Buying property in Italy

Who can buy in Italy

There are no restrictions on who can buy property in Italy, no matter if you’re a buyer from the EU or outside the EU.

However, you’ll need to obtain an Italian tax code number, known as a ‘codice fiscale’, from local authorities and open an Italian bank account to complete your property transaction.

The buying process in Italy

• Once you’ve found the Italian property you wish to purchase, submit a written offer, known as the proposal of purchase, also referred to as the ‘proposta d’acquisto’.
• This offer outlines the terms of the purchase and is accompanied by a small deposit, which is held in escrow.
• A survey, although not a legal requirement, is recommended to give you an expert opinion on the property’s condition.
• Once the offer has been accepted, the notary prepares the legally binding preliminary sales contract, known as the ‘compromesso’, which both parties sign.
• The ‘compromesso’ sets out the details of the sale, including the completion date and deposit paid, which ranges from 10% to 30%.
• If the seller has defaulted on the property’s mortgage payments, you can claim back twice the deposit, but if you decide to pull out of the sale without a legitimate reason, you’ll lose the deposit.
• The final contract is signed in the presence of a notary, and the outstanding purchase balance, along with any applicable fees and taxes, paid.

Financing your property in Italy

If you require a mortgage when buying property in Italy, securing an agreement in principle outlines how much you can borrow from a lender. This puts you in a strong position as a buyer, increasing your chances of having your offer accepted.

Some sellers won’t accept a mortgage clause within the purchase contract, so speaking to a mortgage broker early is crucial.

In some instances, it’s possible to borrow 100% of the property’s purchase price by combining a mortgage with a Lombard loan.

Fees and taxes in Italy

You should expect to spend between 10% and 12% of the purchase price on costs related to buying a property.

• The registration tax is 2% for primary residences and 9% for non-residents or second homes.
• New build properties are subject to VAT, which is 4% for primary residences and 10% for second homes.
• Notary fees vary depending on the property’s location, value, and the complexity of the transaction, ranging from 1% to 2.5%.
• Owners must pay income tax on the theoretical rental income of the property during the year, but non-residents only pay if the income exceeds a certain threshold.
• The mandatory ‘imposta municipale unica’ tax is collected by the local authority twice a year.
• Capital gains tax is 26% on the profit if the property is sold within five years of purchase. However, it is exempt if the property is sold after five years or if it was the primary residence for most of the ownership period.