We’ve all heard about the large number of cheap renovation properties for sale in Italy. And it’s true – you can take your pick of homes for 50,000 euros or less, and many small towns are still selling off houses at a base cost of one euro (though the other costs involved are quite a lot higher).
But even without the major renovation work such properties usually need, the sale price of a house obviously isn’t the total cost of buying a home.
And if you’re a foreigner buying property here you may be understandably wary of hidden costs and charges cropping up.
So to light the way, we’ve got a guide to the real costs of buying a house in Italy as a foreigner from home-buying and renovation expert Gary Edwards from D&G Design, based in Le Marche.
A dream home in Le Marche, Italy. Photo: D&G Design
Taxes
The first point to note is that VAT, or sales tax, is called IVA in Italy and is currently 22 percent. So add this amount onto the prices below.
The bollo
This is a mandatory tax in the form of stamps that is slapped on to most contracts or invoices over the amount of €77.47. And when I say slapped, you literally do have to buy stamps from the tabbachi or post office and attach them to the invoice.
Phone contracts, some utility contracts, any kind of lease over the amount of €77.47, they are all subject to the bollo. However, it is a per-invoice/contract charge, so you don’t have to pay it for every €77.47 you are invoiced for, it’s a one-time payment on the invoice/contract itself.
The amounts of the stamps are either €2, or €16.
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The €2 tax stamp is applied to invoices and tax receipts with an amount exceeding €77.47.
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The €16 revenue stamp is applied to the deeds of public administrations, to corporate or notary documents.
However, if the services you are paying for are exempt from IVA (which very few things are in Italy), then only the €2 stamp is added.
As you can probably imagine, there is a long list of rules as to when the bollo should be applied.
As a guideline, expect to pay €16 on any invoice for a contract that is over €77.47 and includes IVA, and €2 on any invoice that does not.
Agent’s commission
If you’re buying a house through a real estate agent, they take a percentage (normally around three percent of the purchase price) from both the seller and the owner.
There are many articles on the internet which view this negatively, as why would an agent negotiate the best price for you if their commission depends on it?
The agents that we work with are always willing to negotiate the best price as reputation amongst many professionals in Italy is more important than quick money. Realtors invest a lot of time and money to become qualified: you cannot become a realtor in Italy without years of study and qualifications.
A renovated house in Monferrato, Piemonte. Photo: Toni Hilton
As with many industries in Italy, word of mouth is still the most effective and important form of marketing and in our experience, there are few professionals who would risk their reputation for a few hundred euros.
If a house has been on the market for a while, offer a price that is your maximum budget, and stick to it.
Stamp duty
Stamp duty is two percent of the cadastral value of the home if you are resident in Italy full time.
The cadastral value is generally an amount lower than you have paid for the house, as it’s based on a valuation of the property from several years ago. So normally this works in the buyer’s favour.
OR it’s nine percent of the cadastral value if this is your second home in Italy, or if you are non-resident. If you are buying as a business rather than as an individual then nine percent is applied.
The minimum payment for stamp duty is €1,000.
So if your house is very low priced, and either two or nine percent of the property’s value falls below this threshold, you will be charged a flat fee of €1,000.
Property expert Gary at work. Photo: D&G Design
Note: You have 18 months to become resident in Italy from the date of your house purchase. If it is your intent to become a resident, you will only be charged two percent stamp duty at this stage. Should you not become resident within 18 months, then the government will require the outstanding seven percent .
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Exceptions to stamp duty
If your home is deemed a ‘luxury property’, stamp duty is higher, up to twenty percent, with higher land registry and cadastral taxes.
If it’s what’s classed as an agricultural property, stamp duty will be ten percent.
If you’re buying agricultural land, then stamp duty is fixed at ten percent.
If the house is a new development and it is your first Italian home, there is no stamp duty but instead IVA will be added to the purchase price at four percent. for residents, or ten percent for non residents and second home owners. Land registry and cadastral taxes are higher also.
If you build your own home, this is subject to IVA at four percent. of the value.
Land registry tax
€50 – fixed rate.
Cadastral tax
€50 – fixed rate.
Notary fees
These fees are generally fixed for each part of the sale. The notary will pay the above taxes and check that the property is legally registered.
If buying through an agent, they may be able to take care of the preliminary agreement as part of their service. Have the notary do all of the required checks at this stage, whether or not they are handling the preliminary agreement.
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If this is a private sale, it’s worth having the notary on board from the beginning. This will cost extra as it’s more work for the notary, but you have peace of mind that everything is being done above-board and properly.https://www.thelocal.it/20181204/how-to-beat-or-just-survive-bureaucracy-in-italy-the-essential-pieces-of-italian-paperwork
Notary charges can vary from town to town, and are on a scale related to the declared value of the property, to the difficulties of the deed and of the property (i.e. how much work they have to do). A quote can be obtained from a notary before you begin the process.
The taxes above are not subject to IVA, but the notaries fees will be.
Legal fees
Depending on whether you have a lawyer overseeing the purchase of your property, they will charge you based on a percentage of the value of what you’re paying for the property.
It’s entirely up to you whether or not you feel more comfortable having a lawyer involved, many people prefer to use an English-speaking lawyer to explain each step of the process and assist.
Legal fees are subject to IVA.
Geometra or civil engineer’s fees
If the house is an old property requiring restoration or renovation work, we strongly recommend that either a geometra or civil engineer inspects it before you commit to buying.
These professionals oversee all building work in Italy and are qualified to tell you exactly what work the property will need. They can also recommend a building company and give you an estimated quote for all works required.
A house for sale in Montefortino, Le Marche, Italy. Photo: D&G Design
At D&G Design, we have our trusted geometras inspect every property that our clients show an interest in. The geometra or engineer’s fee for overseeing building work is generally 10 to 12 percent of the total price of the restoration works.
Utility fees
Water, electricity and gas are charged per unit and usually bills are issued every two months.
There are name change fees charged by utility providers, even though there is plenty of competition. Some energy companies also take a deposit.
One thing to note is that there are higher unit charges for non-residents or second home owners, so if you’re planning on becoming resident, make sure you have this noted on your contract with your supplier to ensure that you pay the lower rate.
For residents, the TV licence is costed into your electricity bill (two payments per year). Non-residents do not pay a TV licence, but they do pay more for usage.
Local council tax and charges
The IUC (Imposta Unica Comunale – Single Municipal Tax) comprises three different local taxes, all of which are paid to the local comune (council):
- IMU (Imposta Municipale Unica – local comune tax): similar to council or city tax and not charged if the house is your first home in Italy (unless it’s classed as a luxury property).
- TARI (Tassa Rifiuti – collection of rubbish & garbage): a minor tax calculated on the size of your property.
- TASI (Tassa sui Servizi Indivisibili – local tax for municipal services): a tax for services in your local area such as street lighting, road maintenance, etc. This is paid if you own the property or rent for a long period.
The council charges apply whether you are resident or not. Ask your notary or lawyer how much the charges currently are at the property you intend to buy, as they vary from town to town.
Condominium fees
Should you buy an apartment or flat in a shared building, there will be condominium fees to pay each year.
Please note that this list is not comprehensive, but covers most scenarios that foreign buyers may find themselves in.
Are you interested in our articles about property in Italy? Do you have questions or suggestions for topics that we have not yet covered on The Local? Let us know
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Would it be possible to build an actual example with numbers based on a first Italian home?
Say a property of 200.000, to get a feel for the approximate additional costs?
It should be taken into account that if you sell your home within 5 years you are subject to a form of capital gains tax on the profit, ie, the cost that you purchased at and the cost you sell at. Particularly relevant if you have done a lot of improvement works to the home and thus increasing the value accordingly.
Now that I’ve learned more about the process and dealt with several scammy agents, working with a reputable agency to represent your interests as a buyer is essential. I feel extremely lucky that I ended up dealing directly with a seller who was honest and easy to work with (and who has become a good friend) when we made our property purchase in the Val di Susa. An incredible stroke of good fortune as deals can quickly sour. Torben, we paid 20k euros for the home, restoration was approximately 50k on top of that. Property is small and simple, very humble but in close proximity to skiing, hiking and mountain biking, so the motivation was to be as close to possible to outdoor recreation and be outside as much as possible.
Hi there. Thanks for this. I’m just embarking on this journey. And it is quite daunting. I’m down in Puglia and think I have found a house. What I can’t work out after two false starts is how you find out who owns a property and if somebody has put a house with an agent if there are other owners. The costs especially since brexit make it all very murky as the house does need some work.