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Home › Jackson-Stops
offices › International property › Italy
The buying process
The following is a summary of the key steps in the buying process for both resales and “off-plan” purchases:
Offer to Purchase
There may be an “offer to purchase” at the beginning of the negotiations in order to take the property off the market. Usually a deadline by which the buyer has to sign the Preliminary Contract is fixed, and a small sum of money is given as a reservation fee. For “off-plan” purchases, a reservation form is usually completed.
Preliminary Contract (Compromesso)
This is the most important step during the process. It will contain the details of the sale including the purchase price; the completion date and all the obligations for the vendor and the buyer. It will also contain a full description of the property with all related information such as cadastral details and any planning permission obtained. Specific clauses should be drafted if the whole purchase is subject to certain conditions (for example, if the vendor is due to complete the purchase of a plot of land by a certain time). The contract will then be signed by a certain date (for off plan properties usually within a month from the signing of the reservation form). Once both parties have signed the contract it becomes legally binding. A payment of between 20% and 30% is made at this stage. This is non refundable and would be forfeited if the purchaser withdraws. Double the amount is forfeited by the vendor if he withdraws.
Final Deed of Sale (Rogito)
This is the completion process and the point at which the property is fully transferred to the buyer. The sale will be completed before a local Notary Public, who is a public officer under Italian law. He has the duty to verify the identity of all parties and that the vendor is the legal owner of the property; transfer the taxes to be paid to the relevant authorities and register the deed at the local land registry and at the “Conservatoria dei Registri Immobiliari”.
Under Italian Law the presence of the buyer is not mandatory in order to sign the final deed as long as a Power of Attorney has been given to another person to sign on his behalf. This will happen in the majority of the cases for foreigners as the Notary cannot allow a non Italian speaker to sign the deed if he does not speak fluent Italian.
A “Codice Fiscal” (the equivalent of National Insurance Number) is required to complete on a property. This is also required to obtain a mortgage; to open a bank account and to become Italian resident. The lawyer will usually obtain it on the buyer’s behalf from the Agenzia delle Entrate or the Italian Consulate abroad. A bank account is required to pay the utility bills and to make the purchase payment at completion.
Taxes
Taxes on purchase are as follows:
a) If the property is purchased from a builder (i.e. off – plan properties), there will be IVA (VAT) at 4% if it’s the main residence, 10% for secondary residences. Three other small taxes (land registration, cadastral and mortgage), in the region of €168 each are to be paid as a one-off at the time of completion.
b) If the property is a resale, the taxes (land registration, mortgage and cadastral) will be in the region of 7%, 2% and 1% of the cadastral value of the property, which is usually significantly lower than the purchase price. These taxes are lower if the property is going to be used as a main residence. In this case, the buyer will have to declare at the Final Deed of Sale that he will become resident in Italy within 18 months.
The taxes to be paid once a property is bought are as follows:
I.C.I. (Imposta Comunale sugli Immobili): a local council tax of between 0.4% - 0.7% of the cadastral value of the property. The actual rate is decided by the local authority on an annual basis and is paid in two installments in June and December.
Income Tax
A person not resident in Italy has to make an annual declaration to the Italian tax authorities for any income in relation to activities in Italy (an example of this will be the income derived from letting the Italian property). It is possible to off -set certain expenses against that income – repairs, management expenses, local taxes etc. This income also has to be declared in the country of residence with a double taxation agreement mitigating against paying twice.
There is no Wealth tax in Italy
Capital Gain Tax is not applicable if the owner sells after five years. Prior to this there is a charge on a sliding scale depending on the number of years of ownership.
Wills and Inheritance
Legal advice is recommended as the Italian laws of “successione” (inheritance) are very different from the ones in the UK.
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