Guidelines for foreigners to buy a property in Italy

Jun 20, 2024

1. Can I buy a property in Italy?

This is quite a frequent question we receive. Many foreign investors are often interested to purchase a property in Italy for various reasons. Generally speaking, foreigners can buy a property in Italy (with some exceptions as will be explained below) and from a legal point of view, buying a house in Italy is quite safe.

However, there are some points that must be taken into account before jumping to the acquisition process. This article will give you a general guideline for foreigners who are interested in investing on properties in Italy and the available visa options for those interested to live in the country.

2. House for €1: what you need to know

Since 2016 a growing number of small towns in Italy have started to put abandoned properties on sale for just € 1. The programs attracted worldwide attention and the interest of many potential buyers. The goal of these programs is to resettle the town and stimulate the local economy. Details of the programs vary depending on the town but in most cases, the purchaser is required to submit a renovation plan, which must be completed within a set deadline.

Despite the bargain price, only a few hundred buyers have so far been awarded a property. One of the reasons these programs were not successful amongst non-EU investors is because the purchase of a property does not automatically grant a resident visa in Italy.

In addition, to proceed with the sale of these properties is necessary the consent of the owners to the sale. In most cases, properties were inherited by more than one heir, therefore the difficulty is to find them and convince them to agree to the sale. This is because sometimes they barely know each other or live abroad and are unaware of the situation.

3. From rags to riches: why not buy a Castle?

Have you ever dreamed to own a palace and dine in a dining room with a huge fireplace and trophies on the wall? Your dream could become affordable because there are plenty of historical buildings on sale in Italy. Some properties are privately owned and have been owned for centuries by the same family.

In recent years, however, due to the increasing costs of maintenance, cuts in government subsidies to maintain historical properties and an increase in property taxes, many of these properties were put on the market.

Furthermore, many historical and valued buildings are also owned by the State which has started a program to sell or lease it. Many of the assets (which include palaces, villas and hotels) need to be redeveloped but several are in city centers and attractive locations and prices can be lower than market prices.

4. Who can buy a property in Italy? The principle of reciprocity

As a general rule, Italian law permits the purchase of real estate by foreigners. However, can be a few exceptions for foreigners coming from countries that do not grant reciprocity rights to Italian citizens (i.e. countries that do not allow Italian citizens to purchase a property).

5. What types of visas are available?

  1. While the purchase of a property does not automatically grant a visa, it is still possible to obtain a kind of ‘retirement visa’ (residenza elettiva) by proving a “passive” income (i.e. pensions or savings, not a salary or compensation for work) of not less than € 31,000/year. Consulates have full discretion to request a much higher income, and they usually do. Certainly, if the applicant has purchased a property of value there is a higher chance of obtaining the visa. However, the deciding factor shall be the ability to prove a steady wealth, with appropriate documents, such as bank statements and tax returns.

  1. Another option could be the Investor’s Visa. To qualify as an immigrant investor, a foreign national must invest the following:

i. at least € 2 Million in Italian government bond, funds to be kept for a period of at least two years;

ii. at least € 500K in equity instruments of company based and operating in Italy or € 250K in case of a start-up company, or

iii. at least € 1 Million philanthropic funding supporting projects of public interest in the field of culture, education, immigration, scientific research, recovery of cultural assets and landscapes.

6. How to buy a property in Italy: the basic steps

a. Searching for a property to buy with the support of a Real Estate Agency

If you ask a real estate agency to support you in searching for a property and during the negotiation, you will enter into a contract with them. The agreement defines the type of appointment given (exclusive or non-exclusive), the duration of the contract and the agency’s fee in case of completion of the deal. Usually both parties (seller and buyer) pay the agency’s fee, which depends on the sales price and it can range roughly from 2% to 5%, with several exceptions. With the exclusive clause, you agree not to appoint other agencies neither to operate autonomously for the duration of the contract. In this case, the agent is entitled to the agreed commission even if you purchase a property through third parties or by yourself.

The non-exclusive clause, on the other hand, leaves you free to appoint other agents at the same time or to conclude the deal yourself, without paying the fee to the appointed agency, unless the deal is concluded through the agent or if the agent put in contact the parties before the expiration of the contract. Usually, the estate agency prefers to propose a contract of exclusive.

The real estate agent must also be registered with the local chamber of commerce and have a VAT number, Partita Iva.

b. You may be asked to sign a binding proposal

Once you have selected a property, the real estate agent will ask you to sign a binding proposal called proposta irrevocabile d’acquisto. This is the buyer’s undertaking to purchase the property at a certain price; usually, this is a form provided by the real estate agent, signed by the buyer. It may happen that the buyer is required to pay a sum as a “deposit”. The deposit may be paid to the seller or the agent, however, the safest option for the buyer is to pay the deposit to an escrow account of the notary.

Once signed, a purchase proposal is binding for the buyer for a certain time but the seller remains free to consider other offers unless stated differently on the proposal.

With the acceptance of the seller, the contract binds both parties. If the buyer decides not to go ahead with the purchase, he will lose his deposit; but if the seller pulls out, the seller is legally liable to refund a double deposit to the buyer. At this point, it is common practice to proceed with a preliminary contract.

c. The preliminary contract: what, when, and why

The preliminary contract, often called a “compromesso”, is a contract between a prospective seller and a prospective buyer who mutually undertake to sell and purchase a property by agreeing on a completion date and the payment of a deposit, called “caparra” which is usually 10% to 20% of the price. However, for the transfer of the ownership we have to wait until the definitive contract. Usually the completion takes place after 1 to 3 months from the signing of a preliminary contract.

The preliminary contract may occur in certain situations when, for example, the buyer is waiting for a mortgage, the seller is waiting to complete his related purchase or necessary documents are to be provided. Furthermore, it binds the parties to complete the purchase in the future, being a guarantee for both of them.

It must be in writing and contain the agreements the parties made on the proposal, the exact indication of the property being sold (address, type, cadastral data), the intention of the parties to complete and the sale price. The transfer of the property and the payment of the balance will happen upon completion (which will take place at the time of the definitive contract).

In case the prospective seller decides to pull out, he is required paying a double amount of the deposit. If is the buyer who decides not to go ahead, he will lose the deposit. It is also advisable to pay the deposit in escrow to the Notary.

Once the agreement is signed, the Notary transcribes the contract to the property public register “Registro Immobiliare”. In this case, the buyer is protected from any sale the seller may put in place after signing the contract. This effect is called a “booking effect” which ends after one year from the date agreed by the parties for the completion, or in any case after 3 years from the transcription of the preliminary contract if a completion never happened.

d. Completion: the final step

Once the preliminary contract has been signed, the parties are back before the Notary for signing the definitive contract. The buyer must indicate under their responsibility how the payment was made and the details of the same. Payment can be sent to the Notary’s escrow account before signing the deed and then the Notary will send the funds to the seller.

If there is a discrepancy between the content of the preliminary contract and the definitive one, the latter prevails. Unless the parties express their intention to maintain certain clauses of the preliminary agreement.

The buyer receives the keys and the Notary proceeds with the tax payments and the transfer of the ownership.

Regarding the registration tax payable on completion, it usually applies the price-value discipline: in this case, the tax is calculated on the cadastral value of the property not on the market price. In Italy, the market price might be higher than the cadastral value, depending on the location of the property. The cadastral value is determined by multiplying the revalued income by a given coefficient. However, you must buy a residential property as an individual from an individual seller.

7. Is my purchase safe and guaranteed? Notary’s role in the purchase procedure in Italy

The purchase of real estate, from a legal standpoint, is very safe in Italy, as a Notary (who is a public officer under Italian law) will intervene in the acquisition procedure. 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 legal and administrative 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. The Notary’s due diligence does not include any checks on possible structural defects and it is therefore advisable to appoint a specialized technician for this purpose.

As additional guarantee, if you buy a property under construction, the builder – until Closing is finalized – must provide a bank or insurance guarantee equal to 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.

8. Places to buy a property in Italy

Italy is the third most popular tourist destination in Europe. Many foreign buyers purchase a property with the scope of deriving an income from short rentals to tourists. Buying a residential property in the historical center of one of main cities can be expensive, but there are surely more opportunities to rent it.

Gross rental yields in the historical center of Rome, Milan, Venice and Florence, range from 2.4% to 4.4%. If you have a lower budget, you can take into account a property in regions such as Abruzzo, Molise, Calabria, Marche or Sicily or the less expensive parts of more famous and expensive areas such as Tuscany or Lake Como. Generally speaking, northern Italy tends to be the most expensive part of the country, and the further south you go, the lower the house prices are. However, there are many exceptions to this rule, for example Capri Island, Amalfi Coast or Puglia.

9. First home relief for individuals who moved abroad for work reasons and Italians AIRE registered

The Revenue Agency has updated the tax benefit requirements for purchasing a first home in Italy called agevolazione prima casa – due to a recent law (D.L. n.69/2023) that came into force on 14 June 2023.

The amended rule provides that the buyers (either Italian or non-Italian citizens) who moved abroad for work reasons after spending 5 years in Italy are entitled to benefit from the 2% registration tax (instead of 9%) when purchasing their first home in Italy. The Revenue Agency has confirmed that any type of work, not necessarily, a subordinate contract of employment must exist at the time of the purchase and they have moved abroad before the purchase of the property. If they move abroad after the purchase, the buyers are not entitled to the benefit.

In addition, further requirements must be in place to take advantage of it:

  • Buyers have resided in Italy or worked in Italy for at least 5 years before purchasing the property and moving abroad. In this regard, the Revenue Agency has clarified that any type of work is relevant including those without consideration (remuneration), as long as it is prior to the purchase of the house. The 5-year requirement may also be non-continuous.
  • The purchased property is located in the territory of the Comune they were born or they were residents or they worked or ran their business or activity during the 5-year time.

The additional conditions to benefit from the first home relief remain unchanged: the buyer must not own solely or jointly any property interests on properties located in the same Comune; the buyer must not own any property in Italy and he must not have benefitted from the relief before.

Interestingly it does not apply to them the obligation in force for buyers living in Italy, to be resident in the property nor to undertake to move their residence in the Comune where the purchased property is located, within eighteen months from completing the purchase. This is also valid for Italian residents abroad and registered as AIRE.

The agevolazione applies to residential properties only, not luxury properties.

Concerning the Italian AIRE registered, they can still benefit from the relief even though they have not declared in the purchased deed their status of Italian citizen residing abroad, if they declare in a supplementary deed, within 18 months from completion, that, at the time of the purchase, they were Italian citizens moved abroad and registered with AIRE.

10. What if… You buy a property at auction

Buying a property at auction may be as attractive as complex so we always recommend you seek assistance from a lawyer to guide you through the process.

There are two types of auctions “vendita con incanto” and “vendita senza incanto:

  • Vendita con incanto is a public tender where bidders propose their offers in person. The bidder who offers the highest price, to which no one responds with further relaunch, wins the asset. The bid must exceed the reserve price of the auction to be valid.
  • In a Vendita senza incanto, every bidder must submit the bid by a certain date in sealed envelopes, as indicated in the Court Order. On the day of the auction, the delegate will open all the envelopes. The offer cannot be under the reserve price.

The Courts are keen to use a mixed method. It starts as vendita senza incanto, and then if there is more than one offer that exceeds the minimum price, the delegate invites the bidders to relaunch and the highest bidder buys the property. The successful bidder must pay the balance within a period (usually 120 days from the day of the auction). Once paid the balance, the Court proceeds with the transfer of the ownership and the necessary transcriptions.

To take part in the auction, you are required to have an Italian Tax Code, to pay 10% deposit of the offer you propose by bank transfer, if you decide to take part in the auction in person in the delegate office or by cashier check from an Italian bank if you prefer to attend remotely. In case you need to take a mortgage, you must indicate this in the offer and be ready in case of a successful bidder.

You can also ask a third party to bid on your behalf through a limited power of attorney duly notarized and legalized to use in Italy.

11. Better safe than sorry! Useful tips for Buyers

Before purchasing a property in Italy, the following points should be checked beforehand:

PRICE: Make sure that the full price is declared in the transfer deed and do not accept any “side agreement” proposed by the seller. If you declare a lower price in the deed, in case of your next resale at market price (higher than the one you have declared) you are subject to pay a capital gain (“plusvalenza”) on the difference between the purchase price and the sell price.

LANGUAGE: If you do not speak Italian, it may be necessary to have an interpreter who assists you while signing the contract with the Notary; typical fees might be around € 1.000.

BROKER: sign a clear engagement letter if you use a broker, with detailed terms and conditions, be careful in granting exclusivity and set forth an expiry date. Standard brokerage fees range from 1% to 3%.

DEPOSIT: don’t pay any deposit before the “compromesso” (preliminary contract) is signed! If you are asked to pay a deposit upon submitting your proposal, ask to pay into a Notary’s escrow account.

PRELIMINARY CONTRACT: The “compromesso” (preliminary contract) is not mandatory, but it is strictly recommended so that the buyer can verify in advance all relevant aspects regarding the property. Therefore, despite being subject to € 200 registration fee and a proportional fee on the deposit (0.50% on the amount, which will be detracted from final taxes) it is definitely worth doing it.

CHECK BUILDING CONDITIONS: You may want to get the building inspected or surveyed by a professional (such as architect or geometra) to check whether there are substantial renovation or repairs to be carried out. Unless you agree specific warranties in the contract, the sale is usually made “as it is” and you have limited recourse against the sellers, unless you prove that he acted maliciously.

ESCROW PAYMENTS: Notaries are allowed by law to receive and keep in deposit (in a separate Escrow Account), any sums which the buyer is requested to pay (generally 10% advance deposit and the balance of the price payable at Closing). Transferring the funds to the Notary is definitively safer and advisable, rather than wiring the funds to the broker or to the seller.

This article was written by Giuditta De Ricco and Caterina De Carolis.

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