ITALY - The Buying Procedure

Introduction 

Firstly we would ask you to note that this guide is a generlisation of the procedure andis relevant to all forms of purchase although if you are buying 'off plan' on on a newly completed development the procedure may differ in actions taken but generally follows the same procedure. Buying a property in Italy is quite different to many other countries. We hope this explanation of the process will help you to understand it a little better. It is important information so please read it carefully and make sure you fully understand it.

Budgetting for the Purchase

First of all remember that you normally need to budget for an additional 10-15% of the purchase price to cover tax, notaio (notary) fees, translator and agents fees. The reason for the variation is mainly due to the purchase tax. As a primary home you will pay 3% tax, as a secondary home you would pay 10%. The notary's fee is usually 2 - 3% of the selling price but sometimes they have a fixed charge. We can never be sure of the exact notary fee until the final contract is completed, at which time their fee is payable. Additionally there is a fee for a translator, unless you speak fluent Italian, which is usually about 300 euros.

Agent's Fees

In Italy both the buyer and the seller pay a fee to the estate agents at a minimum rate of 3% of the purchase price.

The Notary's Fees

This is usually about 2-3% of the declared purchase price of the property although there is usually a minimum fee charged and the charges vary between different notaries. It is not normally possible to know what the exact charge the notary will levy until after the contract is signed, at which time the notary presents his bill, to be paid immediately. The choice of notary is yours, but assuming you don’t have one then we can recommend one for you that we have worked with before.

The Buying Process

Making an Offer

First of all, we must make it quite clear that making an offer for a property is not to be taken lightly. If your offer is accepted then you will be entering into a contract which the seller may be able force through to completion. At the least you will lose your offer deposit (see below) and have to pay any expenses already incurred as well as agents' fees on both sides.

To make an offer it is necessary to complete a form, called a proposta d'acquisto, which states the amount offered, any conditions, the deadline by which you will pay the deposit, the latest date for the final contract and how long the owner has to accept the offer (usually 7 or 14 days). You will need to sign the form and lodge a small deposit, usually between 1,000 and 10,000 euros, ( 5,000 euros on average).

Obtaining a Fiscal Code

To buy a property in Italy you have to have a fiscal code (codice fiscale). In fact you need this for many things including opening a bank account and buying a car. If you are an EU citizen this is available from the nearest tax office and a member of our staff can accompany you to the office and help you to obtain this. It costs nothing and the service is included in our fee. You can also apply for the fiscal code on the internet, (www.agenziaentrate.it), or through the Italian Consulate in your country. If you are not EU citizens then you will have to obtain your Italian fiscal code from your Italian Consulate when you return to your home country. Only then can you open a bank account here. However, that doesn't mean that you have to return to Italy to open the account as it can be prepared before you leave and activated when your code is available.

Although it is essential to have a fiscal code and bank account for the final contract you don't need either to sign the proposta d’acquisto (so it can be done over a weekend when the tax office and banks are closed) or the preliminary contract. In this case it would be necessary to transfer funds to an Italian bank account prior to signing though so that the offer deposit can be paid.

Opening a Bank Account

Then you need to open a bank account (un conto corrente in banca) from which to pay the deposit and balance. Again a member of our staff can accompany you to the bank and help you to obtain this and the service is included in our fee.
Paying the Deposit

Sufficient funds must then be transferred to cover the deposit (preliminare or compromesso), which is usually 20-30% of the purchase price. The deposit and fee are paid and the preliminary contract (contratto preliminare or compromesso) is signed.
It is preferable that all clients return to Italy for payment of the deposit and to sign the compromesso but sometimes you just don’t have the time to do this. We understand this. In this case the signing can be done by mail and fax: we send you the text by post, you sign it and send it back, by fax and normal post. But first you have to make sure the entire agreed amount of the down payment has been transferred into the seller’s account .

You will need to instruct your bank at home that ALL EXPENSES have to be at the charge of the sender (you), and let your bank contact ours to make sure the correct amount will arrive into our account. Although we stress this time and time again, incomplete amounts still keep arriving, causing extra administrative work and a loss of time in the completion procedure of the compromesso. Our fees for this service are 100 euro, with which we also cover unforeseen expenses (currency fluctuations, bank commissions, etc), to guarantee that the entire amount will arrive. If the expenses turn out to be higher we will let you know how much you need to add, because of course the seller of the property has to receive the precise amount. But usually, if you send 100 euros on top of the agreed compromesso amount plus all expenses at your charge, it should be enough.

At the signing of the preliminary contract LaToCa’s intermediation fees, 3% of the agreed purchase price, have to be paid too. You will receive an invoice with the amount and bank account number. This does not mean that we stop assisting you after we’ve been paid: our service will continue until the final completion, without extra charges!

Pulling out

Obviously, if you pull out you will lose your deposit, but you will also have to pay any expenses incurred and the agents' fees on both sides. If the seller pulls out after the compromesso is signed he has to pay double your deposit!

The Final Contract

For the final contract (l'atto or il rogito) you need a public notary (il notaio) to check all the documents are in order, draw up the final contract and witness the signing. The choice of notaio is yours, not the seller’s.

The Notary

A notary (il notaio) is a government official, not working directly for either party but overseeing and witnessing the contract. His, or her, fee is paid by the purchaser. It is his or her responsibility to ensure that all everything is in order; that ownership confirmed, rights of way determined, buildings registered, etc. The buyer has the right to choose which notary to use but as you probably don’t know any you may wish to rely on us to provide you with one.

Paying the Balance

Although this is done at the final contract we have put this under a separate heading. Our service does not cover the paying the balance of the purchase price for you so, if you haven’t already done so we advise you to come at least two or three days before the final completion to check the property over and open a bank account in a local bank. It is not allowed to transfer money into a local bank if you don’t have a bank account there yet, and unfortunately we are not allowed to open a bank account for you either. So what you should do is:

-Bring cheques with you and pay the seller by cheque or put them into your new account. You will need a cheque for each owner.

-Or, upon arrival, give your home bank a call to wire the money as soon as you’ve opened a bank account. Your Italian bank will give you the cheques (assegni circolari) that you need to pay over to the owner.

Then the final contract is, by law, read out in both Italian and your own language if your Italian is not excellent. In this case you will need to have the contract translated and interpreted into your own language. Although the partners and staff of LaToCa are bilingual we are deemed interested parties and cannot act as your official interpreters.

Signing the Contract

The contract is signed (you have to sign clearly with all your full names, as in your passport, not with your usual signature), the balance is paid and the completion takes place. This is a rather sombre affair with all parties present around a huge table.
Residency

If you want to live here permanently you will initially need a 'permesso di soggiorno' (residency permit), available from the Questura (Police Headquarters) in your nearest city. It takes at least 6 weeks before you can pick up your permit at the Questura. Then you can get residenza (residency certificate) at the town or City Council (comune), after which a local police officer will come to check if you really live there (about a month later). You should then spend 183 days of each year in Italy although with the relaxation of border control in Europe now it is difficult for anyone to check. Be aware that this can lead to fiscal and social security consequences if you change your residency from your home country to Italy. If you are not really going to live here for 183 days per year or more it is better that you pay the extra stamp duty so that you don’t get involved in a complicated situation afterwards.

Taxes

The taxation system in Italy is complicated, as in most countries. However this is important information so please bear with us. We will try to keep it as simple and clear as possible. It is not complete by any means (you would need a lifetime to understand it all!) and you should check the latest laws with an accountant, notary, or other expert as they change all the time.

You normally have to pay 10% stamp duty on the purchase of a house, and 18% on farmland.

However, if you intend to take up your permanent residency in Italy, the tax is reduced to 3% for the house (the so-called “tassa sulla prima casa”), but still 18% for farmland. In this case you must obtain residenza (residency) within 18 months of purchase and register with your local town hall, otherwise you will have to pay the additional 7% plus interest and a fine. You also cannot sell your house for at least 5 years, unless you buy another first house for permanent living within a year, or pay the tax difference.

IVA (the equilvalent of VAT) in Italy is currently 20% and you will need to pay this on any fees, etc. However you pay only 10% for materials to restore your house here. This is due to be reviewed. You may be also claim 36% of your restoration costs back from your income tax over 10 years but speak to a commercialista (accountant) about that.