Historic Villa in Torrita di Siena, Tuscany, Italy. Listed by Altus Realty

When delving into the intricacies of buying property in Italy, foreign buyers must learn how to navigate the tax and fee structures, legal requirements and regulations surrounding property ownership.

Seeking guidance from experienced real estate agents or legal professionals specializing in Italian property transactions can help streamline the process and avoid potential pitfalls.

To uncover key insights to empower foreign buyers interested in Italian real estate market, JamesEdition talked to Maria Sidelnikova – Florence-based real estate agency Altus Realty.

What services do you provide to clients moving to a new country?

Our distinctive feature lies in providing a 360-degree service, handling financial aspects for clients and assisting with home design or the evaluation of historical properties. When people move to a new country, they don’t have to search for a lawyer, notary, designer, or architect.

Within our team, we have two lawyers who, among other services, handle residence permit applications and provide information on the tax system in the country.

What property tax considerations should foreign buyers take into account? 

Understanding taxes and fees is pivotal for foreign buyers. Our agency uses the direct services of a notary, meaning we ensure transparency in tax calculations before transactions.

Italian property tax is a multifaceted system that introduces nuanced variations based on the buyer’s status:

  • Tax variations: These differ based on buyer status, property type (New vs. resale properties), and whether it’s the first or second residence.
  • Equal tax rates: Applicable to both Italians and foreigners, with no regional variations.

The costs foreign property purchasers may come across in Italian systems include the following:

  • VAT on resale properties: Ranges from 2% (for a first property in Italy) to 9% (for a second property) of the cadastral (fiscal) value.
  • VAT on newly built properties: Ranges from 4% to 10% accordingly but is calculated from the total (not cadastral) value of the property.
  • Registration fee (Stamp Duty Tax): 9% of the cadastral value.
  • Notary fee: A standard 1%, paid jointly with purchase taxes.
  • Agency commissions: Typically 2-5%, with no fixed rate.
  • Legal fee: Around 1% if the buyer wants a lawyer to accompany the transaction.
  • Opening an escrow account:  In our agency, 90% of transactions take place through an escrow account, which is a reliable tool for transferring funds
  • Special considerations: Historic properties.

Buyers interested in historic properties will encounter additional fees for assessments.

What is the cost of property assessment in Italy?

This procedure is particularly crucial when buyers are acquiring properties for renovation, such as agriturismo or historic castles and villas. The cost of the assessment depends primarily on the property size and the qualifications of a specialist, Geometra.

For instance, evaluating the condition of a 200-square-meter apartment typically costs around €5,000.

A geometra combines the roles of a technical surveyor and architect. They conduct a comprehensive technical survey of the property, assessing its condition and measuring the square footage to ensure alignment with the cadastral records.

Are there incentives and deductions for purchasing historic properties?

While government subsidies for property restoration are a well-known draw card for those looking to purchase, they primarily target non-luxury real estate. Historic properties in premium segments are sought after, with no additional funds allocated for restoration.

Exceptions exist in regions like Calabria, where the government supports restoration efforts in semi-abandoned villages. In some of these cases, the government is offering financial incentives of up to 30,000 euros for foreigners to purchase property in these small villages to prevent them from crumbling. These villages typically have a population of around 2,000 people and are in some of Italy’s most remote areas.

If you’re thinking about renting out your property in Italy, what taxes do you need to consider?

It’s a good idea to talk to an accountant for advice. The tax on business income in Italy is calculated using a progressive scale, ranging from 23% to 43%, depending on your overall earnings in the country. Income from rent contributes to this total.

Notably, Italy’s flat tax program, often favored by affluent expatriates, does not apply to income earned within the country.

What are other costs and taxes related to owning a house in Italy?

There are three taxes related to owning a house in Italy.

Italian Municipal Property Taxes (IMU and TASI) are calculated based on the cadastral value of the property. They are similar to regular property taxes in other countries and typically amount to around 5%, depending on the municipality.

Owners are exempt from this tax for non-luxury real estate if it is considered their primary residence, where they reside for more than 6 months in a year.

However, for properties classified as luxury, owners are required to pay this tax, regardless of whether it is their main residence.

Additionally, there is a third tax, TARI, which is a fixed fee based on the square meters of the house and the number of occupants residing in the property.

What expert advice should foreigners take when buying property in Italy? 

For those entering Italy’s premium real estate market, some top expert tips will make the process a lot smoother:

  • Preparation is key: Study priority regions and identify crucial decision-making factors.
  • Negotiation is customary: Bargain, as discounts of 5-10% are normal for luxury real estate.
  • Seek professional expertise: Engage experts to navigate the nuances of the Italian market including property tax in Italy.

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