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THE FISCAL CODE
The first thing you need to get familiar with before you buy a property in Italy is the CODICE FISCALE.
You will need this code to open an Italian bank account.
OPENING AN ITALIAN BANK ACCOUNT
It is essential to open a bank account in Italy. The purchase completion and final payment normally happens in Italian bankers’ drafts. It is also essential to get the various utilities paid automatically.
FORMAL OFFER OF PURCHASE
Once you have decided to buy a property, the negotiation starts with an OFFER.
The offer of purchase (proposta di acquisto) must be in writing. If the offer is accepted, the vendor signs proposta di acquisto accepting the offered price. This is binding and means that the seller undertakes not to sell the property to anybody else until a certain date. This letter is to protect the buyer from losing the opportunity to purchase.
It is then important to investigate the title of the property at the “Land registry” (Conservatoria e Catasto). This is to check that the property is registered, that it belongs to the person who is undertaking to sell it and if there are unpaid loans on it.
PRELIMINARY AGREEMENT OF SALE (Compromesso)
The Compromesso is drawn up and this is a legally-binding document which states the agreed sale price, the completion date (Rogito) and any information and rights the property has. This includes the offer of purchase, once accepted, is legally binding. The Rogito is then drafted and it is usually executed 1 to 3 months after the execution of the Compromesso.
DEED OF PURCHASE (Rogito)
The deed of purchase is the final contract or ‘atto notarile’. This is usually signed after the compromesso. It is signed by both parties; the balance is paid, and the property is officially transferred.
Due Diligence means the survey on a property when it becomes subject to a hand-over.
Potential risks linked to the purchase must be identified. Due Diligence consists in a survey of the urban surroundings, construction and installations.
It can thereby be worked out if there are obligations, if the seller has complete ownership of what he is selling, or if collateral security exists.
There are five documents that the notary will require:
Atto di provenienza (ownership titles of the house)
Floor plan of the house
Visura catastale (cadastral document of the house)
Attestato di prestazione energetica (energy certificate)
Building permits if the house was built after September 1967
Seller(s) and buyer(s) identification documents: Passports and tax codes (your realtor will provide you with a tax code for free; the process does not take long)
The vendor is obliged to disclose any, ‘latent defects’ (vizi occulti) in the property. If the vendor fails to disclose latent defects, then it is possible for a court of law to annul the sale, or at least reduce the price paid by the purchaser.
A latent defect is one which cannot be observed by an external inspection of the goods
Property taxes vary according to the type of property, its condition, and its purpose.
Stamp Duty tax is between 2% and 9% of the cadastral value of the property. However, it will never be less than 1000€ regardless of the value of the property.
2% for residents who will be living in the house for 6 months or more, 9% if the property is a second home or holiday home.
Land Registry Tax The land registry tax (imposta catastale) is a fixed fee that varies from 50€ (if purchase from a private seller, to 200€ if purchased from a registered company in Italy.
Mortgage Tax The mortgage tax (imposta ipotecaria) is also a fixed fee that varies from 50€ (if purchase from a private seller) to 200€ (if purchased from a registered company in Italy).
VAT The VAT (value added tax) or IVA, as it is called in Italian, is due on every purchase, and a house is no exception.
If you’re buying from a private seller, no VAT is due; however, varies from 4% to 22% in case you purchase from a registered company. This tax varies according to the fact whether you are buying a primary house (4%) a secondary one (10%) or a luxury one (22%).
Capital Gains Tax The capital gain tax or plusvalenza is proportional to the capital gains you the seller receive from selling the property. It is a tax that only affects the seller.
Here are three aspects to consider about this tax:
Italian banks currently offer foreigners mortgages with the difference between the loan and the value of the property (LTV) of between 50-60% with, in most cases, a minimum mortgage agreement of €100,000. Italian lenders usually require a deposit of 40-50% for non-residents.