Property Purchasing Procedure in Italy
Property purchasing in Italy for Italian citizens and foreigners has no legislative restrictions. The Italian Government confirmed legal parity of Italians and foreigners in "Equality Pact", which gives them equal rights to buy property in Italy. We describe some general points of buying an apartment, townhouse, villa or other object in Italy.
Getting of tax identification code (Codice fiscale)
So you weigh the "pros" and "cons" of property you liked in Italy and decided to buy it. In the local police office you must obtain individual tax number (Codice fiscale), which is mandatory for any foreigner who wish to enter into any financial transactions (rent, purchase, sale, etc.) in Italy. This individual tax number gives the right to open a bank account. Then we advice to turn to a qualified interpreter as all the documents in Italy are made in Italian language.
Purchase Offer (la proposta di acquisto)
The next step is a draft of purchase offer, which is made by a representative of a real estate agency or a notary and signed by a buyer and a seller. After offer of purchase, a buyer has to confirm his intentions and the availability of funds, so he sends a deposit of 10% of flat or villa value to the seller. It serves a kind of guarantee and an incentive to implement the terms of the transaction.
Deposit (deposito cauzionale)
Please pay attention, how Italians formalize deposit in documents. If the deposit is registered as «caparra confirmatoria», in case of deal cancellation by the buyer, it remains with the seller, and if the initiator of deal cancellation is the seller, he has to pay double value of the deposit to the buyer. If the deposit is called «caparra penitenziale», in case of deal cancellation the amount of penalty, which is paid by the Party that cancelled the deal, is specified in the documents. At this step it is important to check the property, specify whether it is insured, if the seller is its legal owner, etc. It is better to turn to consultant for support.
Preliminary contract (Il compromesso)
Within 30 days from the date of purchase offer signing, it is necessary to draw up and sign the preliminary contract with a notary. This document includes banking details and information of the seller and the buyer, the description of the property, indicated price, method and date of payment, and other terms of the transaction. A notary checks authenticity of information, compliance with Italian law, circumstances that may prevent the deal. If the contract meets the requirements of Italian law, the buyer makes a deposit of 10-30% of the total value of the property and thus the seller loses legal right to cancel the deal at its own initiative.
The final contract (Il Rogito)
The final step in the process of property purchasing property in Italy is drafting and signing of the final (main) contract. After the parties of the transaction sign the contract, the buyer gets ownership and becomes a new owner of the property. As the contract requires strict compliance with numerous legal and financial formalities a notary should take part in its drafting and reassure transfer of ownership from the seller to the buyer.
Typically, the procedure of signing the final contract is held in a notary's office, where the he verifies the correctness of the contract and reads it aloud in the presence of all interested parties of the deal. At the same time, it is better if the buyer has an interpreter or a trustee with a good knowledge of the Italian language. If everybody understands all the articles of the contract correctly, and if everybody agrees with these articles, the buyer pays the remaining value of property, taxes, registration fees, notary fees, and then signs the contract. Afterwards the notary will send the signed contract to be registered in the state agencies of Italy.
New owner registration (Registrazione)
The notary performs procedure of the registration of the property new owner in Italy. He transmits the final contract signed by the buyer and the seller to the real estate chamber, which registers the property rights. Registration terms in Italy depend on the region and the officials, and may vary from 2 days to 2 months. After registration the buyer receives the cadastral statement and a copy of the notarial act.
Agency and Commission
Calculating the total and final value of the property in Italy you have to add commission fee of the agency to the indicated price of the property. Usually it is around 3-5% of the property value and also VAT for the commission (22 % of commission fee). Besides the Buyer pays notary fees, professional translator services, and all the taxes stipulated by the Italian law. You may have to pay insurance, which annual price is about 2% of the total market value of the property.
Notary and Translator/ interpreter
You cannot understand all the intricacies of the Italian legal proceedings without the notary and the translator/ interpreter. You cannot sign the final contract (Contratto notarile di compravendita) without the notary. The interpreter helps to understand the details of the deal and can bargain with the seller on your behalf. Payment of interpreter services is provided on a contract basis and notaries get a fixed interest rate, which can vary depending on the complexity of the deal, but usually does not exceed 3%.
Buying a new residential property from the developer the Seller pays the following taxes:
- 10% VAT (20% VAT for elite real estate)
- Mortgage tax (registration fee) - 200 euros
- Cadastral tax - 200 euros
- Stamp duty - 200 euros.
As a result, tax for purchase of a new property is 10% of the sale price of the property plus 600 euros.
Buying property at secondary market the Seller pays the following taxes:
- Stamp duty - 9% of the sale price of the property
- Mortgage tax (registration fee) - 50 euros
- Cadastral tax - 50 euros
As a result, in this case tax is 9% of the sale price of the property plus 100 euros.
Thus, the total value of real estate in Italy includes interpreter and notary fees and taxes, which are about 13% of the price of the object. Real estate agency commission is added to this value.