Can a foreign national buy a house in Italy? As a general rule, yes. Find out the property purchase process and an overview of taxes in this article.
As a general rule, Italian law permits the purchase of real estate by foreigners. However, can be a few exceptions for foreigners coming from “sensitive” countries or countries that do not grant reciprocity rights to Italian citizens, which shall be examined on a case-by-case basis.
The whole process takes around one/two months after choosing the property:
You will need to present a valid identification document and a Tax Code (we can obtain it from the Tax Agency).
The purchase of the real estate, from a legal standpoint, is very safe in Italy. Notaries act on behalf of the Government and NOT on behalf of either the buyer or the seller and they are completely neutral. Italian Notaries perform more duties than those normally associated with Notaries in other countries. Notary Public must carry out a due diligence on the property to make sure that the seller has the full title on the property, the property is free from mortgages, liens or other burdens, and it is compliant with building and safety regulations. It is vital that all these verifications are carried out prior to signing any contract and paying a deposit. Your purchase is safe because the Notary has the responsibility of performing due diligence.
As an additional guarantee, if you buy a property under construction, the builder – until Closing is finalized – must provide a bank or insurance guarantee equal to the price paid. The buyer is therefore protected against the builder bankruptcy or failure to complete the project. Furthermore, the seller is liable for major defects of the property until 10 years after the Closing. Any sensitive information about the property are accessible to any third party because are listed at the Land Registry (Conservatoria dei Pubblici Registri Immobiliari).
Tax liability varies according to if an individual has applied for residency or not. Applying for residency means requesting the local authorities to register an individual as living in its territory. A foreigner can apply for local residency only if in possession of a permit of stay document issued by national immigration authority (immigration compliant).
Taxes also vary whether the property is considered “primary home” (prima casa) or not.
IMU: the tax on ownership of real estate. It is not due on “prima casa” (primary home), provided this is not a luxury home. The amount due is based on the cadastral value of the property multiplied by the coefficients established according to the different types of houses.
TASI: municipal tax for services provided by the local administration. Based on the tax rate decided by the municipalities
TARI: waste tax, due to financing the costs of collection and garbage disposal.
IUC: it is made of IMU, TARI, and TASI. It is due both by owners and tenants.
Foreign residents owning properties in Italy are only taxed on the income earned in Italy (i.e. interest on any money you have on deposit with an Italian bank or income you derive from letting your Italian property)
Foreign citizens who are resident in Italy – have applied for residency registration or spend more than 183 days a year in Italy – are subject to pay taxes (IRPEF) not only on Italian income but also on their worldwide income. In sum, the income of all kinds received by individuals resident in Italy are taxable in Italy and any income received by non-residents from an Italian source is taxable in Italy. This general rule is subject to the provisions of international tax treaties, which prevents the double taxation of expatriates.
COMPROMESSO (“PRELIMINARY CONTRACT”):
Promise to sell or pre-sale arrangement. It is best practice to sign it before proceeding with the purchase. It provides a further guarantee to the parties and protects you in case there is something wrong with the property. Be warned, however, you will not be able to pull out just because you have changed your mind. You will need to pay a deposit (usually of 10% of the total purchase price). Generally, the deposit is non-refundable, except in the event that the terms indicated in the contract are not respected.
CATASTO, CATASTALE (CADASTRE, CADASTRAL):
land register for the purpose of taxation, showing details of properties ownership and value.
“PRIMA CASA” (PRIMARY/MAIN HOME):
In Italy, a house is defined “primary home” (prima casa) when it is located within the jurisdiction where the buyer is registered as a resident or where he/she intends to transfer his/her residency within 18 months from the date of execution of the purchase agreement. Taking out residency means that you are required to physically live there and be registered on public vital records (Residenza anagrafica). The owner must not have other properties in Italy on which he/she has claimed the primary home benefits and the property must not be registered as a luxury property.
RESIDENZA ANAGRAFICA (RESIDENCY):
Applying for residency means requesting the local authorities to register an individual as living in its territory. Generally, one is required to physically be there (at least at the time of application) and as a result, be registered on public vital records. A foreigner can apply for local residency only if in possession of a permit of stay document issued by national immigration authority (immigration compliant)
IMPOSTA IPOTECARIA (“LEGAL TRANSCRIPTION FEE”):
applies whenever there is a formal transcription, registration, renewal, cancellation, and annotation in the relevant public registers (can be fixed or proportional).
IVA – IMPOSTA SUL VALORE AGGIUNTO (VAT – VALUE ADDED TAX):
VAT affects any exchange of goods and services in Italy, at a standard rate of 22% (but it can be also 4% or 10%). VAT is at the buyer’s charge. In case of real estate, if the property is sold by a building company directly and within 5 years from its construction, the Buyer is required to pay VAT (IVA) on the sale price as follows: 10% for non-luxury properties; 22% on luxury homes. A reduced rate of IVA (4%) applies to purchases with “Prima Casa” benefits and not applicable for luxury property.
IMPOSTA DI REGISTRO (REGISTRY TAX):
applies whenever documents related to specific transactions (e.g. purchase of property, lease agreements etc.) are registered with authorities (can be fixed or proportional; for a purchase of property can never be lower than 1000 Euro).
IMPOSTA CATASTALE (CADASTRAL TAX):
levied on cadastral transactions following transaction, donation or inheritance agreements, (can be fixed or proportional).
“IMU” (IMPOSTA MUNICIPALE PROPRIA) MUNICIPAL TAX ON PROPERTY:
calculated on property value. Everyone who owns a land or a property in Italy must pay this tax which is based on the property cadastral value. The amount depends on the local authority and the size, location, and category of property. “Primary homes” are exempted from this requirement.
Attorney at law since 2006, specialized in real estate law, inheritance, citizenship and corporate law.
Mazzeschi S.r.l. | Operazione/Progetto finanziato nel quadro del POR FESR Toscana 2014-2020
Il progetto ITACA (ITaly Attract ChinA) è un investimento nei paesi/mercati a lingua cinese, in particolare Taiwan con l’obiettivo di accrescere le quote di mercato dell'azienda. Tramite ITACA la Mazzeschi Srl ha aperto un ufficio a Taiwan con assunzione di personale di lingua cinese, creato un sito internet in lingua cinese e partecipato a fiere e varie attività di promozione a Taiwan.
Mazzeschi S.r.l. | Project co-financed under Tuscany POR FESR 2014-2020
The ITACA project (ITaly Attract ChinA) is a fund to invest in Chinese-speaking countries/markets, in particular Taiwan with the aim of increasing the company's market shares. With the help of ITACA project, Mazzeschi Srl has opened an office in Taiwan and has hired a Chinese-speaking staff, created a Chinese website and participated in fairs and various promotional activities in Taiwan.