There are no restrictions placed on overseas property buyers in Italy so you can roam as high and as wide as you like in search of your perfect place. The legal process of buying a property in Italy could never quite be like anywhere else though and many of the terms you may be used to in property acquisition may have very different meanings here - so be careful not to get caught up in how brilliantly Italian they sound!
The buying process can essentially be divided into three stages, the first of which is the initial offer. If you are keen to secure your chosen property it is not unusual to sign a purchase agreement (Proposta irrevocabile d'acquisto), which is binding only on the buyer but dependent upon various conditions. This means that should you back out you will lose your deposit given that the vendor has effectively taken the house off the market. For this reason it is in your interests to make the agreement contingent on fulfilling your criteria (i.e. passing a structural survey) and it is also advisable to place a time limit on this so that, should your offer be declined by the vendor, you won’t waste valuable property hunting time because of their indecision. You will also be required to pay a small holding deposit as a sign of your commitment which is usually around 10%. This may be held by the estate agents and returned to you when you sign the preliminary contract at the next stage or can go to the vendor to contribute to payment on the property.
The Compromesso (a preliminary contract) is the next step in the process and this will commit both parties to the sale. The Compromesso lays out the terms and conditions to appear in the final contract and will include specifics such as; price, date of completion, the nature of the property, as well as any other guarantees made by the vendor. Here you will also have to pay a deposit which is typically around a third of the asking price. Given that the property will have fulfilled the conditions laid out in the initial purchase agreement you should feel secure enough with the property to do this. Before you start to think that the process seems a bit one-sided though it is worth mentioning that if the vendor withdraws at this stage he must pay you twice this deposit.
Finally, you will sign the deed of sale (the Rogito), which transfers ownership of the property and completes the transaction – this is usually 1- 3 months after the signing of the compromesso. The Rogito is drafted by the notary (notario) who represents both parties in the transaction and your presence will be required at the notary’s office. If this is not possible you will need to grant power of attorney to a lawyer. Power of attorney can be granted to an agent but is more complex requiring the buyer’s signature in the presence of a solicitor and ratification by their Foreign office.
In Italy only a notario (notary) can witness the deed of sale and register the sale at the land registry, so paying for their services is compulsory (this is usually on a sliding scale according to the property sale price). The notario is involved from the beginning and performs many of the duties you might expect of a lawyer elsewhere such as checking title deeds, checking planning permission, and performing local searches. As they act on behalf of both parties though it is still recommended you hire your own lawyer to push for your best interests at each juncture.
Other costs involved will be purchase tax which will be 3% if the buyer purchases the property as their first residential home in Italy and applies for residency in the local area, or 10% if the foreign buyer already owns property in Italy or does not wish to apply for residency. It is worth noting that tax here is calculated on the declared value of the property (which is usually very low) rather than the purchase price.
You will also need to pay a geometra (kind of an Italian cross between a surveyor and an architect) to check all documents for the house are in order and that the house adheres to planning regulations. The geometra system is set to change however, and in future you are likely to have to deal with an architecto. Additionally, a local tax of between 0.4 and 0.8%, a stamp duty of 7% as well as a charge to have your utilities connected (usually around 5%). In Italy, too, both the buyer and the seller pay the agent which is usually around 3% for each party.
Depending on the kind of property you are buying, you may encounter the Italian legal principle of Prelazione (third party’s right to buy) which allows neighbours living on adjoining properties the first refusal of the property at the asking price. This arose historically where local farmers might wish to expand their land and so is officially limited today to ‘direct growers’. If this is the case with your desired property then neighbouring farmers will be given 30 days following the signing of the Compromesso to match the asking price. Sitting tenants and parties conducting businesses from the premises also have a right to buy so it is worth being aware of this fact when you enter the buying process if it is going to be applicable to your property.
There is no Capital Gains Tax in Italy and all property owners pay a local municipal tax instead. Imposta Comunale sugli Immobili (ICI) is calculated on the official registered value of the property and is between 0.4 and 0.7% which is usually paid in two instalments in June and December.
Non-residents must still make an income tax declaration annually and this is for any income arising from activities within Italy. This will mean declaring the income from letting a property although you will be able to set this off against repairs, local taxes etc. The remainder is taxed at between 19% and 46% depending on the amount in question although for the majority it will typically work out as 30%.
Italy is a representative democratic republic headed by the prime minister who must be appointed by the president. The state of Italian politics is becoming increasingly complex in recent times, with a proportion of the population now feeling they aren’t being properly represented. This has largely arisen from recent prime ministers avoiding votes of no confidence by the narrowest of margins. The present government is keen to concentrate on steering the economy in the right direction and sees sustainable property development as part of this. There are policies in place, for example, to prevent the over-development of attractive areas. Fittingly enough for the country whose scandal-hungry media gave the world the paparazzi though, Italian politics remains open to criticisms of widespread corruption so the prime minister has an unenviable task ahead of him to make headlines for his policies rather than anything else.
The introduction of the Euro as a single currency within the EU has brought with it the benefits of macroeconomic stability. The decreased exchange-rate risk encourages lower interest rates whilst the European Central Bank has helped to lower inflation. The Stability and Growth Pact introduced in 1997 also seeks to ensure a stable currency, although this has been heavily criticised with the more influential members of the EU not always respecting its provisions. The UK, Denmark, and Sweden are the only EU members to remain outside the European Monetary Union, having each negotiated ‘opt-out’ clauses under the Maastricht Treaty, and it remains unclear at what point these countries will adopt the Euro.
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