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PROPERTY

Property: Do you have to be Italian to claim Italy’s building bonuses?

Italy has plenty of schemes on offer allowing those buying or renovating in Italy to save substantial amounts of cash. But who can access these funds? Here's what you need to know about how nationality and residency play a part.

Published: 22 October 2021 10:16 CEST
Updated: 8 November 2021 10:03 CET
There are funds on offer to help with buying and renovating property in Italy. But are you eligible to claim them?
There are funds on offer to help with buying and renovating property in Italy. But are you eligible to claim them? Photo by Nils Schirmer on Unsplash

Italy’s various building bonuses have hit the headlines internationally, attracting interest and curiosity from all over the world.

Who wouldn’t be tempted by schemes that promise to pay for your move to Italy or give you the cash needed to renovate a home?

READ ALSO: The building bonuses you could claim in Italy in 2021

While there are various terms and conditions attached to such schemes, and not all turn out to be as attractive as they may initially sound, there really are considerable amounts of money on offer for those looking to move, buy and renovate.

Italy’s so-called ‘superbonus 110‘ and its other raft of home improvement bonuses have aroused attention and kickstarted many building projects – so much so that many homeowners are now facing delays due to a shortage of building companies caused by the demand.

The ‘superbonus’ offers a tax rebate on up to 110 percent of the expenses incurred for certain property restorations, while other smaller bonuses have fixed limits on how much you can claim.

But can anyone benefit from these schemes? How does nationality or residency affect the rules? Here’s an overview of how different personal circumstances play a part.

Houses in Italy
Homebuyers can grab a one-euro bargain. Photo by Dimitry B on Unsplash

Cash incentives to move to small Italian towns

Firstly, let’s look at the famous €1 houses across the whole of Italy, as more and more municipalities are joining in with this idea month after month.

Pettineo in Sicily has recently launched its version, broadening its appeal by allowing people to buy unused and neglected properties and transform them into not just homes, but tourist accommodation and shops too.

It joins a growing list of €1 properties and each area will have its own criteria, but so far, these schemes seem to be open to buyers from anywhere of any nationality.

The comune of Patrici in the region of Lazio, for example, is offering properties for one euro in its historic centre – and the terms extend eligibility to those from ‘third countries’, i.e. outside the EU.

OPINION: Why Italy must put its forgotten ‘ghost towns’ up for sale – or risk losing them forever

This is also true for the municipality of Cantiano in the region of La Marche, who is hoping to expand its residential base by putting properties on the market for €1, also to non-EU citizens.

But things are different with other schemes that offer cash bonuses to people moving to a particular area.

Piedmont recently announced plans to offer lump sums for people looking to move there for work or to start a business, in an attempt to revitalise some of its smallest towns.

There’s a €10 million pot of funds available to attract newcomers to municipalities with under 5,000 inhabitants, and the grants available must be used to renovate a home.

Out of that financial aid, you could personally obtain an allowance of between €10,000 and €40,000 – and there’s more available if you’re under 40, in a bid to attract younger people who’ll boost the economy for longer.

One reader contacted The Local to say they would apply for the scheme, as it ticked their wish list perfectly. Almost immediately, the most desirable properties had been snapped up and he said he was struggling to reach the agents to discuss further.

Unfortunately, as it turned out, he wouldn’t be able to proceed anyway, as this particular scheme is only open to Italian citizens, those who hold an EU passport or people living in Italy with a long stay residence permit of 10 years (permesso di soggiorno), according to the scheme’s eligibility criteria.

READ ALSO: Visas and residency permits: How to move to Italy (and stay here)

Houses in Burano, Italy.
Buying property in Italy comes with small print. Photo by Luca Bravo on Unsplash

As he’s British, he no longer falls into that category since Britain left the EU – and of course this goes for Americans, Australians, Canadians and New Zealanders too, for example.

The only way around it is to get EU or Italian citizenship, which for the latter can take years to obtain. Or if you have a family member who’s eligible, they could apply but all the documents and deeds would need to be in their name.

Not all move-to-Italy schemes are the same, though.

Santa Fiora in Tuscany, for example, is offering to stump up funds, paying up to 50 percent of your rent if you’ll move there and work for yourself remotely.

READ ALSO: Will Italy really pay you to move to its ‘smart working’ villages?

It makes no mention of the programme only being open to Italian or EU citizens – and even has an application form in English.

As such schemes are complex and vary, remember to check the guidelines of who can participate before you proceed.

The building ‘superbonus’

The Italian government’s famous building ‘superbonus’ promises homeowners a tax deduction of up to 110% on the expenses related to making energy upgrades and reducing seismic risk.

While very few people would actually be eligible to claim the promised 110%, there are still substantial savings to be made.

Under this incentive, there are two notable bonuses available for restorations: the ‘Ecobonus’ and the ‘Sismabonus’ and you can use both in conjunction.

The good news for people with non-EU nationality is you don’t need an Italian or an EU passport to access them. You don’t even need to be legally resident in Italy, as it’s open to second home owners too.

READ ALSO: 

The bonus is available to property owners, regardless of nationality and residency.

However, if you’re not a resident in Italy, your options for accessing the bonus are narrower.

A possibility for residents paying income tax is to use the tax deduction method over five years, which works well if you want to offset high taxes from your income.

Therefore, to go down this route, you must be an Italian resident paying income tax, known as ‘IRPEF’.

The percentage you can claim back will be tied to your Irpef tax bracket, meaning only those making the very largest tax payments would be eligible for the full 110%.

Alternatively, non-residents can transfer the tax credit to another party in return for a commission, such as tax credit institutes or banks.

Or, you can apply for a discount on the invoice (sconto in fattura), effectively trading your tax credit to the contractors. This means the supplier recovers the bonus on your behalf, taking a slice of it as a fee.

Which plan you choose depends on your personal circumstances, such as whether you hold residency in Italy, or how much income tax you pay.

Property renovation works.
Financial aid is on hand for property renovation for all nationalities. Photo by Vitor Pádua on Unsplash

Other building bonuses

Homeowners in Italy can benefit from even more building bonuses which are currently valid until the end of 2021.

There is a government pot for furniture, landscaping gardens and optimising water consumption, but most of these bonuses are for people who pay income taxes in Italy, as they are mainly tax-deductible schemes.

READ ALSO: How you could claim Italy’s building bonus multiple times for the same property

This means nationality isn’t as important as whether you pay income tax. Accessing bonuses such as the renovation bonus (Bonus Ristrutturazioni) require you to be a taxpayer in Italy, allowing you to offset the taxes on your income.

For a full list of the building bonuses on offer and who can claim, click here.

Help with mortgages for those under 36

People under 36 years old who want to buy their first home in Italy can apply to get financial help with getting on the property ladder.

The scheme aims to eliminate VAT on taxes relating to deeds transfers and the mortgage on the purchase of a home, and help young homebuyers (defined as under 36) secure a mortgage – the high upfront cost of which is often cited as one of the factors behind the high number of people in Italy still living with their parents well into their 30s (and beyond).

READ ALSO:

At the time of purchase, the buyer pays 3% registration tax (imposta di registro) if you buy from a private individual, or 4% VAT (IVA) from a company or corporation (except for a few special cases), plus fixed mortgage and land registry taxes.

This ‘prima casa‘ bonus can save buyers up to €9,000 on the costs of buying a first home.

But can anyone access this form of help to buy a first home? The Local understands that many real estate agents, mortgage brokers and other professionals in Italy may tell non-Italian buyers that they don’t qualify as they are not Italian.

However, several of The Local’s members and writers have been able to claim this tax cut successfully.

According to Italian law, there is nothing stopping non-Italian citizens from accessing this scheme. If you’re able to buy a house in Italy, you’re eligible to benefit.

You do need to already be a resident in Italy as the bonus comes in the form of tax deductions, which means that you need to be paying income tax in order to claim these credits.

Note: if you can’t benefit from this scheme but want to get a mortgage in Italy anyway, you don’t already have to be living here. Click here for a guide on how non-EU citizens can get a mortgage for a property in Italy.

Other bonuses for people living in Italy

Aside from property-related bonuses, further tax breaks are available to people who are legally resident in Italy – and these don’t take your nationality into account either.

The newest such offer is the spa bonus (bonus terme), which is open to everyone legally resident in the country and, from November 8th until the funds run out, offers €200 per person to access spa facilities. There are no other requirements apart from being over 18.

READ ALSO: Italy’s spa bonus: How you can claim €200 towards a relaxing break

Italy has a wide range of other subsidies on multiple areas of living costs, many of which are tax deductible and therefore will usually require you to be a taxpayer in Italy.

From baby bonuses to pet tax breaks, from glasses bonuses to TV discounts, it’s worth looking into how you could cut down those hefty bills with our Italian government tax bonus guide.

See more in The Local’s Italian property section.

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PROPERTY

Five pitfalls to watch out for when buying an old house in Italy

Tempted to snap up a little slice of Italy at a bargain price? The older the house, the more potential issues you'll need to be aware of.

Published: 29 March 2024 10:17 CET
Updated: 29 March 2024 12:03 CET
Five pitfalls to watch out for when buying an old house in Italy

Italians themselves may have very little interest in buying or fixing up Italy’s many unwanted old houses, but international visitors are often swept away by the charm of these rustic buildings in romantic settings.

It’s easy to see why. The quirky structures, period details, and picturesque surroundings – not to mention low asking prices – inspire countless people worldwide every year to investigate buying an Italian home of their own, often as an investment or retirement property.

MAP: Where in Italy can you buy homes for one euro?

International interest in cheap Italian property has only intensified in recent years, with dozens of idyllic villages advertising ‘one euro’ homes and other low-cost property offers aimed specifically at foreigners.

Savvy buyers are aware that non è tutto oro quel che luccica (all that glitters is not gold), and quickly realise that these long-neglected buildings really cost somewhat more than one euro to buy and renovate. Still, some of The Local’s readers tell us these offers are worth taking advantage of.

But whether you’re looking at spending a couple of thousand euros or much more on your dream Italian property, there’s always a lot to consider – including some issues that you’re unlikely to experience when buying a home in your home country.

These unexpected issues can turn the Italian dream into a bit of a nightmare, and sometimes lead to buyers having to abandon a purchase, losing money in the process.

But if you’re aware of potential pitfalls in advance, you’re far more likely to be able to complete the purchase process with no major problems at all.

Property taxes and fees

Of course you’ll be expecting tax as part of the property purchase process, but Italian property taxes are particularly steep.

Experts say the total cost of buying in Italy will add approximately ten percent to the purchase price, and advise prospective buyers to budget accordingly.

There’s stamp duty, which is between two and nine percent of the cadastral value (valore catastale) of the property, with a minimum threshold of €1,000 even on the cheapest homes. Plus VAT at four or ten percent, land registry tax, and, if applicable, mortgage tax.

You can also expect to pay between one and five percent of the purchase price as a fee to the estate agent. In Italy agents work for both the buyer and seller – and collect compensation from both parties once the deal is done.

Then you’ll likely need a couple of thousand euros for the notary, plus a similar fee for any other agents you use, such as a mortgage broker, plus legal fees if a lawyer is involved.

See more about the ‘hidden’ costs of buying property as a foreigner in Italy.

Bickering relatives

It may sound unbelievable to non-Italians, but it’s not unusual to find that even the smallest old properties, or parts of them, are legally divided up between dozens of family members due to Italy’s inheritance rules.

One buyer The Local spoke to found herself having to deal with 22 people, all relatives, who each turned out to own a share of a small property she was buying in Mussomeli, Sicily; one of the first places in the country to sell off old properties for a euro.

Toti Nigrelli, the mayor of Mussomeli, said “having to negotiate the sale with multiple owners” was normal.

While this buyer impressively managed to negotiate the deal with all 22 parties, in many cases similar sales fall through because relatives – distant cousins, great-aunts, long-lost nephews – are often not on good terms, disagree over the sale, or can’t be traced.

At the very least, you will need to check the property’s records carefully to make sure there are no surprises in store – such as long-lost relatives who might turn up to claim the property back after you’ve bought it.

A trullo house before renovation in Cisternino, Puglia. AFP PHOTO / GIUSEPPE CACACE

Illegal builds

Another thing that often astounds foreigners who buy property in Italy is the enormous number of illegal builds – homes that were built entirely without permits – on the market as well as the even greater number of houses featuring modifications which were never officially approved or recorded.

Illegal housebuilding in Italy is often thought of as a decades-old issue, but recent data shows that, in 2021, 15 houses were built illegally for ever 100 authorised. Illegal building is twice as common in the south of the country as in the north, and thousands of cases are detected every year – though few people are ever prosecuted.

If you buy a house with undeclared modifications, the buyer is usually held responsible for paying to regularise the paperwork with the town hall. If you catch this issue early enough – and not all sellers or estate agents will inform you about them – you may be able to negotiate for the seller to cover these costs before you make an agreement.

If however you end up unknowingly buying a house built without the correct permissions, or if you never regularise any unauthorised changes, the property will likely prove very difficult to sell on.

This is one of many reasons why buyers need to carefully check the catasto (land registry or cadastral records) of a property themselves, and have a notary check everything is in order.

Conservation rules

When you initially view and fall in love with that charming stone house in the historic centre of a gorgeous Italian hilltop town, rules and regulations are probably not the first thing on your mind.

But it pays to know that old homes featuring frescoes, loggias or ancient stone cellars, as appealing as they are, are often protected by Italy’s cultural heritage authority – meaning more red tape for their owners.

One reader was forced to give up her dream of buying a portion of a two-floor 1700s building in the village of Civita Castellana, Lazio, because it needed renovation work to make it livable – but the frescoed walls, decorated fireplaces and elegant stonework entrance were vincolati (under restrictions) due to Italy’s historic conservation rules.

READ ALSO: Tuscany or Basilicata? How Italy’s international property market is changing

In many cases, this means renovation work can’t be carried out at all, or will be subject to reams of paperwork and close monitoring from authorities known as the sovraintendenza belle arti. To make things trickier, rules can also vary by local authority.

If you think a property you’re interested in might be subject to these rules, it’s always wise to consult the local sovraintendenza at an early stage. And of course, you’ll want to get hold of the records of the property from the catasto (land registry).

Resale prices

The high taxes and costs involved in buying and selling a property in Italy are often said to be one reason why, for most Italians, the concept of climbing the property ladder doesn’t really exist in the way it does in some countries.

Italy’s property market is unusual in Europe in that house prices on average are relatively stagnant. With the exception of some types of property – such as new-build apartments and luxury homes – overall prices have risen little over the past decade.

This is partly because the Italian market is weighed down by a large volume of old, neglected properties in need of major work – hence schemes like the one-euro sales and the (formerly popular but now-unavailable) 110 percent ‘superbonus’ for renovations.

But overall, if your main motivation for buying an old Italian home and renovating it is profit, you’ll need to consider that the resale potential may not be what you’d hope. The exceptions to this are at the pricier end of the market, in most major city centres, and in tourist hotspots.

See more in The Local’s Italian property section.

Do you have any more tips on buying a property in Italy? We’d love to hear from you in the comments section below.

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