The first step to purchasing property in Italy is to hire a real estate attorney, to protect buyer’s interests. Although the real estate transfer process is a regulated process, it’s potentially biased against the buyer. Must also keep in mind that Italian law provides for pre-contractual liability: in the event that buyer feel aggrieved by the seller’s unfair behavior, he can file charges to be reimbursed for expenses.


The offer

Once have chosen the property, buyer makes an offer. Normally, must pay between 1 % and 3 % of the purchase price as a gesture of good faith. Unfortunately, an offer of purchase is only binding on the buyer; the seller may still consider other offers. It is best to specify a time limit in the offer document, so as not to be left hanging by the seller (and be careful with standard offer schedules, that turn automatically to preliminary contracts and don’t protect buyer’s interests!)

The preliminary contract

If the seller accepts, the deal becomes binding on both parties. A preliminary contract is then drawn up (better if by the buyer’s attorney), containing the sale price, the amount to be paid as deposit, the completion date, the land boundaries and details of the property, and any other relevant clauses (i.e. rights of passage). Upon signing of the preliminary contract, the deposit is raised to 10 % to 20 % of the sale price. In the event that buyer decides not to pursue the purchase, the contract will be forfeited or the seller may seek legal action to enforce the purchase. On the other hand, if the seller backs out, he will be liable to pay double the amount buyer has given as deposit.

The notary performs due diligence

Closing usually takes that the notary public (notaio) has the responsibility of performing due diligence – although he is chosen by the buyer, he acts for both parties. When the title search has been conducted to satisfaction, buyer pays the final balance and parties sign the deed of sale or rogito (witnessed by the notary). This requires parties to present a valid identification document, and tax code. The notary will issue a copy of the deed and present copies to the tax office and Land Registry. The necessary government duties must be paid for the sale to be officially registered. Registration protects the property from third parties charging any other interests against it. The notary will also ensure that the utilities have been transferred to buyer’s name, and inform the local police of the change of ownership within 48 hours of signing the deed, in compliance with anti-mafia laws. It takes an average of 15 days to complete all the four procedures needed to register a property in Italy.

Footnotes to Transaction Costs Table

The round trip transaction costs include all costs of buying, lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees.

Taxes

Real estate purchase and sale transactions are subject to the so called “imposta di registro” or, alternatively, to VAT and the so called “imposta ipotecaria” and “imposta catastale”.

The transactions which are subject to VAT are not subject to the proportional imposta di registro but to the fixed imposta di registro, ipotecaria and catastale of 200,00 euro.

 

Imposta di registro ipotecaria and catastale 2018: rates and amounts

Costs for imposta di registro ipotecaria catastale Primary residential property sold by a private citizen Property different from primary residential property sold by a private citizen Property sold by the construction company
Imposta di registro 2% 9% 200 euro
imposta catastale 50 euro 50 euro 200 euro
imposta ipotecaria 50 euro 50 euro 200 euro

 

Imposta di registro, catastale and ipotecaria 2018: pursuant to D.L. n.104 of 12/09/2013 following rates are in force to date.

  • 2 % imposta di registro on primary residential property.
  • 9 % imposta di registro, catastale and ipotecaria on different kinds of properties that are transferred upon payment,
  • in case of transfer of the primary residential property the imposte ipotecarie and catastali are each one due for the fixed amount of 50 euro.

Imposta catastale ipotecaria registro 2018 with tax relief on primary residential property:

The imposta di registro, ipotecaria and catastale with tax relief on primary residential property due from a private citizen is equal to 2 % instead of the current 3 % and the imposte ipotecaria and catastale have to be paid in the amount of 50 euro.

If the property subject to the tax relief on first home for young couples or on first home is sold by a construction company, in addiction to 4% VAT the buyer will have to pay 200 euro as imposte di registro, ipotecaria and catastale.

Examples of calculation of the imposta catastale ipotecaria and di registro on primary residential property:

If you buy a primary residential property for 200.000 euro from a private citizen, the imposte di registro, ipotecarie and catastali will have to be paid as follows:

  • 2% imposta di registro on euro 200.000: euro 4.000,00;
  • fixed imposta ipotecaria: 50,00 euro;
  • fixed imposta catastale: 50,00 euro.

If the primary residential property is sold by a construction company, the imposte di registro, ipotecarie and catastali will have to be paid as follows:

  • 4 % VAT on 200.000 euro: 8.000,00 euro;
  • fixed imposta di registro: 200,00 euro;
  • fixed imposta ipotecaria: 200,00 euro;
  • fixed imposta catastale: 200,00 euro.

Imposta catastale ipotecaria registro: fixed amount of 200 euro

Real estate purchase and sale transactions, settled after the entry into force of the Decreto Legge n.104 of 12/09/2013, that are not subject to the proportional imposta di registro, are subject to a fixed imposta di registro, ipotecaria and catastale of 200,00 euro instead of the previous 168,00 euro.

Reduced 4 % and 10 % VAT

No modification was envisaged for transactions subject to VAT alternatively to the imposta di registro. Those are still subject to the reduced 4% VAT rate when concerning primary residential properties and to the 10% VAT rate in all other cases.

When the transaction is subject to VAT, the taxable base for the calculation of the imposta di registro, ipotecaria and catastale is not the cadastral value of the property but the price fixed by the parties.

Agent´s Fee

The standard agency fee, regardless of the type of property (commercial, residential, or land sales), is between 3 % and 8 %, and is usually shared between buyer and seller. The agency fee is payable at the signing of the preliminary contract, but parties can always agree with the agent to pay him at the deed of sale closing.

Andrea Cominelli

Avvocato nello Studio Legale Reichel