How to buy a property in Italy
Once you have selected an Italian property and agreed a price with the vendor, you will need to select a notary ("notaio"). He/she represents neither buyer nor seller, but the Italian State. Although the notaio is strictly impartial, the buyer can insist on choosing one, as it is who buys that usually pays his/her fee.
As a notary won’t necessarily protect or act in your interests, you may wish to employ a lawyer to ensure that everything is carried out to your satisfaction.
There are two main stages when a notary usually becomes involved in a Italian property purchase. The first is the signing of the preliminary contract ("compromesso"): here the presence of a notary isn’t mandatory. The second is the signing of the deed of sale (“rogito”), which must be done in the presence of a notaio necessarily. He/she is responsible for ensuring that the deed of sale is drawn up correctly and that the purchase price is paid to the vendor. He also witnesses the signing of the deed, arranges for its registration (in the name of the new owner) at the Land Registry (the "catasto") and collects any fees and taxes due. The notary in a sense is a precaution to make sure all is done legally, but he/she doesn’t necessarily verify or guarantee the accuracy of all statements made in a contract or protect the buyer against all possible frauds.
The “compromesso”, or “contratto preliminare” is an agreement between buyer and seller stating the price, the date for completion, what exact property is being sold. It also includes various guarantees from the vendor that h/shee owns what is being solds and that the property, object of the sale, can be actually sold as described.
For instance, if he/she declares that there are no rights of way through the property then he/she must be able to sell it without any; if he/she cannot confirm this, then there would be a breach of the agreement and, if the buyer is unwilling to accept that right of way, the vendor must reimburse him/her with double the deposit received. However, for this penalty to be applicable it is essential that the deposit is described as “caparra confirmatoria”.
Registration of the preliminary contract (“contratto preliminare” or “compromesso”)
- The buyer and seller must legally register the preliminary contract (PC) at the “Agenzie delle Entrate” (tax office) within twenty days of the date of signing. If there is an estate agency involved it is also responsible for the registration and the payment of fees and taxes. If the PC is signed before a notary, he/she will have to be paid for their service, but will take care of the registration. If no registration is done, and no notaries or estate agencies are involved, the PC is equally valid and binding, only the two parties would be liable for tax evasion, since for every PC fees and a taxes are due.
- A fixed, non-refundable, registration fee of € 200 is payable together with 0.50% of the deposit (“caparra confirmatoria”) paid before the completion (“rogito” or “atto notarile”). An additional 3% also applies to any interim payments made between the PC and the completion - such as stage payments to a building company. However, the fees paid at this stage are deducted from the final tax bill paid at the completion.
- F23 is the official form (“modulo”) to be used for this part of the registration. It is stamped by a bank to confirm payment, and must be taken to the Agenzia delle Entrate together with the original PC. An official stamp (“marca da bollo”) with a value of euro 16 (bought at a “tabacchi” shop), must be applied to each four pages of the contract. The bollo must be applied even if the PC is less than four pages. An additional bollo must be applied in any case if the lines of the PC exceed one hundred, regardless of the number of pages. Each extra attachment to the PC (maps for instance) must also carry a bollo. The receipt from the Agenzie delle Entrate must be presented to the notary when the final rogito is signed.
- If the purchaser changes his/her mind about the deal, the deposit is forfeited. If it is the vendor who cannot meet the terms of PC, or simply withdraws, then double the deposit received must be reimbursed to the purchaser. If an estate agent is involved, then estate agency fees are equally due, even if the PC doesn’t finalize (these fees are usually payable when the PC is signed).
Don’t expect a notary to speak English, or to explain the intricacies of Italian property law. Nor will he/she necessarily point out possible pitfalls in a PC, proffer advice or volunteer any information. The notary should check the following aspects of the sale between compromesso and rogito stages.
- Verifying that a property belongs to the vendor, that it is listed at the Land Registry (“Catasto”) and that he has the legal authority to sell it. The owner should produce a certified copy of the deed. The descriptions of the property at the Land Registry and on the deed should be identical.
- Obtaining a certificate that an old property is still fit for habitation (“certificato di abitabilità”);
- Obtain certificates of inspection for all electrical and gas systems and appliances, which must be inspected annually. These must be attached to the deed of sale (rogito).
- If you’re buying a listed building the notary should check whether the Italian State wishes to exercise its right to pre-empt the sale (diritto di prelazione). He should apply for the right to proceed with a sale after the signing of the PC and the State has 60 days in which to pre-empt it. If that happens the PC becomes void and the seller is obliged to return the deposit received. The notary should also check whether there are any restrictions over the use and possible future sale of the listed property and establish if any illegal restoration work has been carried out or any illegal alterations have been made to a listed building. In that case the building could be theoretically confiscated by the State. You should ask your lawyer to check both these aspects.
Legal Conditions of Sale
You must include the following into the PC as conditions of sale that must be satifisfied for the contract to be legally binding. It is advisable that you or your lawyer investigate the following before completing the sale:
- Check that there are no pre-emption rights over a property and that there are no plans to construct anything (e.g. roads, railway lines, airports, shops, factories) that would adversely affect the value, enjoyment or use of it.
- Check whether there’s a zoning policy (“piano regolatore”) in the town or area that may affect a property you’re planning to buy.
- If you buy a rural property (casa rurale), and if all or some of the neighbours are farmers, they have by law the right to buy the property for the same price that has been agreed with you. This law allows farmers to buy adjacent buildings or land for up to two years after it has been sold. To avoid this, you can have your vendor or lawyer draw up a document asking the farmer to confirm within 30 days whether he intends to exercise his right of purchase (at the same price stated in the PC). If the farmer doesn’t declare his intention to buy the land within this period, he automatically waives any right to buy it in the future.
- Check rights of way (“servitù di passaggio”). Land may have a mandatory right of way for a neighbour whose only access is via your land; this may be permanent or renewable.
- Ensure that building permits and planning permissions are in order and that they were constructed in accordance with plans and permits. Any modifications, renovations, extensions or additions (such as a swimming pool) must be included on the plans and be authorised. Plans must be checked against the cadastral plan at the Land Registry. In cases where a property has been inherited, check whether each inheritor has agreed to sell. Heirs who haven’t been contacted have up to five years to contest the will.
- Check that there are no encumbrances, e.g. mortgages or loans, against a property or outstanding debts. All unpaid debts on a property in Italy are inherited by the buyer. If you buy a property on which there’s an outstanding loan or taxes, the lender or local authority has first claim on the property. Any debts against a property must therefore be cleared before you sign the deed of sale (rogito). Enquire at the town hall whether there are any unpaid taxes such as property tax or other charges outstanding against a property.
Il rogito - The completion of sale of property in Italy
Completion, as we have previously said, takes place before a Notary (“Notaio”) and his/her involvement is indispensible. Basically a government official, the Notaio witnesses the transfer of title from one party to another and collects the taxes due on the transaction. With all parties present he will identify them, one by one, and then read through the completion document (“Rogito”) in detail making sure that everyone understands what is being bought and sold. He will need proof that taxes and dues have been paid and he has to have from the Land Registry “visure ipotecarie” to prove what, if any, mortgages or debts burden the property.
With all in agreement he/she will ask each party to sign, then will sign and stamp the document in his/her turn. It is at completion that you, as the buyer, must pay the remaining balance of the price of the property, plus the taxes (reduced by the amount advanced at the time of the PC’s registration), and the notary’s fees. The vendor must also pay his taxes if there are any due. If the parties have used the services of an estate agency they will be asked to declare its the name, VAT code, registration number at the Chamber of Commerce, amount of the invoice and manner of payment. Where the notary finds that the sale has been transacted by an irregular estate agent (one whom is not registered at the Chamber of Commerce) he must inform the authorities.
Once the transaction has been completed the Notaio will register the new title within twenty-one days. If you have taken out a mortgage he will also register the mortgage deed. It may be some weeks, therefore, before you actually receive your copy of the registered title deed.
Italy property - Taxes and Fees
Agent negotiation fee
If you buy via an estate agency, then a fee (usually between 2.5% and 3% of the purchase price) is agreed at the outset between agency and purchaser, and is paid on the successful completion of purchase of a property. If you are dealing direct with the vendor of the property, then this fee is obviously not payable.
Italian Property purchase tax
If you buy a property from us you will have to pay 4% VAT if it is your first purchase, and the place where you will elect your residency. Otherwise it will be 10% of the price of the property declared on the deeds. If you are able to qualify then you should try to obtain Italian residency.
As a rule of thumb we can say that in our case these fees will amout to approximately 1% of the value of the property, but it can be even less than that.
Since it is the buyer who normally pays those fees, he/she is usually the one who chooses the notary. Of course it is always possible to ask for an estimate of costs before deciding to choose one rather than another.
Italian property survey fees
The Geometra's fees vary depending on what work is involved in the conveyance and is usually of the order of €250.
Italian property Capital Gains Tax
Whilst there is no Capital Gains Tax if the property is sold after five years of ownership, a vendor is liable to pay CGT if the property is sold earlier. If the vendor is a private individual the CGT is levied at 20% of the increase in price of resale.
It is also worth remembering that the vendor is responsible for producing the required documentation on the property for the sale to take place; so any missing documents have to be procured at the vendor's expense.