Why buying property in Italy can’t be easy.
What to know before buying a house for sale in Italy
If you are looking for a house for sale in Italy or even a land and a rural house for sale in Italy to create your own property, consider that many other Americans are planning to do the same. Italy is currently the most popular destination for North Americans who want to buy property oversea.
This popularity is not just due to the climate and food. Houses for sale in Italy are substantially less expensive than comparable properties in France or Spain and, due to high demand, after only 5 years it can be sold without paying any capital gain tax and letting you realize a high capital gain.
So, beginning a new life buying property in Italy should be an exciting experience and a wise investment …or maybe not?
The process is sometimes daunting because of the difference of the languages, legal system, and purchasing procedures in comparison to other Countries.
But buying property in Italy may be the ideal investment if you know how to do.
It is important to understand the main differences between buying property in Italy and other Countries to avoid possible issues and errors. Let’s take a look at some of the most typical difficulties associated with expat property purchases in Italy.
- Am I eligible to buy a house for sale in Italy?
- Time is different
- Underestimate costs when buying property in Italy
- Mortgage fees
- Don’t tempt me!
- Beware of the hard discount
- Entrust a Law Firm
- Am I eligible to buy a house for sale in Italy?
- Renting or buying property in Italy?
- Don’t sign it!
Am I eligible to buy a house for sale in Italy?
This is the first and crucial question: am I eligible to buy a house for sale in Italy?
It depends on where you are from.
If you are a US, British or European citizen, you may buy property in Italy via the so called bilateral agreements between Italy and your Country.
Buying property in Italy does not alter the ordinary VISA requirements (decreto legislativo 25 luglio 1998, n. 286), if needed, for staying there. Instead, if you think about a permanent move you may need a support from a Law Firm.
Time is different
Depending on your circumstances and the time of year, purchasing a house for sale in Italy might take between three and eight months. If you want to acquire a house for sale in Italy without a mortgage and just with a cash payment, but the property’s records are not in order, the process might take up to eight months, depending on the magnitude of the issues to be resolved. Additionally, August is a holiday month in Italy, which means that many bureaucratic and legal proceedings are completely suspended. Planning ahead is critical to avoid excessive delays, but expect to wait longer than in other Nations.
Underestimate costs when buying property in Italy
If you are excited because you are going to buy a very cheap house for sale in Italy, be careful of hidden costs and taxes. First of all: if you are not an Italian resident or you are purchasing a second house, these charges are often significantly greater. Bear in mind that you must include at least a surplus of 10% of expenditures when calculating the entire property price.
If you are purchasing a new property it might be added to the cost the IVA if some conditions are met (Decreto del PdR del 26/10/1972 n. 633). IVA is the tax that stands for VAT and today is set at 22%. Not only: regardless if you are buying new or used property in Italy, you will also be required to pay the registration tax, as well as additional cadastral taxes (D.lgs. 31 ottobre 1990, n. 347).
Registration tax follow a double way calculation procedure: you need a professional to pay the lower tax.
Not to mention other cost to consider such as fees and mortgage rates. This one deserves a proper chapter.
Mortgage fees
The good news if you are buying property in Italy is that mortgage rates in Europe are very low and, of course in Italy too, due to the ECB monetary policies. But this does not imply that there are no additional fees and levies to consider.
In the early months of 2022 mortgage rates in Italy are not so different from any other European Country and are set at about 2% of the loan amount.
The sore point is, when you take out a mortgage for buying a house for sale in Italy, almost all the banks require purchasers to get certain forms of insurance. These items are required and beneficial, but they are not inexpensive, which is why it is important to do research in order to get the best mortgage for your scenario.
Don’t tempt me!
It wasn’t unusual, when you purchased a house for sale in Italy, to report a lower price in the title deeds of the property. The difference was then settled by cash. Doing so, the new owner could save on taxes.
Be aware: this is completely illegal (art. 72 D.P.R. 131/1986; art. 1 del D.L. 3 maggio 1991 n. 143; art. 3 e 4 del D. Lgs. 10 marzo 2000 n. 74) and although this occurs less often in Italy today, it has not entirely vanished. So, if you are looking for a house for sale in Italy, don’t be tempted by some “smart” Italian seller.
Today the Agenzia delle Entrate, that stands for IRS (or Inland Revenue) has taken a pic of the whole Italian real estate market and can easily verify if the reported price is appropriate or not.
And it takes very little to make it kick an audit off.
Trentino Alto Adige is a Region in the North Est of Italy
Umbria is a Region in center Italy
Beware of the hard discount
Those interested in buying property in Italy, as seen before, must evaluate a variety of factors. Apart from what we have seen, one must verify that the house for sale’ price is reasonable in relation to its real value.
If the seller is demanding an extra low price, you need to ask yourself a couple of questions: is he the property right-holder? If so, what’s behind it?
Fraud is regulated by law (art. 640 codice penale) and the penalty for that is up to 3 years but it’s rather difficult to get the money back.
Besides, remember: the Agenzia delle Entrate doesn’t believe in generosity and may suspect that you are paying cash to avoid taxes.
Our Law Firm can provide you with legal guidance on any of these issues and can explain the limits that may apply when acquiring a house for sale in Italy.
Entrust a Law Firm
When you’re looking for buying property in Italy, you think to be able to do it without the intermediation of a Law Firm. It’s absolutely understandable: you think you can manage it easily and, of course, you don’t need it.
The problem is that you don’t know anything about the Italian real estate market.
You don’t know that some properties on sale are afflicted by cadastral and construction discrepancies that can constrain you to spend a lot of money to restore the proper condition to live there legally.
That’s especially true for a rural house for sale.
By avoiding a Law Firm, not only you risk missing out on the property of your dreams, but you really risk to buy a house for sale in Italy that you can’t sell anymore until you spend a lot of money to fix all the discrepancies.
When you finally locate your ideal house for sale in Italy, make certain you get a Law Firm assistance to close the deal. It will be required to hire a geometra (surveyor) to properly evaluate the state of the home and a Law Firm to review all the legal terms of the sale. Additionally, a Law Firm will assist you in understanding and signing all necessary forms.
Have you considered how good is your Italian?
Renting or buying property in Italy?
Italy has the highest rate of property house in Europe. If you’re planning to buy a house for sale in Italy you might start renting a house where you’d like to buy.
There’s a large bid almost everywhere and the rent is, almost always, cheaper than the average of the European market.
Many individuals overlook the possibility of renting housing and don’t consider the possibility to sign a “rent to pay” contract (art. 23 D.L. n. 133 del 12/09/2014 ) where the rent is a kind of down payment of the price of the house.
To avoid to be locked up in a strict contract it is high recommended to be assisted by a Law Firm.
Don’t sign it!
It’s a big mistake not contacting a Law Firm before signing critical papers such as pre-sale (contratto preliminare: art. 1351 codice civile) and sale agreement (contratto di vendita: art. 1470 codice civile).
Or just for a legal advice.
For instance, do you know that’s better to draw up a pre-sale agreement before buying property in Italy? Before this, a cadastral study by a geometra (surveyor) and a Law Firm advice are highly recommended.
A pre-sale agreement, indeed, should be drafted if the buyer has agreed on the purchase price of the house for sale in Italy. Additionally, a certain percentage of the property’s price must be deposited in a bank account.
Or do you know that if the house for sale in Italy is the result of a donation to the seller there may be problems with any other successor?
Enrico Berti is specialized in civil and corporate law. He is a founding partner of Studio Legale Berti e Toninelli and has an extensive expertise on real estate.
Studio Legale Berti e Toninelli pratictises throughout Italy.
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