Gallery
A guide to buying a property in Italy
The legal side for buying an Italian property falls into two stages, the Exchange of contracts (Compromesso) and the Completion (il Rogito).
Prior to Exchange of contracts
The buyer must have obtained an Italian fiscal code number (Codice Fiscale) in Italy. This code is essential for any official dealings in Italy (registering a property purchase, opening a bank account, buying a SIM card for a mobile phone, registering utility services in your name, etc.)
Stage 1.) Preliminary sales agreement (Compromesso)
The buyer needs to provide a formal written offer for the purchase of a property.
The offer, if accepted, becomes a fully binding contract under Italian law. In most cases however, the buyer and the seller upon reaching agreement on the terms of a sale would enter into a preliminary Sales agreement (Compromesso) which has the legal effect of fully binding all parties.
The prospective purchaser is bound to the offered amount and the vendor has a certain time frame to accept the offered purchase price, otherwise the offer expires.
The Sales Agreement does not transfer title but is meant to set out all details of the sale and enable the seller to gather the required property documentation. It also allows the purchaser sufficient time to prepare funds for the purchase. Usually a deposit of 10% - 20% of the purchase price is exchanged between buyer and seller at Compromesso. Given the relevance of the document, the drafting is entrusted to a Notary, the sales contract is then registered in the land registry to prevent the same property being sold to anybody else. There is a 0.5% fee of the property purchase price payable for this plus the notary fees. Usually, the Estate Agents fees are paid at this stage.
In Italy the Notary is a public official represents the buyer and seller. Once the offer is accepted in writing by the vendor, a notary is engaged in the process and will undertake the property search, check title records, consistency with planning permission records and check for any agricultural pre-emption rights (if applicable) all of which is in view of drafting a fully exhaustive Sales contract. Once the sales contract is signed by all parties, the purchasing process is only a couple of steps away from the completion.
It's worth noting that each purchase and sale is different, the process depends on the individual circumstances and there can be some flexibility to accommodate the involved parties needs, regarding the deposit paid, timeframe for the purchase, payment of the funds, or necessity of buyer or seller being present in person to sign the documents.
Stage 2.) Completion (Rogito Notarile)
Following signing the Sales Contract, the Notary will be preparing the completion documents.
If the vendor is found to be in material default of warranties under the Compromesso, the purchaser may withdraw and claim back the deposit paid, and possibly more as a predetermined penalty. If the purchaser withdraws after Compromesso without just cause he/she will forfeit the deposit.
Upon signature of the Completion documents (Rogito Notarile) in front of the Notary (the sole authority under Italian law authorised to certify the sale of real estate property), the purchaser pays the balance of the purchase price to the notary's client dedicated account or vendor (depends in case what is agreed), the notary's fees (circa 2.5% of the land registry value of the property), purchase taxes (or IVA), Stamp Duty.
The Notary, after the signing of the Rogito Notarile, will record the transfer of title in the Title Office and pay the Stamp Duty and other purchase taxes on the buyer's behalf.
Ownership/Costs
In summary, the overall costs of purchasing property in Italy depends on the stamp duty and purchase tax rates applicable to the asset. These costs consist primarily of property taxes, notary fees and agency fees. As a very general indication this can be expected to amount to circa 10% to 16% of the purchase price.
IMU: Council tax (Imposta Municipale Unica) is a property tax based on the land registry value of the property and is collected by the local authority twice a year.
There is currently no Capital Gains Tax in Italy for private individuals if the disposal of a property takes place more than five
years after the purchase.
Property purchase tax
On new Italian properties Value Added Tax (VAT) is payable at 10%. If the property is not newly built, then a property purchase tax is paid instead. Purchase tax is levied at 10% for non-residents as per the property's land registry value and at 3% for residents, and gets paid to the Italian Government.
Stamp duti (Bolli)
Stamp duty (Bolli) is levied at 1% for both non-residents and residents, and gets paid to the Italian Government.
Notary (legal) fees
The notary fees usually amount to approximately 2.5% of the Declared Land Value of the Italian property, which is usually much lower than the actual purchase price in the case of resale properties.
Italian survey fees
The Surveyor's (Geometra's) fees vary depending on what work is involved in the conveyance.
In Italy a property survey is not compulsory prior to the completion of the purchase as the notary will perform all the necessary searches on the buyers behalf and will often involve a local surveyor.
Agent negotiation fee
Agent's fees under Italian law are payable both by the buyer and by the seller (3-7% + VAT, depending on complexity of the sale and services included), and these are payable upon the exchange of the Preliminary sales contract (Compromesso).
Differences between buying new and old Italian properties
Due to the high demand for new Italian property, most purchasers buy properties "off plan" from Italian property developers. This means that the purchaser will buy new Italian properties from the plans, and select which property they want within a particular development. Typically, purchasers who buy a new property have to make regular instalments during key stages of the property development (opposed to paying for the property when it is complete), and an initial deposit of 5% to 10%. The initial deposit and regular instalments vary from one Italian property developer to the other.
Note: If you have to make regular stage payments to the Italian property developer you should ensure that you receive bank guaranties for each payment. These bank guaranties protect you in the unlikely event that the Italian property developer has financial difficulties before the property is transferred to your name.
IMPORTANT - Disclaimer :
The above information is provided as guidance only, ECSM Property Ltd. does not accept any liability for the reliability of the information and statements made as this is obtained from 3rd parties.
We always recommend you take legal advice from a fully qualified local Lawyer or Notary before buying a property overseas.
Download: Buyingguide_Italy_ECSMProperty.pdf
