italy? What is the process?
Purchasing a property in Italy can be complicated and involves multiple parties — both on the seller and purchaser side. We have outlined this process below.
How long does it take to purchase a property in Italy?
Timelines for going through the real-estate purchase process in Italy really depends on several factors, such as: the type of property (a single house or a development for instance), if there are any issues with the property (if work needs to be done or there are any challenges obtaining building permission/planning regulations); and the speed of obtaining financing, if necessary.
An Overview of Purchasing Property In Italy
1. The purchase deed/ contract, completion and payment
The purchase deed or contract must be in written form and must be signed before an Italian notary, who is an officer of the State. The notary verifies that the rights can be transferred and whether the property is subject to a mortgage, charge or any other restriction. The jurisdiction (i.e. where any disputes are to be resolved) and the law of the contract must be Italian.
When do I take ownership over the property in Italy?
The full rights on the property pass at the time when the notary completes the procedure and registers the contract into the local land registry. If one of the purchasing parties does not understand Italian, the entire contract must be translated into the other language and an interpreter must be nominated. Alternatively, the party who does not understand Italian can give a power of attorney to an Italian speaker (in general, their lawyer). The power of attorney must be signed in front of a public notary in Italy or, as usually happens, in the country of the given party.
What is a power of attorney, and why is it important?
A power of attorney may be useful for two reasons; firstly, only the power of attorney (and not the whole contract) needs to be translated and secondly, the parties do not need to attend before the notary.
How do I actually pay for the property? What is the most common form of payment?
The most common method of payment is the delivery of a banker’s draft (cashier’s check) at the time of the signing of the purchase deed.
If there are no complications, the meeting in front of the notary generally takes one to two hours. A lawyer can prepare the contract, but each notary has their own standard form which they prefer to use. The lawyer will therefore deal with the Notary’s draft and negotiate amendments, if necessary.
2. Mortgage
A mortgage (i.e. mutuo) is a very common way to finance property purchases in Italy. At the current time of this writing, interest-rates for Italian mutuo’s are very low (~.8-1.4%), so if one can qualify for a mortgage it may be a smart business decision.
I am a Foreign National — can I obtain a mortgage in Italy?
It is possible for a foreign national to request a loan from a bank in Italy. However, not all banks are comfortable issuing mortgages for foreign nationals, especially those who have not paid nor resided in Italy. That said, it is critical that you limit your search to those banks (even specific localities & bank managers) that have experience dealing with foreign-nationals and might me more amenable to processing a loan application for non-Italians.
How much financing am I eligible to receive?
This will depend — like many other banking systems there is a loan process that evaluates the investors net-worth and assets to make this determination. Generally, in Italy, up to approximately 70-80% of the value of the property can be financed by a bank, which will then register a charge against the property.
The mortgage contract must be signed in front of a notary, and this is generally performed at the same time that the purchase contract is signed. As for the purchase deed, this contract can also be signed by means of a different power of attorney, given by the person taking out the mortgage (the buyer) to an Italian speaker, normally his lawyer.
An Italian bank account is also normally necessary to make this process simpler. It is generally fairly easy to open a bank account in Italy.
3. Proposal and Preliminary contract
The Purchase offer
This is a written agreement under which the purchaser unilaterally commits himself to buy. The offer can include certain conditions or contingencies decided by the purchaser (e.g. that the property conforms with building permits and planning regulations).
Once the seller accepts the offer, this offer commits both parties in the same way as a preliminary contract.
Deposit
Together with the purchase proposal the buyer is typically required to leave an initial deposit (normally between 0.5-3% of the final price).
NOTE: These deposits, reservation fees, purchase proposals, etc., are often written in ambiguous terms and can lead to the loss of the deposit. If you are only working through an agency this can be very risky and expose the buyer to significant liabilities. It is therefore strongly advisable, especially for foreign buyers to have any proposal, contract, document, checked by their lawyer before signing anything.
Preliminary contract
In Italy, a preliminary contract is appropriate when the property is not ready for immediate delivery to the buyer. There may several common reasons for this, including: The selling party is a developer or is carrying out restoration works; important details have yet to be resolved (e.g. checking building permits); or where the buyer does not yet have the full funds available (e.g. a mortgage is required).
The rights on the property do not pass on signature of the preliminary contract, but from that point forward, the seller is obligated to sell and the buyer is obligated to buy.
4. Professionals required by a foreign buyer
Below is a list of the important parties involved in a real-estate transaction in Italy
Notary (Notaio) - The buyer has the right to choose the notary who will:
Carry out necessary checks and certification on the property (i.e. that the owner/seller has good title on the property and that the property is not affected by mortgages, restrictions, prejudicial registrations, etc.)
Certify the identity and the signatures of the parties to the purchase deed
Register the deed at the local land registry
Pay the taxes related to the transfer on behalf of the buyers.
The costs of a notary are normally determined by a national tariff, with minimum and a maximum for each activity. Having close relationships with many notaries in Italy, we are able to negotiate good rates on behalf of our clients.
Lawyer (Avvocato) – the lawyer represents solely the interests of the buyer (unlike agents) and performs a multitude of services related to the potential purchase of property in Italy, including:
Reviewing, negotiating and drafting all the contracts involved in a property purchase: from the instructions to the estate agent, to the final purchase deed going through the offer of purchase and the preliminary contract
Organizes the purchase process in accordance with the needs of the client and the outcome of technical/legal checks.
It is strongly advisable to obtain the services of a lawyer and, if possible, one who speaks the language of the buyer.
Accountant (Commercialista) – a commercialista is mandatory IF the property produces an income (i.e. if the property derives rental income). It is strongly advisable to engage a commercialista if you are seeking to invest in property that will have a commercial activity (i. (B&B, Agriturismo, Agricultural).
Surveyor (Geometra) – This is typically someone with an architectural and engineering background. It is strongly advisable to obtain a surveyor’s report to check the technical specifications and whether the factual state of the property conforms with the town/city planning records, requirements and restrictions. The surveyor is also in a position to check and direct works performed on the property.
Estate agent – If required, an estate agent can be involved. The fees of the estate agent are normally paid by both buyer and seller. Italian law states that the mediation fee is due if the deal is concluded as a result of the estate agent’s intervention. In absence of an agreement between the parties and the estate agent, the amount of this fee is determined by professional tariffs or local practice. To avoid unpleasant surprises, we advise clients to sign a written agreement with the estate agent, specifying the agreed fees, any expenses due, and relevant terms and conditions of payment, etc.
NOTE: Agents earn off the sale of a property so it is important that you have someone who solely represents your interests in Italy. We are well positioned to provide you with all the necessary, trusted legal advice and support for purchasing an home in Italy.
Frequently Asked Questions Continued….
Do I need insurance on my property purchase in Italy?
It is not compulsory to insure property in Italy. Of course, it is advisable, and the bank will require this if there is a mortgage. Banks and insurance companies offer various policies against fire, theft, and other damage to the property and to third parties, usually for a cost of around a few hundred euros per year. We are available to deal with the insurance companies on behalf of our clients in order to find and negotiate the most suitable insurance policy.
Do you help with inheritance matters for Italy? How does this affect my purchase of a property in Italy?
When buying a property in Italy, Italian inheritance law grants minimum percentage interests to certain categories of heirs (spouse, children, etc.), even if there is a Will which purports to allocate the inheritance in a different manner. Normally, in countries like the USA or UK, private international law states that, for immovable assets, the inheritance law of the country where the asset is situated is applied to the succession. In order to avoid frequent problems with the registration of these properties into the heirs’ names in future, we strongly advise all our clients to draft and register an Italian will, the content of which must be examined by a lawyer on a case by case basis.
What are the tax implications for purchasing property in Italy?
When you buy a property in Italy you are required to pay property transfer taxes.
How much tax do I need to pay for purchasing a property in Italy?
The applicable transfer taxes in Italy depend on several issues: the seller (if a development company, a company or private individual), the intention of the buyer (if he wishes to take out residency or not), the kind of property to be transferred (if registered as luxury property or not, or for residential use or not).
In general, transfer taxes come to around 10% of the overall purchase price paid for the property. Given the above, in order to provide clients with the exact figure of the taxes due, it is necessary to receive all the relevant information.
I intend to purchase a home and reside in Italy — what taxes do I need to pay?
If the buyer intends to take up local residency, the taxes come to 3% or 4% on the price of the property, depending on whether the seller is a company or private individual. To take advantage of this “prima casa” (first home) tax discount, the buyer must obtain local residency within 18 months from the date of the purchase deed.
NOTE: Please read more about Italian Tax Regimes for Foreign Nationals here
a. Periodic taxes
IRPEF (Imposta sul Reddito delle Persone Fisiche – Income tax). This tax is only payable in the event rental income is earned from the Italian property, full details of which will need to be provided in the relevant income declaration submitted yearly. When a person takes up residency in Italy, he normally pays taxes in Italy.
IMU (Imposta Municipale Unica – Local authority tax). This is a tax which has to be paid to the local authority in which the property is located (similar to council tax). However, it is generally much lower than the UK or US council tax on properties.
TASI (Tributo Servizi Indivisibili – Local services tax) + TARI (Tassa rifiuti – Local refuse removal tax). These minor taxes must be paid to the local authority in which the property is situated. Some local authorities provide discounts if the property is only occupied for short periods or if there is a sole occupier.
When can I apply for residency in Italy?
A foreigner must live in Italy for more than 6 months per year to become a resident. NOTE: Residency has tax major tax implications:
Possibility to benefit for “prima casa” tax discounts; and
Imposes the payment of all taxes in Italy, including those due for income received abroad.
I am in Italy as a tourist — can I purchase property?
Yes. Altogether, however, a tourist visa normally allows non-Italian citizens to remain in the EU (including Italy) 90 days every 180.