When purchasing a property in a foreign country, it is very important to have a solid understanding of the key words that will be used in the real estate transaction. In one of our previous articles we discussed the main differences between the Proposta (“purchase offer”) and the Preliminare or Compromesso, (“preliminary contract of sale”). This article will focus specifically on the latter and it will explain what it obligates the parties to, and its implications.
What is a preliminary contract of sale?
A preliminary contract of sale is a true contract that obligates the parties involved to sign the final deed of sale. In particular, the parties are named “promissario acquirente” (“prospective buyer”) and “promittente alienante” (“the seller of the property”).
What does a preliminary contract of sale stipulate?
A preliminary contract of sale specifies the sale price, the kind of property being sold, its location, and a thorough description of the property’s grounds. The contract also specifies the property’s cadastral information and the deadline for the sale. Both parties agree on the date that the final deed must be signed, which takes into consideration the time needed for the buyer to obtain a mortgage, if applicable, or, in the case of properties that are still under construction, the period when the property will be available for sale.
The parties can decide to add additional clauses called “clausole accessorie”, which specify important terms and conditions, such as the amount of the deposit to be paid and the deadline by which the payment should be made.
Paying a deposit
When the preliminary agreement is signed by both parties, the buyer must pay a deposit, which ultimately results in both parties committing to signing the final deed of sale. The amount requested by the seller is usually between 10 and 20% of the purchase price. Depending on what the parties agree, the payment made by the buyer can either be an amount which goes towards the payment of the purchase price, in which case the payment is referred to as “acconto”. Alternatively, the parties can specify that the down payment constitutes a “caparra confirmatoria”, which is a deposit that entitles the seller to withhold the amount of money if the parties do not sign the final contract due to circumstances that are attributable to the buyer. More specifically, if the buyer withdraws from the agreement after signing it without a valid reason, he/she will lose the deposit. On the other hand, if the seller decides to withdraw, he/she will be forced to pay the buyer double the amount of the deposit paid.
What is the difference between a public deed or an authenticated private deed?
A preliminary contract of sale must be drafted by a notary in the form of a public deed, or it must be signed by both parties but it then needs to be authenticated by a notary. In both cases the contract will need to be registered at the “Agenzia delle Entrate” (the Italian revenue agency).
Anyone, including the parties to the transaction, the notary or the potential real estate broker who assisted the parties in the sale/purchase process can register the preliminary contract of sale.
It is worth pointing out that the preliminary contract needs to be registered within 30 days from the date on which it is signed.
Is a preliminary contract of sale mandatory in Italy?
It is worth pointing out that entering into a preliminary contract of sale is not mandatory in Italy as a deed of sale can also be signed directly after the purchase offer is accepted. However, the preliminary contract of sale is widely used in Italy because it has the effect of securing the property for the prospective buyer.
Final remarks
In conclusion, the preliminary contract of sale allows both the seller and the buyer to commit to signing the final deed of sale while protecting their rights and responsibilities. If you are thinking of purchasing a property in Italy and you would like further information about all the steps involved in the purchasing process, feel free to contact us at info@italianrealestatelawyers.com.
When people decide to buy their first home, they usually decide to purchase from individuals or building companies. However, in recent years, out of the many real estate market opportunities Italy has to offer, auctions have become a popular choice among many people. In fact, participating in a judicial auction offers the advantage of purchasing a property at a significantly lower price than the standard market price.
The exclusivity of real estate judicial auctions is an old tale. As the Italian Code of Civil Procedures states, everyone can participate in the auction except for the debtor/owner. But let’s start with the basics, what is an auction?
An auction is a judicial process that begins with establishing a minimum price for the property in question, and a set time period within which the participants must present their bids.
There are four benefits when purchasing a property from an auction:
- You are buying a property at a lower price than its market value.
The Court will assess the property and the bidding will start at a fixed price (prezzo base). However, offers will begin from a minimum price (prezzo minimo), which is 25% less than the initial fixed price. Therefore, properties purchased through auctions are sold at a much lower price than they would be on the real estate market.
- No realtor and notary fees
As the purchase occurs directly between the awardee and the Court, not only are there no third parties (such as realtors) involved in the process, but as the Court draws the deed internally, there is no need for a Notary, who charges on average €2,000 per transaction.
- Transparency
As stated previously, the purchasing process through auctions in Italy is managed by the Court. This guarantees maximum security and transparency when checking the property’s legal status and structural conditions.
- You can use a mortgage to purchase a property
While paying in full after being awarded the property is certainly faster, there are also other payment options. As a matter of fact, participation in auctions is not reserved to individuals with high financial assets only. In fact, there are specific types of mortgages one can apply for and some are designed to last short periods of time.
Finally, as in any deal, there are risks to take into account when purchasing a property through an auction, which is why many people rely on professionals to assist them throughout the process. The risk factors which are related to the state of the property, financial coverage and faults can be summarized as follows:
a. Not respecting deadlines
In the auction market, the adage “By failing to prepare, you are preparing to fail” is accurate. Budgeting is important since you will only have a certain amount of time to pay off the entire price after winning the auction. Failing to do so could cost you your brand-new home. As a result, you risk losing your initial deposit (which ranges from 10% to 40% of the minimum price) if you bid an amount that is too high for your budget and do not pay the balance due.
b. Overlooking inconsistencies
Properties in auctions go through a foreclosure process. Therefore, one should keep in mind that there may be several types of issues that could significantly lower the value of the property, such as inconsistencies regarding building permits, occupants refusing to leave, and outstanding debts.
c. Overlooking structural faults
Buying at an auction may sometimes be risky as there might be properties with structural faults, such as properties without a building permit, for instance. Therefore, it is always worth relying on the services of an attorney who can carry out due diligence on the property for you.
In conclusion, real estate auctions come with great benefits but there are also a few risks to consider. This is why relying on the help of the right real estate consultant can make a difference in the type of property you buy.
If you have any questions or you would like a free consultation, do not hesitate to contact us at info@italianrealestatelawyers.com.
Due to its affordable housing prices, efficient health care system, high quality education, mild climate and strategic position in Europe, Italy is one of the most attractive countries to live in. As a matter of fact, many foreigners decide to invest in Italy’s real estate market. However, purchasing a property may not always be an easy task especially if you are not familiar with the technical terminology used in the purchasing process. Therefore, it will be the aim of this article to explain a few basic steps involved in a real estate transaction. In particular, this article will discuss the main differences between a “proposta d’acquisto” (purchase offer) and a “contratto preliminare” (preliminary contract of sale), and their importance in the purchasing process. In fact, both documents are used to conclude a pre-sale agreement, however, the former is a written document through which a potential buyer makes an offer to purchase a property and unless it is accepted by the seller it has binding effects only for the potential buyer, whereas the latter is a declaration of intent to purchase a property, which has a legally binding effect for the potential buyer and the seller. So, what do these documents actually entail?
What is a “proposta d’acquisto”?
A proposta d’acquisto, in English “purchase offer” is a detailed document through which a buyer can make an offer to purchase a property. The document can be amended during the process of negotiations. By signing the purchase offer, the potential buyer shows his/her interest and intention to purchase a property.
The purchase offer will almost always include supporting documents that prove that the buyer can purchase the property; if the buyer must apply for a mortgage, this will be stated in a clause. If a real estate agency is involved, the offer will also outline the real estate agency’s details, commission fee and the time frame within which the purchasing process should be completed. It is worth pointing out that the seller does not have an unlimited amount of time to accept or decline the offer, in fact the offer will also specify the date by which the seller will need to provide the buyer with an outcome.
In addition to a standard purchase offer, which allows the buyer to withdraw from the offer at any time if they change their mind, there is also another type of offer, i.e., the proposta irrevocabile di acquisto (“an irrevocable purchase offer”). Unlike the standard purchase offer, if the buyer decides to make an irrevocable purchase offer, this will become binding and he or she will not be able to withdraw from the offer for a pre-determined period of time.
A purchase offer can be made in writing or verbally, however, in most cases it is written. If a real estate agency is involved in the transaction, the agency will provide a form which can be used to make the offer.
When the potential buyer submits the offer to the seller, he or she will need to pay a security deposit (“caparra”); both the seller and the buyer will need to agree on the amount. If the seller accepts the offer without renegotiating the terms and conditions of the purchasing process, he or she will sign the purchase offer and the terms included in the accepted offer will become binding for both parties.
At this point, the parties will be able to move forward and sign the preliminary contract of sale, which will ultimately lead to the final deed of sale.
What is a “contratto preliminare”?
An agreement in which both parties to the transaction commit to signing the final deed of sale is known as a contratto preliminare (or compromesso), or “preliminary contract of sale” in English. Detailed information about the property including its final asking price, its specifics as they appear in the Land Registry, and a description of its grounds, are outlined in a preliminary contract of sale. This document also outlines the property price, the payment method which will be used during the transaction and the time frame to complete the purchasing process.
The purpose of the preliminary agreement is generally to allow the buyer to verify that the property is sellable, that it respects urban planning, and that the seller has a legal right to sell the property. If these documents are in order, the seller and the buyer can proceed with signing the final deed of sale, which ultimately transfers the property’s ownership rights from the seller to the buyer.
Often, a preliminary contract of sale may also include the date by which the final deed of sale must be signed. This is agreed by the parties by taking into account the time that is required for the buyer to take out the mortgage, if applicable. In this sense, a preliminary contract of sale is also useful when applying for a mortgage as the buyer can use this document to provide the bank with proof that the funds requested will be used to purchase a given property.
When the preliminary agreement is signed by both parties to the transaction, the buyer must pay a deposit and the agreement ultimately results in both parties committing to signing the final deed of sale. If the buyer withdraws from the agreement after signing it without a valid and legal reason, he/she will lose the deposit. On the other hand, if the seller decides to withdraw, he/she will be forced to pay the buyer double the amount of the deposit paid.
Finally, if both the seller and the buyer sign the preliminary contract of sale before a notary, the agreement achieves a legally binding effect for the buyer and he or she will not be able to sell the property to third parties. On the other hand, if they do not sign the preliminary contract of sale before a notary, the buyer can potentially sell the property to a third party and the buyer, whom the property was going to be sold to originally, will be entitled to compensation.
Finally, it is worth mentioning that entering into a preliminary contract is not mandatory as a deed of sale can also be signed directly after the purchase offer is accepted. However, a preliminary contract of sale is widely used in Italy because it increases security for both parties in the event of changes in the transaction.
Final remarks
In conclusion, while a purchase offer is formal document through which a potential buyer makes an offer to a seller in order to secure a property, and it becomes legally binding for both parties only when it is accepted, the preliminary contract of sale is an official contract which has legal binding effects from its execution and it ultimately results in both the seller and the buyer signing the final deed of sale.
If you would like more information about the purchasing process, or you would like a free consultation with our team of real estate experts and attorneys, do not hesitate to contact us at info@italianrealestatelawyers.com.
If you are looking to spend your holiday in one of Italy’s mesmerizing locations, you might want to consider opting for a timeshare contract in lieu of purchasing or renting a property. Timeshare is defined as an arrangement whereby several joint owners have the right to use a property as a holiday home under a time-sharing scheme. This joint ownership form of vacation property can be applied to a wide range of properties, including apartments, condominiums, and resorts.
How many types of timeshares are there?
There are three different categories:
1. TIMESHARE PROPERTY (“Multiproprietà immobiliare”)
This option entails complete ownership of a dwelling unit and the permanent and inalienable right to use the property for a specific amount of time each year. In this case, each one of the multiple owners of the property enjoys the property during a specific time of the year, thus no one shares the property at the same time.
2. TIMESHARE STOCK (“Multiproprietà azionaria”)
This option entails the formation of a corporation whose capital comprises ordinary shares and preference shares. As a result, the real estate compendium is held by the firm rather than by individual stockholders. Each corporate shareholder, on the other hand, can own a real estate unit.
3. HOTEL TIMESHARE (“Multiproprietà alberghiera”)
In this case, the shared property is not a regular house, but a hotel. The multiple owners can either be private individuals (such as in “timeshare property”) or a firm (as in “timeshare stock”).
Among the main rules are the following:
- the property must be used as a holiday home only;
- you cannot renovate the property and must keep the furniture;
- third parties cannot access the property while one of the co-owners is using it.
- if the timeshare property is a condominium which is managed by an administrator (or a management firm), the owners are responsible for both the overall building and the individual real estate units.
How do you draft a contract?
A timeshare contract is stipulated before the Notaio (“Notary”). The contract must be in Italian or in one of the languages of the EU member state in which the customers reside or of which they are citizens, otherwise, the contract will be considered null. The contract will outline the buyer’s personal information, the terms and conditions of the transaction, and it will need to be signed by all the parties involved in the transaction. If the buyer decides to withdraw from the contract, they must communicate so in writing, and they have fourteen days to do so without the need to provide a reason. In this regard, prior to signing the contract, the seller must send the buyer a specific form which indicates how to exercise the right of withdrawal.
What are the benefits of timeshare agreements?
Most timeshares properties are owned by large corporations in desirable holiday locations and timeshare owners have the peace of mind of knowing that they can spend their holidays in a familiar location every year without any unpleasant surprises. Timeshare properties also often have resort-like amenities and services, facilitating a more comfortable stay, and many choose this option to avoid the hassle of booking a holiday each year. Therefore, the benefits of choosing a timeshare contract can be summarized as follows:
- you can purchase properties in exclusive locations;
- all premises are shared among the various co-owners so the overall cost of the property is very low;
- all the chores are delegated to a management business that handles all expenses on behalf of the co-owners;
- you can also rent the property, sell it or host a relative or a friend through a simple cover letter.
In conclusion, if you would like to learn more about timeshare agreements and you are interested in purchasing a property in Italy, do not hesitate to contact us at: info@italianrealestatelawyers.com
The real estate market in Italy provides a variety of investment opportunities as well as a large selection of homes in various settings, from rural homes in the northern Italian mountains to contemporary city apartments and beachfront properties. Many people aspire to move to Italy, buying real estate, and enjoying the vibrant culture and way of life there. The process of buying a property in a foreign nation, however, might not always be simple. This article will specifically discuss whether or not a foreign buyer of real estate in Italy is eligible to apply for a mortgage.
Interestingly, in Italy, over 70% of people own a property; this is due to a culture of passing property down to family members. In addition to this, high rent in some areas can make purchasing a property more attractive as the investment can be paid off quickly, and if you do not plan on living in Italy permanently, you can potentially use the property to earn an income. So, what do you need to know in order to get started?
What are the requirements to apply for a mortgage?
Both EU and non-EU nationals must provide evidence of identification in order to apply for a mortgage, but non-EU nationals must also present their permit of stay (permesso di soggiorno).
It is important to note that, as long as they satisfy the general criteria, the majority of Italian banks will grant mortgages to non-residents. However, banks can also be very careful, so you must offer enough proof to show that you are a low-risk borrower.
Inferring from this, there are a few crucial factors that can favorably affect the result of a mortgage application. For instance, if a foreign national has lived in Italy for three years previous to buying a property, mortgages are more likely to be granted. The so-called “ricongiungimento familiare” (family reunification) is another significant element. In other words, the probability of getting a mortgage will rise if a foreign national moves to Italy with the intention of living there with some of their family members.
How do you apply?
Due to the economic crisis and the new Anti-Money Laundering Regulation (Regolamento Antiriciclaggio) Italian banks and credit institutions have developed a three-stage process in order to grant a mortgage. As explained by Idealista, arguably one of the most well-known real estate companies operating in Italy, Spain and Portugal, the following steps apply to both Italian and foreign citizens:
- The bank studies the potential client’s credit history. The applicant is required to submit several documents, among these an ID card or passport, proof of address (e.g., a copy of a recent utility bill), the property’s contract of sale, proof of income (e.g., the last three paychecks, tax return documents and employment contracts), and a credit report. The bank will then assess these documents in order to determine the individual’s eligibility to apply for a mortgage.
- A surveyor appointed by the bank will evaluate the property’s conditions to certify that it is mortgageable, and to determine the value on which the mortgage rate will be based. This information will be listed on the Evaluation Report drafted on the day of the inspection.
- If all of the requirements are met the bank will issue the applicant a formal mortgage approval.
It is worth pointing out that as you set your total budget, you will need to take a few taxes and fees into account, namely the registration tax, VAT, the land registry tax, the notary, the translator and the estate agent’s fees. More information about these can be found here.
How long does it take to get a mortgage?
According to the data reported by Idealista, it takes from 20 to 60 days to for a mortgage application process to be completed. There may be instances in which it may be possible to make a formal offer on a property by stating that the buyer will request a mortgage if the offer is accepted. However each case is unique and thus it is worth seeking the assistance of a real estate and mortgage specialist.
How much are properties in Italy?
The price of a property in Italy varies greatly depending on its location and the property type. For example, you could pay as little as €25,000 for an apartment in a small village in Sicily, but you should expect to pay much more if you go property hunting in cities like Milan or Venice, for instance. Finding the perfect place to purchase property in Italy will always be a balance of budget, lifestyle and location but if you contract an agent or a lawyer in Italy they will be able to provide you with a number of options, as well as with guidance and support in order to avoid any potential scams. If you would like to learn more about the mistakes to avoid when purchasing a property in Italy, please click here.
In conclusion, this article has sought to provide a few useful pieces of information one should know when applying for a mortgage. However, please note that each application is unique and therefore, if you would like to speak to one of our representatives to understand which options apply to you, do not hesitate to contact info@italianrealestatelawyers.com. We will be glad to help you.
If you move to Italy and you are interested in renting a property rather than buying it, there are a few aspects related to renting that are worth considering. In fact, Italian real estate law and bureaucracy can be hard to navigate, especially if Italian is not your mother tongue, and confusion often arises when discussing complex topics, such as subletting.
An overview
Is it legal in Italy for someone to sublet a property? The quick response is yes, but only in particular circumstances.
The Italian Civil Code, which regulates subletting, states that a tenant may only sublet a property with the owner’s consent. Total subletting and partial subletting are the two types of subletting.
Total subletting, i.e., renting out the entire property to a third party, is never permitted unless specifically authorized by the owner and spelled out in the contract. If you sublet a property without consent, the owner will have the right to request the eviction of the subtenant. On the other hand, partial subletting is typically permitted unless the owner directly prohibits it, in which case it must be stated in the tenancy agreement. As a result, if the lease does not expressly prohibit subletting, a tenant renting a two-bedroom apartment, for example, may sublet one of the bedrooms to a third party, however the tenant must communicate the sublessee’s name and personal details to the landlord. It is important to note that property owners in Italy tend to be against subletting as they cannot select the person to whom the property will be rented.
Types of contracts
If you plan on subletting the property you are renting, you will need to have a good understanding of the type of tenancy agreement you hold. In fact, subletting is only allowed in long-term rental agreements, which are categorized as follows:
- The “4+4 contract” establishes that at the end of the first four years, the tenancy agreement will be automatically extended for another four years, unless one of the parties wishes to terminate the agreement.
While the tenant can leave the property at any point by giving the landlord six months’ notice, the landlord cannot terminate the agreement during the first or second four years of the tenancy agreement, unless otherwise specified.
- The “3+2 contract” lasts three years and it is renewed automatically for an additional two years at the end of the first three years (unless the parties decide to terminate the agreement or mutually agree to alter the terms of the agreement). The tenant can terminate the agreement by giving the landlord six months’ notice. The landlord can terminate the contract only after three years, and under specific circumstances.
On the other hand, if you have a short-term rental agreement (contratto di locazione a uso transitorio) or a student contract, subletting is not allowed.
Finally, it is important keep in mind that the subtenant has the same responsibilities as the tenant. However, since the subletting agreement is signed by the tenant and the subtenant, the tenant’s obligations towards the landlord remain unvaried. As a consequence, the subtenant will pay his/her rent to the tenant, who will then transfer it to the landlord.
How to sublet
Once you have your landlord’s consent, you can ask the subtenant to sign a contract which will need to specify the duration of the contract, the amount of rent due each month, and the areas of the property which the subtenant is entitled to use. This information will also need to be shared with the landlord by certified mail or email. Regular emails do not have legal validity.
If you are subletting a property for more than a month you will need to register the contract with the sublessee at the Italian Revenue Agency (Agenzia Delle Entrate) and pay the corresponding tax within thirty days from the start of the agreement.
If you would like to learn more about the topic or you would like to schedule a consultation with one of our real estate experts, do not hesitate to contact us at info@italianrealestatelawyers.com.
Many individuals from all over the world dream about moving to Italy in order to live a peaceful and slow-paced lifestyle. As we discussed in previous articles, purchasing a property in Italy is a worthwhile investment, however, the process may appear daunting and intricate for those venturing into the Italian real estate market for the first time. For instance, many potential buyers may be concerned about transferring considerable amounts of money abroad as well as finalizing the transaction. This article will outline detailed information about the payment methods which are available to foreign citizens who would like to purchase a property in Italy.
How to transfer money to Italy from abroad
When purchasing a property, many buyers pay via wire transfer and thus send their funds from their bank accounts in their home country to Italy. Please bear in mind that commission and conversion fees apply, and these vary depending on the conversion rate between currencies, which is subject to fluctuations. At the time of writing this article, 1 US dollar equals to 0.92 Euros. In addition to commission fees, many banks may charge administrative fees to process the transfer. However, there are online money transfer platforms such as wise.com, for instance, which allow individuals to transfer money between countries at competitive rates. In order to wire funds to any bank account in Italy, you will need the following information:
- The recipient’s first name and last name
- The recipient’s IBAN (= International Bank Account Number)
- The recipient’s SWIFT code, also known as “BIC” (= Bank Identifier Code)
What are IBANs and SWIFT codes?
The IBAN code is used to identify a specific account number. An IBAN is similar to a routing number in the United States. The IBAN is composed of 27 alphanumeric characters and it looks like the example provided below:
IT 33 X 01005 03200 XXXXXXXXXXXX
The IBAN consists of the following digits:
- 2 letters identifying the country (“IT” stands for Italy);
- 2 numbers for the international control code, also referred to as “CIN EUR” (= Control Internal Number in Europe);
- 1 letter for the national control code, known as “CIN” (= Control Internal Number);
- 5 numbers identifying the bank according to the “ABI” code (= Italian Banking Association);
- 5 numbers identifying the bank’s branch according to the “CAB” code (= Codice di Avviamento Bancario);
- 12 alphanumeric characters related to the bank account (or conto corrente in Italian).
A SWIFT code is a security code created by the Society for Worldwide Interbank Financial Telecommunication, from which the acronym derives. A SWIFT code is required for all international wire transfers and it identifies a banking institution. The code consists of several alphanumeric characters and it usually contains 8 to 11 digits. A SWIFT code looks like the example provided below:
UNCR IT MM (XXX)
The digits refer to the following:
- 4 letters identify the banking institution’s abbreviated name (in this example “UNCR” stands for UNICREDIT S.P.A., one of the most popular banks in Italy);
- 2 letters indicate the country (“IT” stands for Italy);
- 2 letters or 2 numbers refer to the bank’s location (“MM” stands for Milan);
- 3 optional characters identify the bank’s branch (if there are three X like in the example above or the digits are absent, it means that the SWIFT code is linked to the bank’s headquarters and not to a specific branch).
A SWIFT code is essential to transfer money internationally and it ensures that the process is carried out safely.
Purchasing a property via an international wire transfer
Generally, the payment for a property must be formalised before the notary during the final deed of sale, which is when both the buyer and the seller sign the final contract of sale. Although you may send the deposit (or Caparra in Italian) to the seller in order to secure the property you have decided to purchase, we recommend remitting the final payment to the notary a few days before the final deed of sale to allow the time for the funds to reach the notary’s bank account. In fact, the notary usually has a dedicated bank account whose purpose is to keep the buyers’ funds secure. This is a useful service that the notary provides specifically for foreign buyers who do not have a bank account in Italy. In essence, this option allows foreign citizens to send the funds via an international wire transfer a few days before the final deed so that on that day the notary can transfer the funds received directly to the seller. Therefore, if you cannot travel to Italy and open a bank account, you can transfer your money to the notary’s bank account and the notary will then send the funds to the seller on your behalf. It is not advisable to send the funds to the seller prior to the final deed of sale as all payments must be formalised on the day on which the deed of sale is signed by the seller and the buyer (or by the individual representing the buyer via a Power of Attorney).
Purchasing a property via a cashier’s check
Although you can cash a foreign check into an Italian bank account quite easily, it is very unlikely that a seller will accept an international check as they are hard to verify. In fact, as a general rule, personal checks are never accepted if you are purchasing a property in Italy. Instead, buyers must use the so-called assegno circolare (cashier’s check or certified check) to complete the purchase. This is the safest and most common payment method used to purchase a property because it is created by the bank and it certifies that the amount will be paid to the recipient. Therefore, if you wish to pay for your new house by using a cashier’s check, the easiest way to do so is to open a bank account in Italy and to request a check from the bank. If you choose this payment method, on the day of the final deed of sale you will need to hand a cashier’s check to the notary and one to the seller to close the sale and complete the property purchase.
Opening a bank account in Italy
As mentioned earlier, you can remit the payment for a property through an international wire transfer. However, if you can travel to Italy before the closing date, we recommend opening an Italian bank account. A few Italian banks may allow you to open a bank account even if you are not a resident of Italy or if you do not have Italian citizenship, however this depends on each individual’s specific circumstances. Once you have opened your account, you can decide to pay the funds for your property either by requesting a cashier’s check or by making the payment via a national wire transfer.
Opening a bank account in Italy is also useful after you have purchased your property in order to pay utility bills, for example. In fact, recurring automatic payments are more efficient than single payments made by credit or debit card or by postal order (bollettino postale).
If you wish to learn more about the purchasing process or you would like to enquire about our tailored services, do not hesitate to contact our team of real estate lawyers at info@italianrealestatelawyers.com.
The Italian real estate market offers many investment opportunities, making the so called Stivale – literally “The Boot”, due to Italy’s shape – one of the best places to purchase property. If you are thinking of buying a house in Italy but you do not have a clear idea of the costs and the taxes involved, and you are wondering whether there are any incentives that might apply to you, this article will provide you with an overview of the information you need to know. Please note that this article focuses specifically on real estate transactions between individuals. Real estate transactions between individuals and construction companies will be discussed in another article.
An insight into the costs involved in purchasing a property
When purchasing a property, the buyer will need to bear the following costs regardless of whether he or she is an Italian citizen:
- mortgage (if applicable),
- registration and cadastral taxes,
- the cost for the surveyor to verify the structural conditions of the property (if necessary),
- the notary’s fees – these are paid to the notary who ensures that the purchase complies with all real estate laws and regulations. The notary’s fees vary depending on the type of property which is being purchased and its location.
- Additionally, both the seller and the buyer need to pay the real estate agent’s commission fees if a real estate agency is involved in the transaction. This fee is usually around 2-3% of the purchase price.
Both the notary’s fees and the real estate agent’s commission fees are subject to VAT. The standard VAT rate in Italy is 22% and it is payable on sales of goods or services.
Taxes and incentives
The taxes to be paid on a property in Italy vary depending on whether the property purchased is the buyer’s first or second house. In particular, there are a number of tax breaks that apply to individuals who purchase their first house.
As a general rule, there are three taxes that a buyer needs to pay when purchasing a property:
The “Imposta di Registro”: this tax amounts to 2% of the property’s cadastral value [1]if the property is the buyer’s first house in Italy. On the other hand, it amounts to 9% if the property is the buyer’s second house. However, an exception is made for Italian citizens residing abroad, who are registered with the AIRE and who buy their first house in Italy; in fact, they only need to pay the 2% tax even if they decide not to reside in the property full time. Foreign citizens are entitled to first home benefits if they establish their residence in Italy in the same municipality where the property purchased is located within 18 months from the purchase date. In order to access the benefits, the property should be classified as habitation and it should not be a luxury property as luxury homes are subject to the 9% tax.
- The “Imposta catastale” (Cadastral tax or land registry tax): this is a fixed tax which amounts to €50.
- The “imposta ipotecaria” (mortgage tax): this too is a fixed fee which amounts to €50.
There are many incentives that are available to purchasers who meet the requirements set by Italy’s Revenue Agency, the so-called “Agenzia delle Entrate”. For instance, the “first home” bonus for individuals and couples who are younger than 36 years old includes a number of tax breaks to encourage young people with an average income below €40,000 to purchase a property that will become their primary house. This bonus allows for the exemption on mortgage and cadastral taxes and it makes it easier to access the guarantee fund (“fondo garanzia[2]”) for first homes. The bonus also includes other benefits, such as:
- a 50% reduction on notary fees;
- a tax credit (on deeds subject to VAT) equal to the VAT paid.
The “first home” bonus for individuals who are younger than 36 years old is valid for deeds signed between May 26, 2021 and December 31, 2023.
With regard to foreign citizens, it is worth pointing out that whether or 
not a foreign citizen who does not reside in Italy can purchase a property in Italy is based on the so-called “reciprocità”, i.e., the reciprocity conditions between Italy and the country of which the individual is a citizen.
In conclusion, if you are considering purchasing a property in Italy, it is important to have a good understanding of the costs and the taxes involved in the purchasing process. As explained above, these may change depending on whether the property you choose to buy in Italy is your first or your second house and on the type of property that you have chosen to purchase. In addition to this, it is also important to have a good understanding of the tax incentives and benefits which might be available to you.
If you wish to learn more about the purchasing process and you would like an expert’s assistance, do not hesitate to contact our bilingual team of real estate experts at info@italianrealestatelawyers.com. We will be happy to help you purchase your “Casa Dolce Casa”!
[1] The guarantee fund was introduced by the Italian government in 2013. Its purpose is to replace the guarantees which are often expensive, and which a bank requires to disburse a loan.
[2] The cadastral value of a property is the tax value of a property. In other words, it is a piece of information that is used to calculate a number of taxes that are linked to the purchase and sale of real estate.
Italy is one of the most attractive countries in the world due to its wonderful cuisine, fascinating history and culture, and stunning landscapes which vary from one region to the other making the Bel Paese a very special and diverse country to live in.
In 2017 the Italian government introduced a flat tax regime which consists of a flat tax charge of €100,000 per tax year, in lieu of standard tax rates for high-net-worth foreign individuals who are willing to relocate to Italy and to establish their residency there. So what does the regime entail specifically? This article will provide you with an insight into the Flat Tax regime and how to apply.
What is “residenza fiscale”?
This term refers to a place where an individual is registered for tax purposes. In order to be considered a resident for tax purposes, an individual must be registered at the “Anagrafe”, the registry office in a municipality’s town hall for at least 183 days, or 184 in leap years.
Arguably, one of the reasons why many people decide not to establish their residency for tax purposes in Italy is due to the fact that Italian income tax rates are quite high among the OECD. Nevertheless, in 2017 the Italian government introduced a new Flat Tax regime for high-net-worth individuals.
Who can apply for the Flat Tax regime?
This aim of the regime is to encourage investments and attract high-net-worth individuals (HNWI), who have not been Italian tax residents for at least 9 out of the 10 years preceding their move to Italy. In essence, the benefit consists of the possibility for these individuals who transfer their tax residence to Italy to apply a substitute flat tax, which is equal to €100,000, to their foreign income. This can also be extended to their family members who will need to pay a flat tax of €25,000 each.
This tax provision is valid for a 15-year period only.
What does the Flat Tax regime apply to?
It is worth mentioning that the Flat Tax regime is applicable to the following:
– a salary
– rental income
– financial compensations
– earnings from self-employment
– dividends.
How do you apply?
In order to have access to this regime, taxpayers need to obtain an advance tax ruling from the “Agenzia delle Entrate”, (Italian Revenue Agency).
The above-mentioned advance tax ruling (in Italian “Imposta 
Anticipata”) enables resident and non-resident taxpayers to prevent litigations with the Revenue Agency by requesting a preventive, written clarification of how the tax provisions are applied. When the taxpayer submits this enquiry, he or she will need to provide detailed information about his or her specific circumstances. In particular, the individual will need to submit a valid form of ID and his or her Italian tax code, and indicate the jurisdiction or jurisdictions under which the individual was a tax resident prior to the year in which he or she applied for the flat tax regime.
The Revenue Agency will then have 90 days to reply and an additional 60 days if further details or documentation are missing. If the Revenue Agency does not reply within the above-mentioned time limit, the taxpayer’s interpretation of the taxation that applies to his or her case is considered to be accepted.
Taxpayers are free to terminate the flat tax regime at any time; however, their foreign income will be taxable at progressive tax rates. Furthermore, if the payment of €100,000 is not provided, or the taxpayer renounces his or her Italian tax residency, the flat tax regime is discontinued.
Finally, it is worth pointing out that if you are a high-net-worth individual and you are planning on relocating to Italy you might want to consider applying for the elective residence visa or the investor visa as the flat tax regime does not come with any specific visa.
In conclusion, if you are a high-net-worth individual who is considering relocating to Italy, and you do not want to pay ordinary taxes on your foreign income, applying for the flat tax regime may be the best option for you.
If you would like further information about this regime or if you are seeking assistance to apply, please contact our team at info@italianrealestatelawyers.com. We will be happy to assist you!
If you are planning on purchasing a property in Italy you will need to take a number of factors into consideration in order to make an informed decision. If you are not very familiar with Italy’s geography and the cultural differences among its regions, there are various websites which rank the best cities to live in, the most sought-after locations, and they also list the types of properties and their prices. Drawing from Idealista’s 2022 ranking, this article will analyze the most expensive locations to buy a property in Italy.
LUXURY SEASIDE DESTINATIONS
According to Idealista’s ranking, the ten top most expensive and most popular locations to buy property in Italy in 2022 are seaside destinations. The top step of the podium is occupied by Forte dei Marmi; the second place is occupied by Pietrasanta, also known as the “Athens of Italy”. Pietrasanta is considered the capital of artistic marble manufacturing in Italy. As a matter of fact, artisans from all over the world go to Pietrasanta to work side by side with skilled artisans who have passed their abilities from one generation to the next. Forte dei Marmi is a luxury resort and unlike many other seaside destinations in Italy, it has maintained its allure over time, attracting wealthy Italians and foreigners from all over the world. The average price for a house in Forte dei Marmi is €1,416,294.
The third place is occupied by Alasso, which is on the Ligurian coast in the province of Savona; the average price for a house in Alasso is €453,215. Alasso is famous for its Muretto, a wall which is decorated with colorful ceramic tiles that have the autographs of famous film stars; it is also famous for Budello, the town’s main street and shopping hub, as well as for its breathtaking natural views.
The top ten most expensive places to buy a property in Italy are tourist resorts such as Lerici, Riccione, Desenzano del Garda, Camaiore and Cervia, which all share the same exclusive features: luxury hotels, high-end boutiques and jet-set visitors.
CHARMING AND TIMELESS CITIES
Although purchasing a property in a city is relatively expensive, prices outside the top 10 most sough-after locations are much more affordable, starting from €268.778 on average for a property in Padova to €338.661 for a property in Modena. Florence and Milan are among the most expensive cities to buy property with an average asking price of €356.14 and €351.438, respectively. Finally, the average price for a property in Venice is €433.640. Cities like the ones listed above are famous because they are among the main art cities in Italy and they attract thousands of tourists each year.
ITALIAN PICTURESQUE VILLAGES AND MID-SIZED TOWNS
If you prefer to live in a mid-sized town or in one of Italy’s picturesque villages nestled in the countryside far away from the hustle and bustle of big city crowds you will be spoiled for choice.
There are dozens of cities and towns in Italy which are worth exploring and which are enchanting, such as Trento, which may not have the fame and glory of cities like Florence or Venice, but it is full of charm and youthful vibes. Trento is the main city in Trentino, an autonomous region in Italy with special status and financial autonomy which borders with Switzerland and Austria. Due to its location, it is very different from other regions in Italy, in fact, it is famous for its magnificent natural landscapes, its impressive mountains and its lakes. In this sense, Trentino is a must for those who enjoy winter sports and outdoor activities. The region of Trentino Alto Adige is considered one of the richest regions of Italy, hence the higher prices for properties. In November 2022, an average of €2,929 per square meter was requested for residential properties for sale, with an increase of 5.21% compared to November of 2021 (€2,784/m²).
On the other end of the spectrum is Palermo, which is filled with gorgeous architecture, most of which is Arab-Normal style. The less touristic feature of Palermo has kept the city affordable in comparison to other cities in Italy and the cost of living is also low. The average price for a house in Palermo is currently below €1,200 per square meter.
Finally, many foreign tourists are attracted by the beauty of some well-known and picturesque Italian towns. It is nearly impossible to choose just one as there are many medieval cities, mountain retreats, and vibrant beach towns on the list. For instance, Tuscany has always attracted many foreign investors who tend to prefer properties which are far away from the chaos of bustling city centers. Foreign investors generally look for properties which are surrounded by beautiful landscapes and vineyards where they can enjoy breathtaking sunsets. Volterra is one of the most famous towns in Tuscany and it has some of the most beautiful medieval churches in Italy. Volterra is set on a hilltop between the Cecina and Era valleys and it is the ideal place to learn about the area’s rich history. Florence and Siena battled over control of Volterra over the centuries. The average price of a property in Volterra in 2022 is €1,772 per square meter, which is slightly lower compared to the average price of a residential property in Tuscany, which was about €2,500 per square meter in November 2022.
In conclusion, the prices listed above should not discourage you from looking for your dream house. In fact, if your heart is set on living in a lovely rural area, you may consider purchasing a property in other beautiful regions in Italy. It is important to remember that the further way from the seafront you go, the cheaper the property, and the same applies to big cities.
If you would like some help with finding the property that best suits your needs, feel free to contact us at info@italianrealestatelawyers.com for a free consultation.