Country Guides Country Guide: Italy

Date Published:

30/05/2008

There are no restrictions on foreigners buying property in Italy, but, as ever, employing a fully qualified specialist English-speaking lawyer is a must. Adrian Bishop, editorial director of overseas property portal NewSkys explains how the purchasing process proceeds through to completion in Italy.

'After the initial offer stage, a compromesso is signed committing both parties to the sale and establishing the terms and conditions of the final contract,' he says. 'At this point you are expected to pay a deposit, usually 10 per cent of the purchase price (30 per cent on a new build property). Withdrawing from the sale from here on will lose you your deposit, though if the vendor pulls out they have to pay you double the deposit value.

'Between one and three months after signing the compromesso, the rogito is signed. This is the final contract and is drawn up by a notary and signed in front of him or her. You will have to pay the final balance to the vendor at this juncture, and arrange to pay the notary fees and other taxes that are due. These include purchase tax at 3-10 per cent, surveyor's fees and notary charges, for which you should budget another 2-3 per cent.

'In Italy, both buyers and sellers pay estate agency fees of between 3-8 per cent, and often the buyer is expected to pay all the agent's charges. Whether buying a new build or resale property you should budget approximately 15 per cent of the purchase price for all up front fees and taxes relating to the transaction.

'In running a property you will also liable to annual property tax and rubbish tax. The council tax, called ICI, is paid to the local commune, and IRPEF, is paid to the state. The amount due is dependent on the size of the house and on the commune in which it is located. Other taxes are on the high side, with income tax between 23 per cent and 43 per cent, which you will be liable to pay this on any rental profit.'

A ricevuta fiscale (fiscal receipt) is required for tax purposes on any restoration work undertaken. The document also acts as a guarantee should any dispute arise. N.B. If you don't ask for a fiscal receipt for labour hired, the unwritten rule is that you get a 'discount' equal to the 20 per cent VAT - although by law the IVA tax should always be included in estimates and paid.

Significantly, for those looking to purchase for investment, capital gains tax (CGT) is not applicable if the owner sells after five years' ownership; selling prior to five years incurs a charge on a sliding scale depending on the number of years of ownership. Amongst the most attractive CGT rulings in Western Europe (in Spain CGT can be as high as 35 per cent for foreigners), it is a further reason why Italy continues to cast its spell over many of us.

For comprehensive advice on buying and selling in Italy, visit APlaceInTheSun.com