KNOWLEDGE BASE

PROPERTY OWNERSHIP

Buying a Property in Italy

Introduction Reservation Offer (Proposta Irrevocabile D'acquisto) Preliminary Contract (Contratto Preliminare Di Vendita) Deed of Sale (Atto Di Vendita) Additional Information Ownership / Costs Estate Planning Taxation

INTRODUCTION

In Italy the purchase of a property has three key stages:

  • Reservation Offer (Proposta irrevocabile ďacquisto)
  • Preliminary contract (Contratto preliminare di vendita)
  • Deed of Sale (Atto di vendita)
Back to top

RESERVATION OFFER (PROPOSTA IRREVOCABILE D'ACQUISTO)

The Reservation Offer is usually made by an estate agent but is not mandatory when purchasing directly from the seller (private sale).

The signing of the “Proposta irrevocabile dacquisto” usually secures the removal of the property from the market for a limited period of time normally 15 days. During this time your solicitor assisted by a surveyor will make the necessary searches to ascertain the property is free from encumbrances e.g. debts, mortgages etc.

At this stage a small deposit is held in escrow, usually by the solicitor or estate agent until the offer is formally accepted (signed by the vendor) at which time the deposit will be considered partial payment of the purchase price. If the offer is not accepted the deposit is returned to you.

NB: The reservation offer is only binding upon the buyer until formal written acceptance by the vendor, at which point it becomes a legally binding contract.

Back to top

PRELIMINARY CONTRACT (CONTRATTO PRELIMINARE DI VENDITA)

Once the vendor and purchaser have agreed to go ahead with the conveyance of the property they will formalize the agreement with the “Contratto preliminare di vendita” which sets out the detailed terms and conditions for the sale. Some Estate Agents, especially when finalizing private sales, elect to leave out this part of the purchase process. It is essential that you have engaged a reputable solicitor to handle the purchase of the property and draft this contract where possible or at least examine it and advise you of the detail and implications before execution of the document or the implications of omitting this part of the purchase process.

One of the legal elements of the preliminary contract is the payment of a deposit (caparra confirmatoria), usually a minimum of 10% of the purchase price. The deposit is non refundable if you back out of the contract without a valid legal reason. However if the vendor changes their mind about the sale he/she will have to refund your deposit in full and you may also have the right to claim an equal amount to the deposit through the Italian Courts.

The preliminary contact includes the date of completion in front of a Public Notary who is also charged with paying all the registry fees and cadastral taxes and carrying out all the necessary searches on the property.

Back to top

DEED OF SALE (ATTO DI VENDITA)

The deed is drafted, in English and Italian, by the Notary and has to be compliant with the preliminary contract “Contratto preliminare di vendita”, Upon execution of the deed, by both parties, the balance of the purchase price is paid to the Vendor and the keys are handed over to the purchaser. If the purchaser cannot be present in person a Power of Attorney can be granted to the acting solicitor who will then sign on his/her behalf.

The Notary, will transfer legal title of the property at the Ufficio delle Entrate and register the change at the land or building registry, a copy will then be given to the new owners after the registration process is complete, usually one month.

Back to top

ADDITIONAL INFORMATION

  • Prior to completion the buyer must obtain an Italian tax code number (codice fiscal)
  • Further tax advice should be sought as to the advantages/disadvantages of becoming resident in Italy and the appropriate vehicle for property purchase.
  • Estate Agents fees are split between the buyer and seller in Italy (3% + IVA for seller and 3% + IVA for buyer)
  • Notary fees are circa 1% of the purchase price
  • The overall cost of purchasing property in Italy is circa 10%-12% of the purchase price
Back to top

OWNERSHIP / COSTS

  • 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 ratable 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%.
Back to top

ESTATE PLANNING

Estate planning is part of life, whether it involves standard transactions or a luxury property, most people already have thought through who shall inherit upon their death. Independent tax advice should be sought before purchasing a property in Italy or becoming tax resident, in order to identify the possible scenarios to then delineate the legal strategies to execute under each scenario especially as many governments are under pressure to increase their revenue and may elect to do so via “inheritance tax adjustments”.

By adopting the proper strategy, a property owner can legally avoid or minimize the impact of succession taxes, in whatever form they might be, at the time of succession. For luxury property investors it is often valuable to investigate the possibility of purchasing property through a corporate vehicle, i.e. a company (possibly held by a Trust or Foundation) to hold full or partial interest in the property.

If the property is owned through a company, it can be transferred to other “persons” either prior to or after the death of the company owners. A transfer of ownership in this manner is not subject to real estate transfer taxes and also benefits from the fact that the process entails fewer legal steps to carry out.

The use of a corporate vehicle to purchase an Italian property is not a tax free procedure but taking into account all factors involved on a case by case basis it may be more effective than processing the transfer through a traditional succession process.

If the property has already been purchased, there are still options and strategies to put in place. One of the most effective and generally applicable options would be for the property owner to formally transfer the remainder interest in favor of the “person(s)” who would be designated as the beneficiary in the owner’s will. The transfer can be executed as a deed of donation (also known as gift deed – in Italian “atto di donazione”) or by means of a regular sale (“atto di compravendita. Proper legal and tax advice should be obtained before proceeding with either of the above scenarios.

Back to top

TAXATION

A double tax treaty exists between Italy and the UK meaning the same income is not taxable by both governments. Where you pay tax depends on:

  • Principle Residence
  • Where your income originates
  • What your nationality is

The tax year in Italy ends on 31st December.

Earnings up to €15,000 are taxed at 23% increasing to a maximum of 43% on earnings above €75,001 and over.

IVE (equivalent to VAT) varies from 4% to 2% depending on the commodity.

Back to top
CONTACT A CONSULTANT

A bespoke 'offshore' solution can be complex and requires careful planning and execution. We therefore encourage our clients to contact us directly, without obligation.

While all of our consultants in our offices provide a Free Initial Consultation, the offices listed below have particular expertise in this area and will gladly assist with advice on how to approach your unique challenge.

Alternatively, to select one of our multilingual offices, click here for a list of our office contact details.

OCRA Switzerland Sàrl
Place Saint-François 12B
1003 Lausanne
Switzerland
Tel: 
Fax: 
Email: 
+41 21 643 1026
+41 21 643 1027
ocrach@ocra.com

Languages spoken in this office: English, French, Italian, German

REQUEST A CALLBACK

Legal Warnings | Privacy Policy | Feedback     OCRA Worldwide 1995 -
Disclaimer: Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other
professional advice. OCRA Worldwide does not accept any responsibility, legal or otherwise, for any errors or omission.