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Buying a property in Italy isn’t generally more complicated than buying a property in your home country, but it is important to understand that the system and process can be quite different and not always the most straightforward.
Although the objective is the same and the process may be similar (searches, contracts, get a new title, register the property) local customs may be quite different and of course language barriers may present challenges. Furthermore, terminology which may appear similar in English can have very different meanings in Italian.
Click on each section to learn more about the different phases of the purchasing process in Italy.
Before the execution of the “Compromesso” and undoubtedly before the execution of the Final Deed it’s advisable that the buyer checks with his/her personal attorney a substantial number of documents related to the property that is being purchased..
The amount and complexity of such documentation will depend on several factors and the type of real estate that is being purchased. Said documentation is, in most cases, difficult to obtain – as various documents are issued by different administrative offices and agencies – and difficult to be interpreted without the technical assistance of an attorney.
Generally, documentation to be reviewed by the purchasing party is:
1) The Property Deed (“Titolo di Propietà e/o di Provenienza”)
This document confirms the ownership of the property and the seller’s title, and includes any limitations, restrictions, easements, mortgages etc. negatively affecting the property. Particular attention should be paid when the purchaser buys a property that the seller received by inheritance or gift.
2) Certificate of Urban Destination (“Certificato di Destinazione Urbanistica”)
This document must be attached to any deeds transferring property rights on non-built lands. This document shows the buyer the legal destination of the specific parcel of land that is being purchased according to the Urban Master Plan (“Piano Regolatore Urbanisitco”). This certificate must be obtained by the seller from the Italian municipality where the land is located
3) Authorization for Division into Lots (“Autorizzazione alla Lottizzazione”)
According to the Italian law it is invalid any purchase of parcel of land when the purchase is not accompanied by specific authorization for residential division into lots.
4) Town-planning Conformity (“Liceità Urbanistica”)
In case the construction was built before 1967, it is necessary to make express reference on the contract to the essential terms and conditions of the authorization (i.e. construction/building license).
5) Certificate of Indemnity (“Concessione in Sanatoria”)
This document regularizes any construction works or renovation works performed on the property without the required administrative permits, authorizations and permits.
6) Certificate of Habitability (“Certificato di Agibilità)
This document is issued by the municipality where the property is located and certifies the presence of safety, health and energetic efficiency conditions of the property.
7) Preemptive Rights (“Diritti di Prelazione)
Italian real estate properties of artistic and historic value are subject to the preemptive rights of the Italian Ministry of Cultural Heritage and Cultural Activities (“Ministero per i Beni e le Attività Culturali”). Therefore, the owner of this type of properties is legally required to inform in advance the local office of the Ministry of any transfer of those type of properties to other individuals.
8) Cadastral documentation (“Documentazione Catastale”)
The Italian “Catasto” is the local office which holds documentation regarding all properties located under its jurisdiction. Specifically, this office issues certificates of ownership and documentation regarding third parties’ rights on the property. Prior to the execution of any deed of purchase of Italian property it is advisable to conduct a proper search on the cadastral registries of the property and its current and previous owners as well as its compliance to cadastral laws and regulations. Furthermore, it is highly advisable to obtain the property cadastral map (“Mappa Catastale”) and compare it with the actual structure of the property to make sure there are no discrepancies. In case of non-conformity, a declaration of variation (“Denuncia di Variazione”) will need to be filed to obtain the regularization of the status of the property.
9) Condominium Regulations (“Regolamenti Condominiali”)
Each condominium complex has its own internal regulation that regulates the use and the benefits of the common parts of the building as well as the rights and duties of the residents.
10) Administrative Documentation (“Documentazione tecnico-amministrativa, sicurezza degli impianti, dei cantieri e barrier architetoniche”)
All buildings built after 1996, for safety purposes, need to be accompanied by a building file (“Fascicolo del Fabbricato”). In addition, properties built after 1990 need to be accompanied by conformity certificates. Finally, properties built after 1989 need to be accompanied by a certificate attesting the level of accessibility, visibility and adaptability of the property.
11) Environmental certifications
The property needs to be in compliance with Italian environmental laws and regulations issued for public safety.
Requirements to open an Italian bank account are:
2. Italian tax code (codice fiscale);
3. Anti-Money Laundry (AML) compliance.
The process to open an Italian bank account is the following:
a) Open a bank account from Italy
The easiest way to open an Italian bank account is typically to go to an Italian bank in person with passport and Italian tax code (codice fiscale) (link to codice fiscale page). Pursuant to the Italian laws and regulations against money laundry (AML), the bank representative will need to check your identity and ask for your personal information. If everything is in order the bank’s representative will require you to sign several documents which, in most cases, are in Italian.
The bank’s representative might also ask you to provide a statement from your home country bank indicating that you are a reliable client. Banks communicate to each other via SWIT messages so your home country bank can send the information directly to the Italian bank.
In general, the bank account is set-up immediately, or within a few hours after the bank representative has completed the registration of your personal information into the bank system, and it is possible to start using it right away.
b) Open an Italian bank account remotely
Some Italian banks have branches in foreign countries or have strong business relationships with banks in third and therefore they are able to perform AML compliance formalities abroad.
If you reside abroad and cannot travel to Italy, you need to find a bank that can screen your profile for Italian AML purposes and then pass your information onto the Italian bank. That will allow the Italian bank representatives to set-up your Italian bank account without the need for you to be actually present in Italy.
Terms and conditions of the bank account may vary depending on the local bank you have chosen. In order to avoid delays it is highly advisable to contact the Italian local branch prior to start the process to make sure that the bank is familiar with non-residents bank accounts and verify in advance the specific fees and requirements under their own policies.
Many banks operate with foreigners on a daily basis and have specific services and packages for non-Italian residents. Some banks have specific local branches which deal exclusively with non-residents. Therefore, it is not difficult to find banks which offer a wide range of services equivalent to the ones offered to Italian residents, such as online banking, checkbooks, utility bills auto payment, debit card and credit card.
Other banks might not be familiar with non-residents accounts and might only offer basic services to people who are not residents. Local branches in small municipalities, might be unfamiliar with the procedures for non-Italian residents and might refuse to supply their standard services them.
In some cases it might be convenient to appoint an Italian domicile in order to benefit from more complete bank services or better conditions.
What is the role of an Italian Notary public (“Notaio Pubblico”) in Italian real estate transactions?
Italian Public Notaries are public officers who play a fundamental role in Italian conveyance.
In Fact, any contract transferring the ownership of a property, in order to be validly executed, needs to be signed in front of a Public Notary as well as countersigned by the Notary.
The Notary will verify the parties’ identities as well as conduct a review of all the documentation concerning the property that is being sold. The Public Notary will also verify the selling and buying parties’ respective powers and entitlement to be part of the transaction.
In addition, according to the Italian Law, Italian Public Notaries are responsible for calculating taxes applicable to the transaction, as well as collect them from the parties upon execution of the final contract of sale and timely pay them on behalf of the parties.
After the execution of the Purchase Contract, the Public Notary files the property title with the local Land registry (“Conservatoria dei Registri Immobiliari”). Only after such filing the transaction is officially public.
Once taxes have been paid and the deed has been filed with the “Conservatoria”, the Public Notary keeps the original on his/her books and makes true copies available for the parties.
Common practice holds that the Notary is chosen and paid by the purchaser. An important point to remember is that the Notary is an Italian officer fulfilling an official role and does not work on behalf of the buyer or the seller, but serves as a neutral party.
The Italian Tax Code (“Codice Fiscale”) identifies citizens and non-citizens, residents or non-residents, in all dealings with Italian Public Authorities and Administrations.
Many are the benefits of having an Italian Fiscal Code and, in some cases, it is mandatory to have an Italian Fiscal Code for a certain number of activities in Italy.
For example, you need an Italian Tax Code to open an Italian bank account, to inherit an Italian property, to register a Preliminary Contract for property purchase, to execute the Final Contract of Sale of an Italian Property, to set-up utility connections, to obtain an Italian mortgage, etc.
Having an Italian tax code does not imply any tax duty itself. In fact, you may be subject to Italian tax duties only if: you own certain qualifying assets in Italy; you are an Italian resident; or you earn an Italian taxable income.
Requesting and obtaining an Italian Tax Code is quite easy also for non-residents. While the “Codice Fiscale” is assigned by birth to Italian citizens, it is assigned upon request to non-Italian residents.
A foreign citizen can apply for free for an Italian “Codice Fiscale” through any Italian consular office or Embassy or through any “Agenzia delle Entrate” office in Italy.
In alternative, an attorney can apply for and obtain a Tax Code Certificate on your behalf without the need to deal personally with the relevant Italian tax authorities.
In general, If you apply in person or through a representative, the Tax Code certificate is issued the same day.
If you are not an Italian citizen and need an Italian Fiscal Code, you can apply for it, in person or through a representative, directly in Italy, or through the Italian consular authority, by submitting a valid passport. However, if you are not a EU citizen and you are not a citizen of those countries whose citizens are not required to obtain a visa for shorts visits, you may be required to previously obtain a visa in order to be able to apply for an Italian Tax Code.
***Tax Code (“Codice Fiscale”) certificate compliance***
When you receive the Italian Tax Code certificate we recommend that you verify that the information on it is fully consistent with the information on your identification documents (i.e. passport). Typos and inconsistencies are quite common, especially when foreign names are involved.
A power of Attorney can be granted for many sorts of matters, such as, but not limited to: to purchase or sell Italian property, to incorporate Italian companies, to carry out Italian inheritance claims and cross-border successions procedures, to formalize inheritance property transfers, to accept or refuse Italian inheritance, to start a dispute in Italy.
If you are in the process of purchasing a property in Italy but do not have time to travel to Italy and take care of the formalities, you can grant an Italian lawyer or any other person you trust, the power to represent you and act on your behalf in all the formalities required by the Italian law to complete the purchase of an Italian property.
A Power of Attorney to be used in Italy can be signed abroad, for example in your home country or wherever you are temporarily located. It used to be possible for anyone to execute a formal power of attorney at any Italian Consulates abroad. However, in 2011 Italian consular offices changed their policies due to budget cuts. As a result, Italian Consulates and Embassies no longer provide non-Italian citizens with notarial authentication services, including on Powers of Attorney to be used in Italy.
However, there suitable alternative options to execute a Power of Attorney document abroad.
In fact, it is possible to sing Powers of Attorneys in front of any foreign Public Notary or solicitor who will authenticate the signature.
It is advisable to grant a Power of Attorney to somebody else when a non-Italian-speaking party is involved in a deed that needs to be executed in Italy before an Italian Notary Public (i.e. property purchase or property sale), even if such non-Italian speaking party would be willing to sign the deed in person.
In fact, when a non-Italian speaking party is directly involved in a notarial deed (such as a property transaction), the law requires such deed to be executed in two languages, the Italian language and the language spoken by the non-Italian speaking party.
Furthermore, the law requires that an interpreter is present when the deed is executed, and that will increment the final cost of the transaction.
These requirements have an impact on transaction costs and, in addition, a Notary meeting with a non-Italian speaking party may apply additional charges. Also, a longer deed requires higher stamp duty charges.
Finally, a Power of Attorney allows more flexibility in the event of last-minute need to reschedule completion.
All the legally binding documents related to the purchase of Italian real estate must be written in Italian, regardless the nationality of the parties.
Italian legal writing is highly technical, ritualistic and often archaic due to its closeness with Roman Law. Ultimately, legal Italian language can appear obscure for people lacking of solid expertise or background in Italian law. Besides, the sensible difference in between civil law countries legal systems (like Italy) and common law countries legal systems (like U.S. and U.K.) can create even more difficulties when foreign nationals are involved in an Italian real estate transaction.
As a consequence, an accurate understanding of the legal systems and the legal processes involved is fundamental for counselors, translators or interpreters involved in such essential transactions.
Many real estate agents use pre-printed contracts and agreements with an English translation when foreign nationals are involved in Italian real estate transactions. However such translations are frequently not precise and accurate and can often lead the buyer to misinterpret the content of the agreement and the duties involved. It’s important to remember that in the case of litigation the Italian version will always prevail.
This is why an Italian legal document should never be signed without the assistance of a bilingual qualified lawyer who can explain in English the full scope of the commitment.
Explaining to clients the Deed of Sale or other technical documents involved in the process of purchasing Italian real estate is a very delicate task and it is essential to make sure that that buyer has a full understanding of the events, legal documentation and commitments. An independent international legal adviser has the right qualifications to assist foreign buyers and investors throughout the purchase process and will always make sure that the foreign national has a full understanding of the documents he/she is requested to sign and the legal consequences implied.
The purchase process is a complex process that usually involves several professionals.
Normally, there are three stages in the sale/purchase of a property in Italy:
1. The Purchase Offer or Reservation Offer (“Propostale Irrevocabile di Acquisto”);
2. The Preliminary Contract of Sale (“Contratto Preliminare” or “Compromesso”);
3. The Final Agreement (“Rogito Notarile”), which is signed by the parties before an Italian Notary Public and countersigned by the Notary.
The Reservation Offer (“Proposta d’Acquisto”) is a specific written contract indicating the amount offered for the property accompanied by a and small deposit (usually up to the 5 %), taking the property off the market for a certain period of time (expressly agreed by the parties) while basic checks, or an in-depth due diligence, are performed. Even if the Reservation Offer does not obligate the parties to finalize the final Contract of Sale, it is advisable that the buyer to pays great attention before signing the Reservation Offer as this agreement may produce legally binding effects. If the purchase fails due to legal problems the deposit is usually refunded.
The second step is a legally binding agreement, called Preliminary Contract of Sale, (“Contratto Preliminare di Vendita” or “Compromesso”), which defines all selling conditions such as a description of the property, rights of way, payments and timing, ownership rights etc.
The “Compromesso” should always: 1) specifically define the property that is being sold; 2) state the identification details of both parties (buyer and vendor); 3) state the agreed final price, the amount of the deposit paid and the payment plan for the remaining installments; 4) acknowledge the property conformity to legal standards, the respect of legal planning and building regulations, fiscal laws etc.; 5) affirm the seller unconditional commitment to sell the property on or before the agreed closing date (i.e. the date in which the deed of sale (“Rogito Notarile”) will be executed) and guarantee the absence of existing limitations, restrictions or any third party rights.
Although this contract does not have the effect of transferring the ownership of the property, it has several legal binding effects between the parties. For example, Italian Courts have recently established that Real Estate Agents are entitled to receive their fees when a Preliminary Contract is signed, even if the final contract is not yet finalized or will not eventually be executed.
According to the recent regulations, the Preliminary Contract of Sale must be registered at the competent Italian Tax Office. Said registration requires that the registrant pre-pays part of the State Taxes but the amount of taxes paid at this time will be deducted from the total amount due at the signing of the final Deed in front of the Italian Public Notary.
Upon execution of this contract, the purchaser pays a deposit of approximately 10%-30% of the property price. Under the Italian Law, the deposit can legally have diverse purposes. In fact, if the deposit is defined on the contract as “Caparra Confirmatoria” the purchaser, in case of failure to fulfill its obligations, and upon the seller’s rescission of the contract (“rescissione del contratto”) will automatically lose the entire deposit paid. On the other hand, in the event of seller’s default, the seller will be legally required to refund the sum originally received.
Conversely, if according to the wording of the contract the deposit is defined as “Caparra Penitenziale”, either or both parties can terminate the agreement but the seller will retain the deposit paid, in case of termination requested by the buyer, or the seller will return the deposit received in case the seller is the party terminating the agreement.
After the execution of the Preliminary Contract of Sale, it is, in most cases, essential to perform a due diligence (from a legal and technical point of view) on the property, in order to make sure that it complies with the legal/technical/structural requirements as established by Italian State and Municipal relevant laws and regulations.
Before the execution of the Final Contract of Sale, the purchaser should always make sure that:
– When the property is being sold by a person who owns it in a community property regime with his/her spouse, the spouse has formally agreed to the sale when the spouse’s consent is necessary.
– In case the property has been inherited by the seller jointly with other heirs, the concurrent heirs have been preliminary offered the same property and they have rejected such offer.
– In case of purchase of commercial (and, in some cases, even residential) properties currently leased to third parties, the tenants have been preliminary offered to purchase the property and they have rejected such offer.
When the seller is a construction company or a business entity, the buyer should also always make sure that the company representative with whom the buyer is executing the Final Deed of Sale actually has the legal powers to sell the property. In this regard, the seller should request and obtain from the competent Chamber of Commerce (“Camera di Commercio”) a certificate (“Visura Camerale”) including all fundamental information and data on the company currently on file, including the company’s officers and their legal powers.
At this point, a Public notary (“Notaio Pubblico”) is appointed. The Notary is an independent legal body that prepares and coordinates the purchase and that drafts the final contract of sale. The Notary acts on behalf of both the vendor and the purchaser. The Final Contract of Sale (“Atto di Vendita” or “Rogito Notarile”) is signed by both parties at the notary’s office and is countersigned by the Notary.
Purchase taxes and notary fees, as well as the purchase price, are paid by the buyer at the execution of this agreement. Once all documentation is signed and the amount is paid, the purchaser is handed the keys of the Italian property.
Tax related costs for the purchase of a property in Italy are usually in between 5% and 20%, but they may considerably vary depending on the specific case (some fees are fixed, not necessarily a percentage of the value of the property). Foreign citizens willing to relocate to Italy can enjoy tax benefits if they intend to move into their new property and provided that the property is their “first house” in Italy.
Value Added Tax (VAT) – in substation of the purchase tax- is due in case of purchase of properties from a company or business (i.e. builder or developer). This is typically the 10% of the property’s purchase price.
Other fees related to the purchase process usually are: notary fees (1.5% to 5% of declared price); legal fees if you use an independent solicitor (1% – 2%); mortgage tax/arrangement fee (if applicable) plus some small State/Cadastral taxes; real estate agent commission (1%-3%).
Foreign buyers will also need to find the most cost-effective, safe and easy way to move their money from their home country to Italy to complete the purchase. Bank charges and fluctuating exchange rates can both have an impact on the overall cost.
After the purchase is completed, owners will be required to pay property taxes on the property. The main Italian Property tax ( “Imposta Municipale Unica” also known with its acronym “IMU”) is paid by everyone who owns property or land in Italy, whether resident or non-resident.