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Buying a house in Italy from a foreign national

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What foreign citizens can legally buy in Italy?

The law distinguishes three different categories of foreigners who can buy home without any particular problems

  1. Legally resident foreigner who, together with their family members and stateless persons for less than three years, must hold a valid residence permit or residence card;
  2. Foreigners not legally residing, who can buy a house on the basis of the so-called condition of reciprocity, that is, that in the country of origin of the foreigner is also allowed to the Italian citizen to buy a house;
  3. Community citizen and/or EFTA (European Free Trade Association= European Free Trade Association) or stateless resident for more than three years, for which there are no limits.

After an accurate check of the conditions that allow the foreigner to proceed, you will have to figure out what type of property you will go to buy (whether it is first or second home, whether luxury real estate, condominium, whether you buy from private individuals or companies).

What documents should the foreigner possess:

Tax code issued by the Revenue Agency

Residence permit or residence card

Passport or equivalent travel documents

If the foreigner does not understand the Italian language?

If the foreigner does not know the Italian language, it is necessary to bring in, in the presence of the Notary and witnesses (if no one knows the foreign language), an interpreter/ translator designated under the law of notary. In addition, the Italian notary must follow a foreign translation certified by an official translator (it can also be the same Notary, if he knows the language), in accordance with the Italian text.

If the notary understands the foreigner language no question since he himself will draw up the act in double language.

If the foreigner is not in Italy to conclude the agreement ?

It may happen that the person interested in concluding the purchase agreement cannot actually participate in the conclusion. In this case, it is possible by resorting to a power of attorney, a document by which others are given the power to perform a legal or material act in the place of those who are prevented from doing so.

When you want to buy a property it is useful to open a bank account in Italy both because it will make payment procedures more streamlined, and because it will be necessary to carry out the banking domiciliation of services.

Alternatively, it may sign a trustee’s mandate to a notary selected for the final act who may:

  1. receive the fiduciary deposit of the sums required for purchase by bank transfer to the notary’s account (L. 147/13 art. 1 co. 63-67
  2. issue cashier’s checks to the seller according to the terms of the contract. The balance of the price will be made after the notary will have made the registration and the transcription of the deed of sale.

FORMAL OFFER OF PURCHASE

When a customer, after visiting several properties, decides to proceed with the purchase of one of them, the negotiation begins with the PURCHASE OFFER. The purchase proposal must be made in writing, while the communication of acceptance can be given verbally.
Once the seller signs the proposal, accepting the price offered, he undertakes not to sell the property to any other buyer until a certain date. This serves to protect the buyer from the possibility of losing the purchase of the property.

CHECKS TO THE LAND REGISTRY

Before formalizing the purchase it is essential to check the Land Registry in order to check whether the property is regularly registered, belongs to the seller or if it is not subject to mortgages.

PRELIMINARY CONTRACT

The preliminary contract (said compromise) is the agreement with which the parties undertake to conclude a subsequent final contract (deed). With the preliminary contract, in essence, you do not transfer ownership of a good, but you oblige to such transfer at a later time (e.g. because you want to verify the persistence of interest in the transaction, the existence of certain defects, or because you want to reserve the possibility of making changes). The preliminary must already contain the essential elements of the subsequent final contract. The deed will then be drafted and executed one to three months after the Compromise.

It must be remembered, however, that the purchase proposal, if stipulated and accepted, already creates a relationship between the parties legally binding.

Once the compromise is signed and the deposit, equivalent to about 10% of the purchase price, has been paid, the seller can decide to withdraw only by returning to the buyer the deposit paid plus a sum equal to the deposit itself.

In the event that it is the buyer to back out would lose the entire deposit paid.

Sometimes, in place of the “confirmatory deposit”, the buyer pays a “down payment” which is an advance on the price.

DEED

The notarial deed, or final contract, consists in the final act of the negotiation of real estate. It represents, in fact, the actual act of sale, that is, the moment through which the final passage of the property from the seller to the new owner takes place.

It is drawn up by the buyer’s trusted notary and contains all the elements necessary to identify the property in question (which should already be contained in the compromise).

It is possible that the parties choose to go to the deed directly without going through the compromise.

The notarial deed must be transcribed by the notary. The original remains in the Notary’s records.

Necessary documents to be provided by the seller

Let’s start from an essential premise: with the Stability Law of 2014, the notary has become the guarantor of the transaction in the real estate sale. In particular, the notary where to verify the regularity of the sale, both from the legal and from the “technical” point of view.

The documents are:

  1. Biuld permit of first construction
  2. Urban documentation
  3. Certificate of occupancy
  4. Cadastral documents (mortgage documents, cadastral documents, cadastral planimentries)
  5. Energy qualification certificate
  6. Condominium regulation

To learn more about the documents read: the documents needed to buy a property

Costs of a property in Italy

The costs for the purchase of a property in Italy are between 10-20% of the purchase price and consist of:

Real estate agency fee

In case you buy a house through a real estate agency, the commission due to the agency is around 3% of the purchase price + 22% VAT. It is not divided between seller and buyer, but the first and second pay, each, 3%+VAT.

Registration tax – Mortgage tax – Cadastral tax

These are the 3 main taxes to pay when buying a property along with other lower taxes. The “declared cadastral value” in the deed represents the tax base on which these 3 taxes are applied and which currently could be lower than the market value of the property. But the rule of “cadastral value” is not applicable to all sales; in fact, for example, if the buyer buys not as a “private” but as a “company”, the tax base will be given by the commercial price of the property. The amount of these three taxes to be paid varies depending on the type of property and the “characteristics” of the buyer and seller:

A) Sales and purchases subject to proportional registration tax (those in which the selling party is: a private person; or an enterprise that has neither built nor restructured the property; or an enterprise that has built or restructured the property for over 5 years and does not exercise the option Iva): 1. Registration tax – first house: 2% (always to be calculated on the cadastral value); – second house: 9% (to be calculated on the cadastral value if you buy a private individual or to be calculated on the declared price if you buy a company or a natural person who buys as an individual business owner or as a professional); >> The registration fee can never be less than €1,000 2. Fixed mortgage tax: EUR 50; 3. Fixed cadastral tax: EUR 50.

B) Sales and purchases subject to VAT (those in which the selling party is: the company that has built or renovated the property for less than 5 years; or the company that has built or renovated the property for more than 5 years and in place exercises the option VAT): 1. Iva – first house: 4% (always to be calculated on the declared price); – second house: 10% (always to be calculated on the declared price); – luxury building: 22% (to be calculated on the declared price); 2. Fixed registration fee: EUR 200; 3. Fixed mortgage tax: EUR 200; 4. Fixed cadastral tax: EUR 200; 5. Fixed stamp duty: EUR 230; 6. Fixed mortgage fee: EUR 35; 7. Fixed voltage charge: EUR 55.

This summary scheme is valid as a general rule, but before buying a property it is always good to check the exact amount of fees to be paid for not having nasty surprises afterwards.

Notary fees

In the generality of cases you pay the notary fees for the preparation of the deed by the notary. But I can also be asked for the preparation of the preliminary contract if the parties draft the compromise through the figure of the notary who will then register the original in the records. The amount varies from city to city and is calculated on the basis of the declared value of the property, but generally they are similar, at least from the point of view of notarial law. For example, notaries in a big city such as Milan centre will be able to charge higher notarial fees to the small-town firm, mainly for management costs and not instead of notarial fees, which is always the same.

Other costs

These may include, for example, legal fees; surveyor or architect for property inspection; removal company; etc.

MANAGMENT COSTS

IUC (imposta comunale unica)

It is a tax that includes 3 taxes: IMU (you do not pay on the first house unless it is a luxury house), TASI (tax on municipal services such as street maintenance, public lighting, etc.) and TARI (waste, garbage). Who owns a property in Italy, whether resident or non-resident, is subject to payment of the IUC whose amount is divided into two/three tranches. The IMU is applied to the cadastral value of the property plus 5%. The amount shall be multiplied by the coefficient corresponding to the cadastral category. The base rate for second homes is 0.76%, but the municipality may decide to increase or decrease it by 0.3%. The same applies also to the TASI. But we must also consider that the sum of TASI and TARI cannot exceed 10,6%.
TARI is calculated on the basis of square metres.

Services

Electricity, water, heating, telephone, gas usually charge a fixed fee plus a portion on consumption and you pay every two months.

Condo fees

If you buy a property that is part of a condominium, you will have to pay a condominium tax that will vary depending on the size and type of condominium area.

The “first home” benefits provided for foreign buyers

As mentioned in the previous paragraph, if the property object of the sale turns out to be “first house”, that is house destined to main house, you will pay a reduced tax, of a different amount depending on whether the purchase was made through a private individual, a manufacturing or non-manufacturing undertaking:

  • if you buy from a private entity or a company after 4 years from the completion of the work, the stamp duty is 2% calculated on the cadastral value;
  • If, on the other hand, you buy from a manufacturing company within 4 years of completion of the works, you pay the VAT calculated at 4%. Registration, mortgage and cadastral taxes are fixed.

Of course, subsidised properties must meet certain requirements:

  • shall be classified as “dwelling” and be classified under categories A/1 and A/11;
  • they must not be luxury goods (within the meaning of d.m. 218/1969);
  • must be in the municipality where the buyer has his residence or where he plans to move.

The facility also applies to pertinent properties such as cellar, garage, shed, attic etc.

For this reason, it is necessary that the buyer, within 18 months from the date of purchase, establishes the new residence in the municipality where the property is located, if not yet provided.

In addition, it must not be the exclusive owner or for shares of other property rights, naked property, usufruct or dwelling on another house purchased by him (or any spouse).

It must be said that foreigners who have a residence permit or other valid document from which they are legally resident and registered as unemployed have the right of access, under the same conditions as Italians, public housing and credit facilities with regard to the purchase or rental of the first house. Therefore, income tax deductions will also apply to them, if they are the first home.