Purchasing a property

The following information intends only to be a general guideline and is provided without any responsibility on the part of the real estate agents, but we will assist you with your purchase, and you can draw upon our experiences. It is also not meant to be exhaustive since many details can only be determined at the time of selling or purchasing a specific property. We will assist in securing appropriate legal council to act on your behalf in the purchase of a home. This may be different from what you are accustomed to, but at umbria quality house, we are here to assist you through these procedures.

• Italian law generally does not place any legal restrictions upon the purchase of a property in Italy by non-citizens. Foreigners are in no way treated differently than Italian citizens. There is no special consideration for foreigners in the Italian tax system. Please consult your country’s tax and immigration treaty with Italy in order to fully understand your position with the Italian government.

• Should you choose to use a real estate agent to locate and negotiate the purchase of a property in Italy, you should check with the local Chamber of Commerce to be certain that this agent is licensed to conduct business. Registered real estate agents are identified by   a registration number along with a Partita IVA or VAT tax number.

• It is important to note that all property in Italy is considered freehold, regardless of whether it is an apartment, a farmhouse, a castle or a piece of land.

Generally there are 3 phases which comprise the purchase of property in Italy

At that time when a price and all other items regarding the purchase of a property are fixed or nearly negotiated by the prospective buyer and seller, a written irrevocable offer subject to contract (proposta irrevocabile d'acquisto) is forwarded by the real estate agent to the vendor along with a deposit to the seller (normally around 2% of the offered price).

This deposit confirms the buyer's intention to purchase the property and prevents the seller from initiating any further negotiations with a second party. With the signing of this document, both parties become legally obliged to sign a preliminary contract or sale agreement ("contratto preliminare  or  “compromesso").

The preliminary contract or compromesso is a private contract between the buyer and the seller in which all the details of the final contract are laid out, all the terms and conditions, methods of payment, dates for making of the final contract, and any other details are stated. It provides a description of the property and its structures as they appear in the local City Property Registry Office (Nuovo Catasto Edilizio Urbano) and/or in the local Land Registry Office (Catasto Terreni). In it, the seller warrants that the property is unencumbered by financial and legal liabilities. The seller also must assume complete liability (the terms of which vary by contract) should encumbrances arise from the previous ownership of the property that were not made evident and subsequently expunged at the time of the signing of the preliminary contract.

The preliminary contract can be signed from a distance. Though it is a private deed, we always recommend generating this act by a public notary! He/she will make a title search and see that there are no loans, liens or other impediments on the property, that the property is the exact one that is for sale, and that all permits and permissions for the building are in order. In this contract, the price being paid for the property is stated. At the time of signing the preliminary contract, the buyer usually pays between 20% and 30% of the value of the property. This is called “caparra confirmatoria”, that is a confirmatory deposit and is not held in escrow, but goes directly to the owner of the property.

If the purchaser then defaults on the contract, he/she loses this deposit. If the seller defaults on this contract, he/she has to refund the full amount of the deposit plus an equal amount to the purchaser. The real estate agent’s essential task is fulfilled as soon as the purchase is protected by the preliminary contract.

Within 1-3 months after the signing of the preliminary contract (this date agreed upon within the preliminary contact itself), the final contract is signed by both buyer and seller. This must be signed in front of a public notary. At the signing of the final contract, the property is officially transferred to the buyer and the balance of the purchase price is paid to the seller. The public notary's fee is paid  (according to Italian law the notary's fees are paid by the purchaser) as well as the payments of the government purchase tax and contract registration fee.

This contract in fact is registered in the property registration office (Ufficio del Catasto and the Conservatoria dei Registri Immobiliari.). After the signing of this contract there is a period of approx. 3 weeks before the new owners receive this document.

This document is equal to a title deed and is the document of ownership of the property.  Italian law categorizes property as an exclusive possession of a single person or as a communal possession of a married couple. This categorization is determined by the notary and documented within the notary contract.

1A.  PRIMARY RESIDENCY PURCHASE (PRIMA CASA)

When foreign purchasers, who do not own any other property in Italy, acquire a property (house or apartment) as a primary residency (i.e., declare in the contract that the property they purchase is to be their main place of residence, i.e., that they will live in that property for at least six months and one day per year), then the government purchase tax will be 3% if they buy from a private individual (and is called imposta di registro) or 4% if they buy from a company (and is called VAT). In this case they’ll have to register as residents in the “anagrafe” office of the municipality where their house is located within 18 months of having signed the final contract. Otherwise they will have to pay an additional 7% tax plus interest and a fine. They also cannot sell their house for at least 5 years unless they pay another first house for permanent living or pay the tax difference. 

For agricultural properties, the purchase tax for the agricultural land is 18%, but  if the property will be their place of residence and their principle activity will be agricultural, then the purchase tax will be 11% for the agricultural land instead of 18%.

1B. SECOND HOME PURCHASE (SECONDA CASA)

In any other circumstance, as for a second home purchase the purchase tax amounts to 10% for the building and court and 18% for agricultural land.

Please note that as of 1 January 2006 new tax laws are in force, according to which above taxes if you buy from a private individual, are paid on the registry value, known as “valore catasale” and NOT  the market value stated in the preliminary contract. This “valore catastale” is much lower than the market value. The notary’s fee, however, will be calculated on the market value declared on the deed of sale with a 20% discount.

P.S. When you move to Italy and declare that the property you buy will be your primary residence (la prima casa), you will have a reduction in purchase tax (see paragraph 1a. in this section). When you come to stay, you will have to file for residency permit (permesso di sogiorno per residenza elettiva) at the provincial police headquarters (Questura). This takes about 6 weeks (but sometimes longer), then you can go and pick the permit up at the Questura. Then you go to Comune (Anagrafe Office) to register. Take your permesso di soggiorno with you. Within a month a local police officer will come to your house to check if you really live there. If he doesn’t find you after 3-4 visits, the registration process will be stopped. It takes about 3-4 months to become a resident in Italy, so start early!

In addition to the purchase tax the buyer has to pay the notary fee, which is usually about 2-3% of the declared purchase price of the property + VAT, but charges may vary between notaries. It is to be paid at signing of the final contract. The choice of the notary is the purchaser’s. But as our foreign clients usually do not know anybody, we can recommend one that we have worked with before. Estimates of the registration tax and notary fees are supplied by the notary in advance.

The agency fee or sales commission is payable to the real estate agency once the preliminary sales contract has been signed. In Italy a real estate agent or broker is an impartial, autonomous and independent mediator whose job is to bring both parties to a satisfactory business agreement.  Brokers, therefore, receive a fee split between the seller and the buyer, which for each party is 3% to 5% + VAT of the full purchase price (customary commission now in use in Umbria).

• The annual property tax is called the "ICI" (Imposta Comunale sugli Immobili). This is a municipal tax which is determined by the size of the property (including the surrounding land) and the quality of the structure(s) on the property (whether it is a single apartment, independent house or a luxury villa). Normally, the tax is not very high, especially for country properties (read non-luxury houses).
• There is a local garbage collection tax (tassa per lo smaltimento dei rifuti solidi urbani) too, which varies from municipality to municipality but is usually rather low.

• A valid passport for the person or persons who are going to purchase the property.

• Current address and full name of the person or person who are going to purchase.

• An address in Italy (you can use ours until you have one of your own)

• A Codice Fiscale. Everyone who lives or owns a house in Italy needs to have a fiscal code number (like a social security number or a tax number). This is necessary for the signing of the notary contract and to obtain electricity, telephone and gas contracts. On receipt of a copy of your passport the notary will obtain this for you.

• Bank Account in Italy. It would also be helpful for you to open a bank account here in Italy to facilitate payments to the various bodies such as the electrical, gas and telephone companies. We can help you in arranging this.

We hope that this information has given you some insight into the procedures and implications of buying a property in Italy. We are here to assist you in every possible way. Before, during and after the sale, we will even help you settle into your new home. Please feel free to contact us at your convenience. We are at your service.