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To Be Or Not To Be…..Resident
By admin | June 12, 2008
During your search for an Italian property you will at some point be asked if you are going to be resident. It may even be suggested to you that you may wish to be resident as it will save you tax on the purchase of the property. We will examine the actual tax issue separately but for the purpose of this argument you can take it as a fact that if you declare residency then your first house in Italy will attract a much lower rate of ‘stamp duty‘.
We spotted the following on a prominent website:
“The tax on your first property purchase in Italy is 3% (4% if buying the property from a company). However you must obtain residenza (residency) within 18 months of purchase otherwise you will have to pay an additional 7% plus interest and a fine. You should then spend 183 days of each year in Italy although with the relaxation of border control in Europe now it is difficult for anyone to check. It is likely that the police will visit the house to check that you live there. On your second house the purchase tax rises to 10%. The way round this though is to buy the first property in your name and the second in the name of your spouse thereby qualifying for 3% in both cases!”
The implication is clear - lie about being resident to save tax! We must impress upon all purchasers that it is an offence to claim the ‘prima casa‘ discount if you are not going to be resident in Italy. In any event, being resident brings other tax implications with it. We recommend that you take professional financial advice before becoming a resident.
There are many estate agents who will try to persuade you that it is ‘the done thing’ and perfectly acceptable. You have been warned!
Topics: Essential reading, Uncategorized |
June 26th, 2008 at 2:01 pm
Great site! Thanks for all the great info!
June 26th, 2008 at 2:07 pm
Thank you for that advice. Some agents do suggest being less than completely honest and I thought that it was trouble.
June 26th, 2008 at 3:44 pm
Nice
July 4th, 2008 at 5:44 pm
This is really helpful information. Thanks - great site
July 7th, 2008 at 6:41 pm
Ah, but unless you have a pre-nup agreement with your spouse, even if you buy one property in your name and one in your spouse’s name, you will still have to pay the higher (10%) rate of tax on the second property.
July 8th, 2008 at 10:22 am
Thanks, Ellie. More evidence against trying to fiddle!