A Guide To The Buying Process In Italy
Residential property purchase procedure in Italy
Buying property in Italy should be relatively straightforward but we would always recommend that you instruct the services of a reputable lawyer and notary.
Exchange of Contracts
Compromesso
In some cases the buyer is required to provide a formal written offer (proposta) for the property. They may also be required to put down a bank cheque held in escrow to secure the property, which becomes binding if the offer is accepted.
Upon an offer being accepted, the agents will often produce a Memorandum of sale to send to all parties involved. This serves to help the professionals involved draw up the preliminary contact (compromesso).
The buyer’s solicitor and/or geometra will undertake initial searches, check
conformity with permissions & regulations, and check for any pre-emption rights. He
will then work with the notary (notaio) and the vendor’s solicitor to produce the compromesso, and when signed by all parties this will be lodged with the notary.
At the signing of the compromesso, the buyer will pay a non-refundable deposit
(deposito) of 10-30% of the final purchase price. Agent’s fees are split between the buyer and seller in Italy (3% + IVA for seller and 3% + IVA for buyer), and these may be payable, or at least 50%, at compromesso.
Completion
Rogito notarile
Following compromesso, the notary will undertake any final necessary searches, tie up any loose ends, and prepare the final contract. If the vendor is found to have not declared any important information, the purchaser may withdraw. However, if the purchaser withdraws after compromesso without just cause they lose their deposit. If the vendor withdraws after compromesso, a penalty of twice the deposit level is paid to the purchaser. Please be aware that damages could also be requested from either side under certain circumstances.
Upon signature of the final contract (rogito notarile), the purchaser pays the remaining sum to the vendor, the notary’s fees (circa 1%) which are mandatory, the solicitor’s fees (if applicable), purchase tax (stamp duty) and any remaining agent’s fees. Please note that the purchase tax due will differ on every sale and should be calculated on an individual basis.
The notary, upon final signing of the contract, will transfer legal title of the property at the Ufficio delle Entrate and register the change at the land or building registry.
Additional Information
- Prior to completion the buyer must have obtained an Italian tax code number (codice fiscale); your agent can help in this process.
- Further tax advice should be sought as to the advantages/disadvantages of becoming resident in Italy and appropriate vehicles for property purchase.
- If renovation work is planned, permissions can take up to a year, so the earliest involvement of an architect/surveyor (geometra) is advisable.
- The overall cost of purchasing property in Italy is circa 10-12% of the purchase
price.
- Income tax is payable by all property owners on the theoretical increment of the value of the property during the year.
- Imposta Comunale sugli Immobili (ICI: Council tax) is based on the property’s
rateable value (at 0.5%) and is collected by the local authority twice a year
- There is currently no Capital Gains Tax in Italy for private individuals if the
disposal of a property takes place more than five years after the purchase.
- All foreign owners are advised to draw up an Italian will.
- VAT (IVA) is currently 20%.
This document is intended to give a basic indication of the purchasing process, but should be independently verified in each individual case. Such particulars are not intended to constitute part of an offer or contract.
For further information on the buying process and ownership please contact the
Italian desk on +44 020 7629 8171 or our Radda office +39 0577 738 908.