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Buying Real Estate in Italy
- In Italy both the buyer and seller pay the Italian Estate Agent Fees, usually between 2% and 3% of the purchase price + Value Added Tax (IVA, currently 21% of the purchase price) because they have to act on behalf of both parties, unless the buyer is coming from another company.
- Agents in Italy must be licensed to collect commissions. They can be either salary people or paid on commissions. There is no rule about this.
- Commission is usually paid at the final deed if it takes place shortly, otherwise it can be divided 50% at the Preliminary contract and 50% at the closing.
Fees Associated With Buying In Italy
This is only a guide and the exact fees associated with buying your property will be outlined for you before you start the sales process. There are several registration taxes:
- The purchase tax is 3% if the buyer purchases the property as a first home and applies for residency in the area and the vendor (seller) is a private person. 4% is applied instead if the vendor (seller) is a corporation. 10% if the property is a “second/third” private home.
- The basic Notary fees are fixed by law and are charged according to the price of the property - they range from 1% to 2%. The Notary is chosen by the buyer.
- If the buyer needs the advice of a lawyer, he will have to be paid by the buyer.
- On second homes once a year a tax called ICI is due and is calculated on the value of the property according to the Cadastral registration.
The Land Registration tax is the main tax on real property. This is levied at 10% of the declared value for 'urban' property, and 17% of the declared value for 'rural' property. Most houses, even in the most remote rural areas have been 'urbanized', and 'rural' property refers to land or land with an agricultural building on it. In some cases, the property being sold is owned by a corporation, in which case I.V.A. (VAT) at a rate of up to 21% is payable on the declared value instead of the Registration Tax.
The declared value is based on the official rateable value of the property, which depends on the local commune (local town hall), the category and location of house and the size. The amount payable depends on many factors including: whether the property is your first and only home; a second home; whether it's a new home; and whether you are a resident.
- New Property: Value Added Tax ( IVA ) is levied at 10% on new (for non-luxury properties) and at 21% (on luxury homes with a rating of A1 in the property register), and is included in the price charged by the builder or developer. If you build your own home you pay a reduced rate of IVA at 4%.
The person buying the house may attend in person before the Notary, but, if this is inconvenient, arrangements can be made for a Power of Attorney (called Procura) to be granted enabling another person to attend on their behalf. This must be in the Italian form and signed in front of a Notary or an Ambassador. Your lawyer may appoint an associate in the area to sign on their behalf. However, you can have a Power of Attorney for a signature drafted in your home country.
Types of Contracts
Generally, there are three steps involved: proposal of purchase, preliminary purchase (called Compresso), and final purchase or deed (called Rogito).
Preliminary Deposit - A preliminary deposit is usually 10% of the purchase price. With this you reserve the right to buy the property for a fixed period of time. In the meantime, the agent will submit your offer to the Vendor. If it is accepted, you fix the date of the Compromesso. If the offer is not accepted, you will receive your money back. If after the vendor (seller) has accepted your offer, you change your mind, then you will lose the deposit.
Preliminary Contract (Compromesso) - This contract requires you to pay between 10% and 30% of the property price and commits you fully to purchasing the property, unless the vendor (seller) has a problem with proceeding.
Final Deed (Rogito) – This contract is the final act that takes place in front of the Notary once the full amount of money is transferred to the vendor’s bank account.
Steps for Buyers
- Foreigners can buy in Italy without restrictions.
- Buying a house in Italy is not complicated, but it is important to choose a good legal advisor who must ensure that the property you buy has: good title; appropriate planning consent; and is free of debt, charges and other burdens. Usually the real estate agent checks all of this in advance. The Notary is also a choice for the role of legal advisor.
- In order to buy property in Italy, you need to be registered with the Italian tax authorities and to have a tax identification number (called Codice Fiscale).
- The money will have to be transferred to a Bank with a headquarters or representation in Italy where a Bank account will have to be opened and this must be concluded before the final deed is transferred.
- Mortgages are available to foreigners but not all banks provide this possibility.
Type of Buyers
- Italians usually buy in USA: Florida or NY are the most preferred locations or London, Paris and Spain (mostly seaside locations)
- Foreign buyers varies, mostly depend from where they want to buy. In most cases it is a second home, but some are looking to move permanently.
- # of investors looking hotel and/or luxury resorts are growing
This is a tough argument. In Italy we have just started to have 3 or 4 MLS system but still a minority of the companies have applied and still not all the properties are uploaded. Real estate here has always been a selfish market where the less info were given, the better it was. In the past years it was almost impossible to have floor plans in advance or exact addresses. Now this has finally changed at least in most of the companies.
In Italy agencies usually work only with exclusive mandates which help to feel secure from outside operators and in this case they are more willing to share buyers. Taking from both parties (buyer and seller) the general rule is “I take from my side, you take from yours” when a co-operation is successful. Only recently the idea of “gaining less, but often” has taken place into some of the Italian brokers mentality and this is probably due to the crisis that has invested the market, who brought the more intelligent companies to share and provide more services to both sellers and buyers, and this is the reason why a small commission is due also from the buyer (usually less than what the sellers pays).
But the Internet has given buyers a world of possibilities. They can choose properties from many agencies, and usually they don’t have a preferred agency unless a friend told them to go with that company. So it can happen that a client visits 5 properties in a day with 5 different companies. And here is were the non security raises. We are not ready yet to be able to show a client everything that is available on the market. The one on the MLS system are now very much into this and can access to many offers: they work a lot on the buyers side. The others still grab the buyer feeling unsecure.
The advice is to always tell your clients to trust their brokers and not go to look for properties on their own with other companies… if they see something interesting they should ask their agent to contact the agency and fix an appointment. By doing this it will also be easy for them to get a very good discounted commission from their appointed agent, while they will probably have to pay the full one to a company that doesn’t know them. Foreign buyers (or sellers) should appoint ONLY ONE agent to be their eyes and voice in the country they want to buy and stick with him. They’ll be served and advised professionally: at this point they will be so satisfied that paying something would sound natural.
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