Investing

We often talk about investment strategies, how to buy a house and how not to make mistakes. These are very beautiful things; but let’s face it, everyone has a fear, especially Italian people: taxes. In this article, we will (finally) understand together what taxes you have to pay to buy a house and how much is property tax in Italy.

I often read articles by experts who use big words and expose a thousand tricks, I will be clear and concise in order to make this complicated matter as simple as possible.

If you will have any further needs in buying/selling a property or real estate investing in Italy you can leave a comment or e-mail me.

Index

1. Buying property in Italy: Tax
2. Registration of the preliminary contract, buying a house in Italy
3. Buying with first house tax relief from a company
4. Buying a home from a company
5. Buy with first house tax relief from a private individual
6. Buying a property from a private individual
7. What is the first House tax relief?
8. How Much is property tax in Italy?

Buying property in Italy: Tax

1. Registration Tax
2. VAT
3. Hypothecary and cadastral taxes
4. Registration of the compromise

These fees change depending on the specific situation. I advise you to understand which is your case and go directly to read the dedicated paragraph without having to read all the other cases that may not interest you (actually, taxes are not a very exciting topic!).

Taxation of a real estate purchase is usually on the buyer.

Registration of the preliminary contract, buying a house in Italy

I start from this point because it is the same in all the different cases. The fixed costs for the registration of the preliminary contract are:

• 200 euros
• 16 euros as stamp duty for every 4 pages or 100 lines of paper.

In addition to these costs, advances must be paid with respect to the registration tax which will then be paid in the notarial deed, specifically:

• 0.5% of the amounts paid as a deposit
• 3% of the amounts paid as a down payment

These last two items are not “extra” costs and they will be deducted from the registration tax due to the final deed of sale.

Buying with first house tax relief from a company

If it’s your first house in Italy you can take advantage of the tax relief (continue to read)

If the seller is a construction company (which sells within 5 years of the completion of the work), the VAT will have a rate of 4%, the registration tax, the mortgage and the cadastral tax will be € 200.00 each.

Example: purchase price € 100,000.

VAT = € 4,000

Mortgage, registry and cadastral taxes: € 600 (in total)

TOTAL: € 4600

If a construction company, after 5 years from the completion of the works, or a non-construction company sell a property it does not apply VAT, the registration tax is equal to 2% of the revalued cadastral income (minimum € 1,000 ), the mortgage and cadastral tax are equal to € 50, each.

Example: purchase price € 100,000, cadastral value € 50,000

Registration fee: 1000 €

Mortgage and cadastral taxes: € 100 (in total).

TOTAL: € 1100

Buying a home from a company

In the case of a non-luxury second home, the registration tax, the land registry and the mortgage are € 200.00, while the VAT increases to 10%.

Example: purchase price € 100,000

VAT = € 10,000

Mortgage, cadastral and registry taxes: € 600 (in total)

TOTAL: € 10,600

If the house is luxury then the land registry, mortgage and registry tax will remain unaffected, instead, the VAT rate rises to 22%.

Example: purchase price € 100,000

VAT: € 22,000

Mortgage, cadastral and registry taxes: € 600 (in total)

TOTAL: € 22,600

Buy with first house tax relief from a private individual

The mortgage and cadastral taxes amount to € 50 each, the registration tax is equal to 2% of the revalued cadastral income (minimum € 1,000). No VAT is payable.

Example: purchase price € 100,000, revalued cadastral income € 50,000

Registration fee: 1000 €

Mortgage and registration taxes: € 100 (in total)

TOTAL: € 1100

Buying a property from a private individual

The mortgage and cadastral taxes amount to € 50 each, the registration fee is equal to 9% of the revalued cadastral value.

Example: purchase price € 100,000, revalued cadastral income € 50,000

Registration fee: 4500 €

Mortgage and cadastral taxes: 100 € (in total)

TOTAL: € 4,600

What is the first House tax relief?

If you choose to buy a house in Italy you could choose to take advantage of this tax relief, below you need that the property:

• It is classified as a dwelling
• Not classified as “luxury”, according to the land registry classification A/1, A/8, A/9
• It is located in the municipality where the buyer has or, within 18 months, intends to transfer his residence.

The benefits may also be applied to the appurtenances of the house. However, with the limit of one for each of the cadastral categories C / 2 (cellar or attic), C / 6 (garage or box) and C / 7 (closed or open canopy).

In addition to the characteristics of the property, in order to benefit from the concessions, the buyer must:

• Within 18 months of the purchase, undertake to establish residence in the territory of the Municipality where the property to be purchased is located, if not already resident there;
• He is not the sole owner or in communion with his spouse of property rights, usufruct, use and residence of another house in the territory of the Municipality where the property to be purchased is located;
• Is not the owner, throughout the national territory, of property rights, usufruct, use, dwelling and bare ownership on another house purchased by the same person or by the spouse by taking advantage of the first home tax breaks that have followed over the years.

Both foreign citizens and emigrants abroad will be able to take advantage of the first home benefits. It should be specified that taxpayers who do not have Italian citizenship can purchase a first home with concessions if the required requirements are met.

Is there a property tax in Italy?

The answer is yes, and it’s called IMU.

How Much is property tax in Italy?

IMU (property tax in Italy) is paid annually and is calculated starting from the taxable value, here is the formula to calculate it:

• Take the cadastral income
• Increase it by 5%
• Multiply the results with the right coefficient (look at the tab right after)

The tab of coefficients to calculate the right taxable value

IMU: property tax in Italy

When you have this value you just need to apply the rate of the municipality where the house is located.

The rate can change in every city and here are the 2 types of rates:

• An ordinary one (in general cases), is equal to 0.86%; Municipalities can increase it up to 1.06 or decrease it up to zero. It is possible to further increase the rate under certain conditions;
• A reduced one (luxury home with residency and related appurtenances), is equal to 0.5%; Municipalities can increase it by 0.1% or decrease it to zero

This article will surely have clarified many doubts about what taxes you have to pay to buy a house in Italy but, if you still need some advice or help, I invite you to write me an email here.

Here we are!

You think you have found the right house and you can’t wait to buy it. In reality, you already imagine where to place your wardrobe and you already see yourself in the dining room with your friends and relatives for an aperitif. 

I know what it feels like when you find the right property (even if it is an investment), the euphoria rises and you risk neglect. Before proceeding, understand what you absolutely must check before buying a house.

Don’t let your guard down! Italian real estate is a complicated world, read below and deal with it in the right way

Index

1. What to ask when you go to see a house for sale
2. Inquiries to be made and documents to check before buying a house
3. What to check when buying a used home

What to ask when you go to see a house for sale in Italy

When considering buying a home, there are a few essential things to ask the real estate agent or landlord:

• Does the property comply with both the land registry and urban planning? In Italy, there are frequent building abuses or situations of discrepancy in the state of affairs with respect to the plans present in the land registry or in the municipality. This should not scare you, often these are solvable situations, but it is right that you know them and evaluate them with your consultant.
• Are there any extraordinary condominium works that will be approved shortly? It may happen that, shortly after your purchase, the condominium assembly decides to renovate the roof or the facade. This is good because it enhances the building, but spending several thousand euros immediately after buying your apartment could affect your family budget.
• Are there any injurious inscriptions or transcripts on the house? I understand that they are complicated terms, it is a matter of finding out if there are mortgages (voluntary mortgage, legal or judicial ) or other burdens that may affect your purchase. This is often a complicated step to carry out independently, you must be aware of it and ask for clarification, but I recommend that you rely on your consultant to understand the documentation.
• Plants and other certifications: also ask if the systems are compliant (it is not mandatory to buy and sell a house, but it is extra security) and if they have the energy performance certificate (APE) with the relative energy class (yes, mandatory).
• Useful information for negotiation. I always recommend asking questions (preferably open questions) to understand the needs and situation of the seller, it will come in handy during the negotiation phase. How long have you been trying to sell? Why does he want to sell? By when would you like to close the operation? This is all extremely important information!

Obviously, the answers we receive to these questions must be supported by adequate documentation, let’s see which documents you need to check.

Inquiries to be made and documents to be checked before buying a house

To verify the information we have collected, we need to check the documentation. This step is called document analysis (due diligence in English) and can be done before making a binding proposal, but also afterwards if we have inserted the appropriate safeguard clause. If you have a question about this step click here .

Here are the essential documents:

• Deed of origin: this is the deed (deed, declaration of succession, transfer decree, usucapione …) by which the seller acquired ownership of the property. It is a very important document that certifies, in addition to the correct ownership, also the urban planning practices made over time and any conditions that could hinder the purchase.
• Last planning practice presented: you must ensure that the house as it appears corresponds to the plan in the municipality.
• Planimetry and cadastral survey: even with the cadastre, you will have to check the conformity of the state of affairs with the plan and check the data reported in the survey.
• APE (Energy Performance Certificate): mandatory in a sale, by law.
• Allotment of condominium expenses: check how much you will spend exactly at the condominium level.
• Minutes of the last condominium assemblies: They will allow you to find out if the condominium assembly is talking about any work to be done in the future.
• Mortgage certificate: Essential document allows you to be clear if the property is burdened with mortgages or other burdens that could be dangerous.

The cadastral plan is a fundamental document in documentary control

What to check when buying a used home

A used house, compared to a recently built one, could present some more risk, regarding the state of conservation of the systems and structures.

For example, we must be careful to observe the presence of infiltrations, mold or humidity in the walls.

In particularly ancient buildings, I also recommend checking the stability of structures such as floors, roofs and load-bearing walls.

It is also good practice to check the state of maintenance of the systems (electricity, water, heating).

It is also a good idea to check the maintenance status of the systems (electricity, water, heating).

The safest strategy is to make an inspection to get a quote for any renovations, you can ask for it for free by clicking here.

How much does it cost to buy the first property in Italy? What are the costs that will be incurred? This article will outline all of the costs needed to purchase the first house.

I don’t want to scare you, but if you’re thinking of buying your first home in Italy, you should be aware of all the expenses you’ll have to pay.

Useful resources

• Mortgage Calculator (Italian banks)

Index

1. The costs of buying a property in Italy
2. Expenses to buy a house from a real estate agency
3. The first method to calculate the real estate agency commission
4. Customs and practices for calculating the mediator’s commission
5. The judge determines the real estate agThe-judge-determines-the-real-estate-agent’s-commissionsent’s commissions
6. Preliminary contract registration costs
7. Compromised transcription cost
8. First home purchase expenses: taxes
9. Costs to buy a first home from a builder
10. Notary fees for first home purchase
11. Who pays the notary fees?
12. Costs related to the first home loan
13. Expenses for first home purchase, conclusions

The costs of buying a property in Italy

Depending on the terms of the purchase, the location, and the purchase price, the costs of purchasing the first house might vary significantly. However, if you understand the fundamental guidelines, you will be able to assert yourself without difficulty and avoid being deceived. If you don’t want to waste time reading this article, you can get a consultation by clicking here.

Expenses to buy a house from a real estate agency

In Italy, you cannot give a standard amount that is suitable for everyone and in all situations.

The national average is around 3%, but be careful, read the next few paragraphs because it is not that simple and some bad real estate agents may experience a low blow!

The first method to calculate the real estate agency commission

The first method of determining the commission due to the real estate agency is the agreement with the buyer. Usually, this is what happens, but suppose the agent has not communicated anything to you (and you have not asked for anything …), are you free not to pay the real estate agent’s commission?

Not exactly…

If you want to avoid getting ripped off, find out how I can help you, and request a quote.

Customs and practices for calculating the mediator’s commission

In the absence of an agreement with the buyer, the commission must be determined based on customs and habits. Do not be confused by the name, the collection of uses and customs is a very precise thing.

Each chamber of commerce has its own collection of customs and traditions for each sector. So in Italy, there are more than 100 different ones!

The judge determines the real estate agent’s commissions

Ultimately, in the absence of an agreement, tariffs or customs and habits, the agent’s compensation is determined by the judge according to equity.

What does second equity mean? In a nutshell … what the judge considers correct!

Here is the article on the Italian civil code:

Art. 1755. (Commission).

The mediator has the right to a commission from each of the parties if the deal is concluded as a result of his intervention. The extent of the commission and the proportion in which this must be borne by each of the parties, in the absence of an agreement, professional rates or uses, are determined by the judge according to equity.

Preliminary contract registration costs

Congratulations! You’ve accepted your proposal and agreed to pay the real estate agent’s commission, and the purchase of your first house is taking shape… but the costs don’t stop there!

Almost sure, you will be required to sign a preliminary contract. Registration is required.

Yes, but how much will it set you back?

Registration in the revenue agency (which is for tax purposes only) has a cost of € 200 plus a revenue stamp of € 16 per page (in any case every 100 lines).

In addition to this, you will have to advance a small part of the registration fee (which you will pay in full at the notarial deed), equal to 0.5% of the amount paid as a deposit.

Apart from that, there isn’t much else to say. The contract is normally registered free of charge by the agency. If you bought it privately, you’ll have to wait in line and go to the nearest tax office to register it.

Compromised transcription cost

The transcription of the preliminary contract is not mandatory but recommended in homes where the sale involves some risk. If you want to understand if it might be advisable in your case, you can have your situation analyzed.

The costs related to the registration are as follows:

• the fixed registration tax (currently € 200.00)
• fixed transcription fees (currently € 35.00)
• the notary’s fee compared to the value of the sale. (about 600 euros for a property of 300,000 euros)

A few more costs, but I assure you that it can save you many future problems!

First home purchase expenses: taxes

The taxes to buy a property as a first home are 2% of the revalued cadastral value, with a minimum of 1000 euros (this method of calculating taxes is called Price-value).

How is the cadastral value calculated? you must increase the cadastral income by 5% (you can find it on the cadastral survey) and then multiply by 110.

Obviously, if you had paid the advance on the registration fee when registering the preliminary, this will be deducted from the payment of the tax at the time of the deed.

If it is not the first house you buy, you may have a tax credit to claim. If you want to find out if you have a tax credit you can find out with me.

To be honest, there would also be another way of calculating the registration tax, which is simply 2% of the purchase value. This road is usually more disadvantageous than that of price-value (you pay more taxes in short) and therefore rarely used.

An interesting thing to know is that in the past (until 2006) the registration tax was always calculated on the price. Subsequently, to avoid false (lower) prices being declared, the price-value discipline was introduced.

In addition to the registration tax, you will have to pay two small taxes, mortgage and land registry, which together amount to € 100.

Costs to buy a first home from a builder

Buying a first home from a builder does not differ in costs, except in the part relating to taxes.

If the seller is a construction company that has been built or renovated in the last 5 years, VAT equal to 4% must be paid, in other cases, you will pay the registration tax as described in the last paragraph (in addition to the mortgage and cadastral tax ).

In the specific case in which you buy a house directly from the builder, without agency intermediation, you will obviously not have to pay commissions to the real estate agent.

Notary fees for first home purchase

Notary fees are likewise not set in stone; instead, they vary depending on the area, the professional, and the property’s worth.

They normally have less of an influence as the property’s value rises, and if you also need to take out a mortgage (which means earning twice for the notary), they may even offer you a discount.

The Bersani Decrees (Law 284/2006) also restrict the notary’s charge, stating that if the price-value is utilized as tax computation, the buyer is entitled to a 30% discount on the notary fee.

To give you an idea of what a notary might charge, assume an “average” amount of € 1500 for a purchase between € 100,000 and € 150,000.

Who pays the notary fees?

In general, according to the law, the costs of the notary and the stipulation are borne by the buyer.

However, different agreements can be made, nothing forbids it. The costs could be fully borne by the seller or distributed between the parties.

ATTENTION. If the buyer does not pay the taxes or fees of the notary, the latter could also claim against the buyer!

The buyer and the seller, in fact, are jointly and severally liable for the payment of taxes and notary public.

Costs related to the first home loan

At this point you will feel like you are burning your money, but don’t give up, you are almost done!

If you want to find out which mortgage is best for your needs and immediately understand the feasibility, several online services allow you to do it for free. Personally, I recommend Mutui Supermarket. The costs related to obtaining a mortgage loan that you will have to face are essentially 4:

1) Practical mortgage investigation

The investigation is that phase in which the bank analyzes all the documentation necessary to assess the creditworthiness of the applicant (in a nutshell that you are not a bad payer and that you have sufficient income to support the commitment that the bank loan entails) and the adequacy of the property to act as a guarantee for the credit. It usually has an average cost of between € 200 and € 300

2) Property appraisal

The appraisal is carried out by a technician appointed by the bank and essentially has the purpose of:

Estimate the value of the property to ensure the capacity concerning the registration of the mortgage.

Check for any town planning and/or cadastral irregularities and liens (for example other mortgages).

The cost generally varies between € 150 and € 250.

3) First home purchase substitute tax

The substitute tax for a first home loan is 0.25% of the amount disbursed.

4) Mortgage notary deed

Yes, even for the mortgage you will have to do an act just like buying a house. Basically, you are, pass me the term, “buying money from the bank”.All this means that you will have to pay another notarial deed, the cost is similar to that of buying the house (sometimes slightly higher).

Expenses for first home purchase, conclusions

At this point, you know pretty much everything you need to know about the costs to buy your first dream home!

I know this might scare you, but don’t worry, you can write to me here about your journey. Don’t worry, we have something for all budgets, from free to no-limits assistance in the process of buying your new home.

If you liked the article, let me know with a comment and, if you want, share it! Keeping an informative blog like this takes a lot of work and a simple appreciation makes us understand that all of this is appreciated.

Jacopo Tartaglia
Real Estate Broker, founder and CEO.
info@valenteit.com or +39 379 1668 147