One of key stages in our guide to buying Italian property is the need to establish a realistic budget. And the best way to do that is to understand the buying process in Italy and the various costs and fees that will be incurred at its different stages.
The good news is that the process is uniform, regulated by law and not that complicated once you familiarize yourself with the Italian terms.
Italian agents all charge commission on sales but what many foreign buyers find surprising is the fact that the buyer as well as the seller are liable to pay a fee to the estate agent upon the successful completion of purchase of an Italian property.
The usual estate agent's fee is 3% of the purchase price. Of course, if you are dealing directly with the vendor of the Italian property, then this fee is not payable.
On top of the agency fee, there is stamp duty which will be 1% of the declared
value of the property. Unlike many other countries, stamp duty when purchasing a property in Italy does not kick in at a certain level, it applies to all property purchases.
If the property is not new and you are buying from an individual, the purchase tax will be 10% of the property’s declared value if you are non-resident. If you are resident, or undertake to become resident within a year of purchase, the tax will amount to 3% of the declared value.
If you are buying a new property you will be paying a Value Added Tax ( VAT) instead which stands at 9% for non-luxury property and 19% for luxury property.
Note on Declared Value:
The notion of 'declared value' can be a bit alarming for the majority of foreign buyers. The declared value of a property is a notional figure arrived at by local officials based on a book of valuations and it will be considerably less than the real market value.
The official book price of a property, known as cadasdral value
may be, say, €300,000. Yet, the market value and the amount the
property is sold for is €800,000.
The purchaser can then register the property at €400,000 and so
Tax, half the amount of registration tax and stamp duty.
The official value of the property will depend on the commune it is in, the property’s category and its size. The price you actually declare should be decided with advice from your estate agent and the geometra. It must always be more than the official (cadasdral) price.
What causes alarm for many foreign buyers is the fact that the balance between the declared price and the actual price is not stated officially anywhere and therefore has to be paid outside any legal jurisdiction – except for the compromesso, which is usually not a legal document, merely a contract. You should not worry too much, it is just the way this process works in Italy. And usually the notary is very careful before he issues the Rogito (the final contract), to ask whether all parties are happy and have received all monies owing to them.
If this sort of practice is disturbing to you, you can declare the full market value of the property and pay tax on the whole amount. The downside of this is that while you may feel everything is nicely above board, when you come to resell, the value that has to be declared is likely to be much higher than otherwise would be the case. This may put off a prospective buyer – or at least encourage them to demand that you lower the asking price.
You will also need to pay a fee for the notary to prepare the scrittura (Deeds). This is a scale fee based on the declared value, but usually amounts to approximately 2.5% of the declared value of the Italian property.
The fees for the services of a Geometra ( local surveyor) will vary depending on what work is involved in the conveyance. Typical types of checks that can be carried out by the Geometra will include verifying that:
The property matches the Land Registry definition
The property was not built without planning permission
Any work or extensions done, have received approval and have had the relevant taxes paid
The owners as Land Registry Office are the same as stated by the vendor
So depending on the services you ask for, it can cost you anything between €300 to €2000.
If you are taking out a mortgage in Italy, there will be a mortgage registration tax to pay. If the property will be used as the main residence, then the tax will be 0.25% of the loan amount. If the property is a second property, the tax will be 25 of the loan amount.
The sum total is that these costs will add approximately 10 – 15% to the purchase price of the property.
As we mentioned earlier in our guide to buying Italian property , the costs you will incur on top of the sale price of the property will differ depending on whether you are officially resident in Italy or not. To help you understand the difference better table shows a basic total cost breakdown of purchasing an Italian property for €300,000 with a declared value of €200,000.
|Costs and Fees in €||Resident
|Purchase Tax at 3%/10% of
|Estate Agency Fee at 3% of actual
|Stamp Duty (Bolli) at 1% of
|Notaio Fee at 2.5% of declared
|Total charges as a proportion of
* You are classed as a resident in Italy – whether or not you register yourself as resident with the local authority – if you are physically present for more than 182 days a year.
** The charges above do not take into account mortgage commission fees, mortgage valuation fee and the cost of a solicitor, or a geometra, or architect if either is used.
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