Expert Advice on Buying Italian Property
Buying an Italian Property
Buying a property in Italy can be both a dangerous game, and an extremely fulfilling one, with dream-worthy results! The difference can be as simple as getting good advice, from people who:
- know how to buy a property in Italy,
- know the pitfalls, and the
- things to watch for in the buying process
That’s what this site is for. Buying a property in Italy, owning a property in Italy, letting a property in Italy and even selling a property in Italy need not be a nightmare. The system and rules are surely different from anything you have experienced anywhere else and this is why getting the right advice from the outset is crucial.
This site is not intended to replace the independent professional advice that we urge you to take. But here you will find plain speaking, something which in our opinion, is sadly lacking. We have spotted so-called 'independent buyer's guides' which are really fronts for currency exchange companies; PR companies posing as estate agents; even so-called expert international lawyers who give out incorrect information.
We hope that this site will quickly develop into a serious forum for exchange of questions and answers, views and information
Italy is split into regions, much like the counties of the UK. The regions this site specialises in are:
Shopping
By admin | June 12, 2008
Once you own a house in Italy you will need to locate all manner of things from furniture to appliances, garden equipment, towels - the list is endless. We have been asked to create a shopping post so that the professional shopaholics can share their specialised knowledge.
Topics: Share your wisdom, Uncategorized | 4 Comments »
Buying a Car in Italy
By admin | June 10, 2008
So you have bought your Tuscan villa. All has gone smoothly because you took sound, professional and independent advice. Now you want to buy a car. Nothing fancy because you don’t live in Italy but you do spend long periods at your house, especially in the school holidays, and the cost of hiring a car mounts up over a few weeks. You pop into your local second-hand car dealer who has good range of vehicles and you decide to buy one.
For as long as we can remember the Italian law permitted only residents to purchase cars (at least other than for export). In recent years the law was changed, for the better, so that you could purchase a car if you obtained a permesso di soggiorno (permission to stay). Sadly, a step backwards has been taken and you now must be resident in order to buy a car. This effectively means that all those non-resident holiday home owners who wish to have the use of a car must choose between some less-than-ideal options.
Option A - hire a car each time.
Option B - bring a car from home.
Option C - buy a car but put it in the name of a trusted resident.
Option A is convenient but, as we have said, can be costly. Option B is feasible but it has downsides that may not be immediately obvious; imagine that once a year you will have to drive the car back for an MOT Test in order to be able to have a valid road tax certificate! And insurance is frought with problems as many insurers place limits on the time the vehicle can be abroad. The risks of Option C are countless.
Such restrictions are outdated in a modern democracy. They force people to cut corners. Isn’t it better for the Italian economy to have property owners (you don’t have to be resident to buy a property!) spending money with an Italian car dealer, paying Italian road tax, buying Italian insurance and spending money for servicing in Italy, than have them driving around in dubious foreign registered vehicles, some of which you can see at a glance are barely roadworthy and many of which haven’t had valid road tax or an MOT in years?
We can only hope that the Italian Government sees the sense both economically and in terms of security in changing this restrictive law urgently.
Meanwhile, we are pretty sure that somewhere in Italy non-residents will be manging to buy cars. So please add your comments and help create a global picture.
Topics: Share your wisdom | 7 Comments »
Selling a Property in Italy
By admin | June 10, 2008
For every buyer there must be a vendor and it is surprising how many vendors do not know what their obligations are. Laws change and if you have owned your house for some time it is entirely reasonable to expect that you won’t be up to date on current requirements. In this section we will outline the basic steps you need to take in order to sell your property in Italy. Italy is a country where laws are often interpreted differently by different functionaries - so please do post any experiences you have had and we will endeavour to formulate the definitive solution!
Topics: Essential reading | No Comments »
Buy a House in Italy - Step 1
By admin | June 9, 2008
The procedure for buying a house in Italy is not comparable with what you will be used to if you are from the United Kingdom, Eire, USA, Canada and most northern European countries. Basically, if Napoleon never invaded your homeland, the purchase of your Italian house will be a new experience. Here is the process in a nutshell. We will expand each area in detail in separate Posts and as this site develops with your questions and comments.
Proposta di Acquisto Irrevocabile
This document is a formal proposal to purchase. It is not an essential step but can be useful. Let’s say you have been on some form of inspection visit and have fallen in love with a particular property. You don’t have time to organise all the necessary resources to sign a Contratto Preliminare but you don’t want to lose the property. By signing a Proposta di Acquisto Irrevocabile you can gain the time you need.
This purchase proposal will usually be drawn up by the estate agent and will identify the buying and selling parties as well as the property in question. It will set out the price you are offering and the basic terms of the eventual agreement such as when the Contratto Preliminare will be signed and when completion will be. You will leave a goodwill payment, usually in the form of a cheque payable to The Vendor. The proposal will give the vendor a fixed date by which to accept your offer and if it is not accepted within that time the offer loses validity and your cheque will be returned to you. If your offer is accepted the vendor will cash your cheque and then you are both bound to proceed to the next stage.
The Proposta di Acquisto is without doubt the most satisfactory way of making an offer below the vendor’s asking price. Verbal enquiries as to what might be acceptable are not usually very effective. A written, binding offer with some money tends to concentrate the mind of any vendor.
Topics: Essential reading, The buying process | 8 Comments »
Buy a House in Italy - Step 2
By admin | June 9, 2008
The Contratto Preliminare
Once your mind is made up and the price agreed you will be required to sign a Contratto Preliminare (preliminary private contract) and pay the statutory deposit. This agreement between buyer and seller states the price, the date for completion, what is being bought and sold, and also includes various guarantees from the vendor that he owns what he is selling and that the property can be sold to you as described.
For example, if he states that there are no rights of way across the property then he must be able to transfer the property without any rights of way; if he cannot do so then he is in breach of the agreement and, if you are unwilling to accept the right of way, he must return double your deposit. However, for this penalty to be applicable it is essential that the deposit is described as ‘caparra confirmatoria‘.
With the passing of Law 296/2006 (Finanziaria 2007) certain modifications to the purchase procedure came into force as of 1st January 2007. Briefly these are:
The parties (buyer and seller) are legally obliged to register the Preliminary Contract (correctly called ‘Contratto Preliminare di Compravendita’ - referred to by some as the ‘compromesso’) at the Agenzie delle Entrate (tax office) within twenty days of the date of signing. The official Italian estate agency is equally held responsible (responsabile in solido) for the registration and the payment of the appropriate fees and tax.
What does this mean? Firstly, the preliminary contract must be drawn up in four original copies and signed by buyer and seller; one copy each for the parties and the other two for the registration. Within twenty days of this date there is a two-part registration to carry out. The estate agent may accept the task of doing this, receiving payment for expenses, and for clarity will undersign the four copies of the contract. The registration involves a visit to any bank and to any office of the Agenzia delle Entrate.
An amount is payable at the bank comprising a fixed, non-refundable, one-off sum of Euro 168 as registration fee (Imposta di Registro) and a variable amount equal to 0.50% of the deposit (caparra confirmatoria) or 3% of any other type of deposit paid before the completion (Atto notarile). This 3% also applies to any interim payments made between the preliminary contract and the completion - such as stage payments to a building company. However, the variable fee paid at this stage is deducted from the final tax bill at the completion. F23 is the official form (modulo) to be used for this part of the registration.
The original F23 stamped by the bank is to be taken to the Agenzia delle Entrate together with an original preliminary contract. Official stamps (bolli) with a value of Euro 14.62 each, are to be affixed applying the following rules: one stamp per four sides of the contract and an additional stamp for every one hundred lines over and above an original hundred. The bollo must be applied if the contract is less than four sides and an additional bollo if the lines exceed one hundred even if there are fewer than four sides. Each attachment must also carry a bollo. You may want to read this a few times! The Agenzie delle Entrate will issue a receipt which is to be presented to the notary.
It is very, very unusual for a deal to fall through after the preliminare has been signed because the deposit is relatively hefty, for a normal house 30% of the purchase price is fairly standard. With the requirement for the 0.5% advanced tax payment this habit may change. This means that the purchaser does not go into the contract stage lightly, nor does the vendor. If the purchaser withdraws through no fault of the vendor, the deposit is forfeit and, as shown above, if the vendor cannot meet the terms of the preliminare contract - or simply withdraws - then double the deposit must be returned to the purchaser.
Topics: Essential reading, The buying process | 2 Comments »
Buy a House in Italy - Step 3
By admin | June 9, 2008
Estate agency fees, payable by both the buyer and seller, are also payable with the signing of the contratto preliminare. It sometimes comes as surprise to buyers who come from countries with different customs that they have to pay the agency. Remember you are buying a house in Italy, not anywhere else, so why should the rules from home apply in a different country with a different system? If you want to look it up it is article 1755 of the Codice Civile.
In Italian Law the agency is entitled to its fee when the two parties are aware that a contract exists between them. In effect this is when both parties have signed a binding agreement. Strictly speaking this is when a proposta di acquisto irrevocabile has been signed. Where a proposta has been signed, there is no requirement for the agency to wait until the signing of the contratto preliminare before asking for their fees but in practice most agents will wait until the preliminary contract before invoicing you.
It is not the case that agency fees are due only after the sale has completed. And don’t think you can avoid paying the agent because you consider his service in some way inadequate. The law is clear that the agent needs to have caused the transaction to take place in order to be entitled to his fee; sufficient is to have introduced you to the property, vendor or agent handling the sale of the property. As we will see later, the notary (Notaio) needs to see the agency’s invoice and how it has been paid before he can complete the transaction (compravendita).
Where the estate agency is also registering the contract it is, in addition to the fees, entitled to be paid the sum due to the authorities (which the agency will pay over on your behalf) plus their reasonable expenses. This payment is to be made by the purchaser and the time scale needs to be noted. In the event that the contract is not fulfilled it is the defaulting party who is responsible for all costs.
Agency fees may vary but the average figure is 3% from each side. That is, the buyer pays 3% and the vendor pays 3%. Some agencies, especially foreign agencies, don’t wish to appear to be making money from both sides and ask the vendor to increase the price of the property to include a higher fee - 6% or even more - so that they can avoid asking the buyer directly for fees. Another one to be wary of is the agency who offers to sell you a property inclusive of all commissions, notaio fees, geometra fees, taxes and registration costs. In such a case how can you, the buyer, possibly know the real cost of the property?
That the buyer pays the agent is a fact and is nothing to be ashamed of or to be shy about. There is nothing better for you than a transparent deal.
Topics: Essential reading, The buying process | No Comments »
Buy a House in Italy - Step 4
By admin | June 9, 2008
Completion takes place before a Public Notary (Il Notaio) and his (or her) involvement is indispensible. Basically a government official, the Notaio witnesses the transfer of title from one party to another and collects the taxes due on the transaction. Contrary to popular belief the Notaio does not act for both parties; he acts for neither party, being - as stated - a witness. With all parties present he will identify them, one by one, and then read through the completion document (Il Rogito) in detail making sure that everyone understands what is being bought and sold.
If either of the parties does not understand Italian sufficiently they will be required to either give a power of attorney (procura speciale) to someone to act for them or have the transaction conducted in both languages with the aid of official translators.
The Notaio will need proof that taxes and dues have been paid and he has to have ‘visure ipotecarie‘ to prove what, if any, mortgages or debts burden the property. With all in agreement he will ask each party to sign and the Notaio will sign and stamp the document. It is at completion that you, as the buyer, must pay the remaining balance of the price of the property, plus the taxes (reduced by the amount advanced at the time of registering the preliminary contract) and notaio fees. The vendor must also pay his taxes if there are any due.
If the parties have used the services of an Italian agent they will be asked to declare in the atto the name of the agent, fiscal code, registration number at the Chamber of Commerce, the amount of the invoice and the manner in which payment was effected. Where the notary finds that the sale has been transacted by an irregular Italian estate agent (one who is not registered at the chamber of commerce as ‘agente di affari in mediazione‘) he must inform the authorities.
Foreign agencies, agencies which are regular in their own home territory but have no legal establishment in Italy should not be required to provide their invoice copy to the notaio but, as with many laws in Italy, sometimes it is asked for.
Since 22 April 2006 the money laundering rules (antiriciclaggio) have obliged various professionals including estate agents and notaries to maintain a register of transactions for ten years. The register must show the parties, fiscal codes, profession, powers of attorney, property and price. In addition, in order to perform the atto, the notary must have copies of transfers/cheques to prove where the money has come from and where it went.
Once the transaction has been completed the Notaio will register the new title within twenty-one days. If you have taken a mortgage he will also register the mortgage deed. It may be some weeks, therefore, before you actually receive your copy of the registered title deed.
As with all property transactions anywhere in the world, there are additional costs to be paid when buying property in Italy. For the purchaser there are three main items; tax, notary’s fee and estate agent’s fee. For the vendor there are two main items, the tax and the estate agent’s fee. Whilst there is no Capital Gains Tax after five years of ownership a vendor is liable to pay CGT if the property is sold earlier. If the vendor is a private individual the CGT is levied at 20% on a normal house. Also worth remembering that the vendor is responsible for producing the required documentation on the property for the sale to take place; so any missing documents have to be procured at the vendor’s expense.
Topics: Essential reading, The buying process | 5 Comments »
Italian property buyers checklist
By admin | June 9, 2008
If you are serious about buying a property in Italy, you should read our notes on the purchase procedure. Try to remember the following basic points:
- There are no restrictions placed on non-residents wanting to buy property in Italy be you from the EU or most of the rest of the world; there are currently restrictions for Australian citizens.
- We strongly advise that you only use the services of an estate agent fully licensed by the Chamber of Commerce. The internet can be as bad as it is good; someone with web skills may have the best looking site but do they have the qualifications and experience to help you?
- Remember that under Italian law estate agents act for both the buyer and the seller. The agent is required to act in the best interests of both parties. Both buyer and seller have to pay the estate agent.
- If you have fallen in love with something and don’t want to risk losing it you can sign a ‘proposta irrevocabile d’acquisto‘ which is an irrevocable purchase proposal. You will leave a small payment with this. In this way you will have time to sort out your full deposit for the ‘contratto preliminare‘.
- When appointing a lawyer to act for you choose one who is bilingual and who specialises in Italian property transactions, Your family lawyer at home, however much a trusted friend, will be of no use to you unless he has this experience.
- Under-declaration of the purchase price is an offence and must be avoided. All written contracts, however brief, must be registered. All payments must be fully documented.
- On top of the purchase price you need to add extra costs, usually around 10% but any rule-of-thumb is frought with danger as there are many variables. Agricultural land carries hefty add-on costs.
- If your own currency is not the Euro, bear in mind currency fluctuations can make your purchase more (or less) expensive.
Topics: Essential reading | 8 Comments »
Ryanair Flights Perugia-Girona
By admin | June 9, 2008
The announcement by Ryanair that they are introducing a service between Perugia and Barcelona (Girona) is definitely good news. However, do bear in mind that Girona is not exactly Barcelona - it’s about 100 Km away.
Topics: Miscellaneous | 5 Comments »
Restaurants in Central Italy
By admin | May 29, 2008
Do you have a favourite restaurant in Umbria, Tuscany or Marche? Whether it’s an old favourite or a recent find, here’s the place to spread the word.
Topics: Miscellaneous | 10 Comments »