Investors Guide to Italy

The Purchasing Process

As there are no restrictions for foreign ownership on property purchases in Italy, the purchasing process is considered to be straight forward. It is advisable to use a lawyer who specialises in Italian property as they will understand all of the required processes and be best able to advise clients on their purchase.

While it is not a legal requirement to obtain a lawyer for the purchase of property in Italy, it is highly advisable. The legal firm will be able to ensure that the property being bought, whether it is off-plan, under construction or fully built, fully complies with regulations and is a safe and secure purchase.

If purchasing within a new development, the payment process will largely depend upon the developer. While some developers in Italy will accept an initial deposit of 20-40% of the purchase price with the remainder payable upon completion, others will require staged payments throughout the construction. Initial holding deposits can also vary and are often between 2 -6,000 Euros. The holding deposits are normally subtracted from the total reservation deposit, payable between 2-4 weeks of placing the holding deposit. It is during this time that the buyer’s lawyer will be examining the legal documents to advise their clients whether the purchase is safe to go ahead.

Fees & Taxes

The total associated costs for purchasing an Italian property rage between around 7.5% and 18.5% of the purchase price. The variations take into consideration the price of the property, with luxury homes being taxed at a higher rate. If the purchaser is an Italian resident will also make a distinct difference to the associated buying costs. If buyers are planning to become an Italian resident prior to purchasing, it is advisable to make the arrangements well in advance of the making the purchase to take into account any potential delays relating to document processing.

• VAT is charged at 20% on luxury properties. 10% for a non-resident and second home buyer. 4% for a first home resident buyer.
• Registration tax is 3% for residents and 7% for non-residents
• Land Registry tax is 2%
• Cadastral tax is 1%
• Registration tax, land registry tax and cadastral tax is exempt from those purchasing a new property. A new property is considered to be one that has been constructed or reformed within 5 years of the purchase. Instead buyers falling into this category will pay a fixed fee of around €170, plus VAT of between 4% and 20%.
• Notary fees are between 1% and 2.5% and are based on the property price, while also being subject to 20% VAT
• Legal fees are usually between 1% and 2%, plus 20% VAT

Financing the Property

Arranging financing for the purchase of an Italian property is considered to be a straight forward process as the property market is well established. Buyers can arrange to release equity from an existing property or take out a mortgage from an Italian bank. Purchasers wishing to obtain a loan from a bank in their home country rather than an Italian bank will be effectively paying for the Italian property purchase with cash and the loan will exist only within the country it was obtained.

To arrange a mortgage from within Italy, a bank account will need to be set up. The Italian mortgages are based whichever is the lower amount of either the declared value or the purchasing price. Depending on the bank or financing company used, the repayments can vary, although there is usually a maximum limit of 30 years. Often the minimum loan amount is around €25,000, and can be obtained up to the age of 75. Fixed rate loans can be arranged, yet often banks will provide a variable loan.

The maximum loan to value amount is 70% of the value of the property and proposed rental income for buy to let investors will not be taken into account. All loans will be arranged in Euros and proof of the minimum income will need to be provided. More about overseas property finance

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