These vary considerably according to the price, whether the property is new or old, whether you’re buying via an agent or privately, and whether you have employed a lawyer or other professionals. Most property fees are based on the ‘declared’ value of a property, which is usually less than the actual purchase price or its ‘market’ value.
The fees associated with buying a property in Italy are among the highest in Europe and may include registration tax, land registry tax, value added tax (VAT), a notary’s fees and estate agent’s fees, mortgage fees and legal fees, as detailed below. Fees are usually payable on the completion of a sale and range from around 9 to 15 per cent for a non-resident (the average is around 13 per cent), although they can be as high as 20 per cent for luxury properties. Before signing a preliminary contract, check exactly what fees are payable and have them confirmed in writing. If you’re a resident, the fees associated with buying a property in Italy can be offset against income tax.
Registration tax (imposta di registro) is the main tax on property and is levied at between 3 and 7 per cent of the declared value or rendita catastale. The amount payable depends on whether it’s your first and only home or a second home, whether it’s a new home and whether you’re a resident, as follows:
Buyers of new properties don’t pay registration tax but must pay VAT (see below).
On your first home, you’re eligible for a reduced tax of 3 per cent. The property must be your principal home for residential use and be located in your present or future comune of residence (or in the comune where you have or plan to have your main place of business) and it mustn’t be classified as a ‘luxury’ home. This concession is theoretically available once only, although this isn’t always the case in practice.
The registration tax for non-residents and those buying second homes is 7 per cent, so if you’re planning to become a resident in Italy it will pay to do so before buying a home there.
If you’re buying an agricultural property, you must pay tax at 10 per cent, although it may be possible to have it ‘de-ruralised’ (deruralizzato) before the sale, thus reducing the tax payable from 10 to 7 per cent (or to 3 per cent if it’s your first home). Agricultural land, however, is always taxed at 10 per cent. When a property comprises both an urban building and agricultural land, tax is calculated separately for the building and the land.
Registration tax is payable on completion.
Land Registry Tax
Land registry tax (imposta catastale) is payable on all property purchases and, as with registration tax, the amount payable depends on whether it’s your first and only home or a second home, whether it’s a new home and whether you’re a resident. First home resident buyers of new or resale properties pay a fixed fee of €168.00. Buyers of second homes and non-residents pay 1 per cent of the declared price.
Value Added Tax
Buyers of new properties must pay VAT (IVA), which is levied at 4 per cent for first home resident buyers, at 10 per cent for second home and non-resident buyers, and at 20 per cent on luxury homes (with a rating of A1 in the property register). VAT may be included in the price by the builder or developer, but make sure you check this. If you build your own home, you pay VAT at 4 per cent; if you buy from a company, you must pay VAT at 20 per cent irrespective of the type of property. VAT at 20 per cent is also levied on all professionals’ fees.
There are various fees associated with mortgages (spese istruttoria). All lenders charge an arrangement fee for establishing a loan, usually around 2 per cent of the loan amount. There’s a mortgage tax (imposta ipotecaria) of €129.11 for resident first-home buyers and 1 per cent otherwise, and a fee of 0.25 per cent (imposta sostitutiva) is payable to the notary (notaio) for registering the charge against the property at the land registry (catasto). Most lenders also impose an ‘administration’ fee of around 1 per cent of the loan value, and it’s compulsory to take out insurance cover with the lender against fire, lightning strikes and gas explosions. The insurance is usually a one-off payment of 0.21 per cent of the property’s value and valid for 20 years.
Notary’s fees depend on the price of a property and are higher (as a percentage of the selling price) on cheaper properties. There’s also a fee for each page and each copy of a contract, plus fees for extra services such as taxes (e.g. tax stamps), expenses, legal advice and any payments made on your behalf.
Notary’s fees for the completion vary, although there are maximum charges for each service. Typical fees are €2,000 for a property costing €50,000 and €3,500 for a property costing €500,000 plus fees for other services. Fees for a preliminary contract are around half these. You can obtain an estimate in writing, although fees depend on the work involved and are subject to a surcharge known as the rimborso delle spese generali di studio for ‘overheads’, levied by all professionals in Italy. All fees are itemised in the notary’s bill (parcella). If you buy a home through an agent, he may have an agreement (notaio convenzionato) with a notary (notaio) whereby all notary’s expenses are incorporated into a ‘standard’ fee and agreed with the buyer. Check in advance.
The fees for conveyancing, which is usually performed by a lawyer (avvocato), are usually from 1 to 2 per cent of the declared price of a property or a fixed fee, depending on the amount of work involved. Legal fees are subject to VAT at 20 per cent.
Estate Agent’s Commission
Agents’ commissions (provvigione) vary considerably (e.g. from 3 to 8 per cent) and are usually shared equally between the vendor and buyer, i.e. (1.5% - 4% (+ 21% VAT)
If you buy a new property, you must usually pay for electricity, gas and water connections and the installation of meters. You should ask the builder or developer to provide the cost of connection to services in writing. If you buy a resale property, you must usually pay for the cost of new contracts, particularly water.
Other fees may include surveyor’s or inspection fees, architect’s fees and the cost of moving house.
This article is an extract from Buying a Home in Italy from Survival Books.