“I would do it again and I probably will. My best advice to anyone considering buying one of these homes is to put in a bid!”
These are the words of Meredith Tabbone, a Chicago-based financial adviser with Sicilian ancestry who shared her experience of purchasing a 1-euro property in Italy in an interview with the magazine The Latch.
The 1-euro property phenomenon started two years ago in the region of Abruzzo but it slowly became widespread: houses that would otherwise be abandoned or destroyed in the south and in the north of Italy alike were sold by homeowners or by municipalities for one euro.
Most of these properties have now been sold but there are still a few on the market. The objective is to bring new life to the towns where the properties are located by repopulating them and by carrying out renovation works on the properties. Indeed, Italy’s population is shrinking rapidly: in the past, Italians used to have a lot of children but now they have the lowest birthrate in Europe. Furthermore, young people are moving to bigger cities where there are more job opportunities than in small towns and villages. As a result, properties in these towns end up being abandoned. However, since the 1-euro property phenomenon started many foreigners have been attracted to the country, especially those who want to spend their retirement in Italy and live a quieter and less stressful life.
Among the areas that launched the 1- euro property project are:
- Sambuca (Agrigento), Sicily
- Zungoli (Avellino), Campania
- Mussomeli (Caltanisetta), Sicily
- Gangi (Palermo), Sicily
- Regalbuto (Enna), Sicily
- Salemi (Trapani), Sicily
- Patrica (Frosinone), Lazio
- Fabbriche di Vergemoli (Lucca), Tuscany
- Montieri, (Grosseto), Tuscany
- Ollolai (Nuoro), Sardinia
- Nulvi (Sassari), Sardinia
- Carrega Ligure (Alessandria), Piedmont
- Lecce nei Marsi (L’Aquila), Abruzzo
Undoubtedly, buying these properties has its pros and cons. Firstly, they need to be renovated, therefore if you want to be creative this might be the right option for you. Secondly, the overall price is more affordable compared to other properties, and the towns were these properties are located are small and quaint villages with a lot of history and culture. Thirdly, most of these properties are close to marvelous beaches and the quality of life is higher compared to chaotic cities. However, you should always check carefully what is expected of you after you have bought the property; in most cases, for instance, you must submit a renovation project, and the renovation works need to be carried out within a set number of years. Furthermore, you need to pay for notary fees, water, gas and electricity connections as well as registration costs and, in some cases, you might need to pay the municipality an insurance policy (€5,000 on average) as a guarantee that you will carry out the renovation works. However, it is important to note that each municipality has different rules and policies.
But what does buying a 1-euro property entail?
Firstly, you will need to fill out an application form. This can be found on the municipality’s website. Secondly, you will need to provide the municipality with a project that shows how you intend to improve the status of the property. Your application will be assessed and if everything is in order you will be informed about the outcome of your application. Finally, if your application is approved the municipality will act as a guarantor and a mediator between you and the owner of the property and you will sign the final deed of sale before a Notary.
One interesting fact about 1-euro properties is that the Italian government has introduced some tax deductions which are linked to renovations works. Among these are:
- Renovation bonus –> the objective is to incentivize maintenance, restoration and renovation works on the property. The tax deductions amount to 50%of the expenses (up to a maximum of 96.000€) and they must be divided into 10 equal annual installments.
- Facades bonus –> this is to renovate a building’s external facade by painting it or by carrying out repairs. The tax deduction goes up to of 90% of the expenses and it is divided into 10 equal annual installments.
In addition, the 2020 “Rilancio” Decree brought two major tax changes which are valid until December 31st, 2021:
- The Superbonus 110% tax deduction –> the rate is applied only when the renovation works are carried out together with other works that are financed by the eco-bonus or the so called “seismic bonus”. These works include thermal insulation, air conditioning replacements and anti-seismic works.
- It is possible to use this tax discount immediately.
In conclusion, 1-euro properties offer a long-term investment opportunity, however, as discussed above, they also require a great amount of work. If you would like further clarifications or need advice feel free to contact us at info@italianrealestatelawyers.com. We will be happy to help you!
