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FINANCE

‘How we claimed Italy’s building bonus twice for the same property’

For those looking to make renovations to their property in Italy, the government is offering considerable sums of money to help. But look into the small print and it turns out you could access the same state funds more than once for the same property. Here's what we found.

Published: 8 June 2021 17:48 CEST

The Italian government’s superbonus scheme is an incentive measure following the coronavirus crisis, which could see homeowners benefit from a 110 percent tax deduction on expenses related to property renovation.

Linked to costs for making homes safer and more energy efficient, the superbonus was introduced in the government’s Decreto Rilancio (Relaunch Decree) last year.

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

There are potentially hundreds of thousands of euros in savings to be made, spread across the so-called ‘ecobonus’ and ‘sismabonus’, which can be used in conjunction and offer state funds for making energy upgrades and reducing seismic risk respectively.

But it turns out property owners could make even bigger savings in renovation costs, as we discovered the ‘sismabonus’ – worth up to a considerable €96,000 – can be claimed more than once for the same property.

Photo: Milivoj Kuhar on Unsplash

So how can you access this hefty bonus multiple times?

Here’s a closer look at the government regulations and the pitfalls to watch out for.

Note: The schemes are complex and subject to change, so it’s important to get professional advice before buying and renovating.

What funding is available and who is it for?

The Sismabonus is for properties at risk of earthquakes. To claim from this kitty, the property must be in an area with a seismic risk level of 1, 2 or 3 (high, medium or medium-low). Those with a risk level of 4 (low) don’t qualify.

The scheme covers shared areas of buildings, detached houses, social housing and single-family homes, even within multi-family buildings.

There’s also no limit to the amount of properties you can renovate with this particular pot, which may be of particular interest to those with second (or multiple) homes in Italy.

What’s more, we stumbled upon the fact it can also be claimed more than once for the same property – in fact, you can claim a staggering €96,000 up to four times.

We were taken aback too. And absolutely elated.

Of course, there was a hint of caution and suspicion. Had we read it right? Can this be legitimate?

We’d had four months to pore over the terms and conditions of the superbonus, as that’s how long it’s taken for the sale to go through following submitting an offer.

READ ALSO: How to stay out of trouble when renovating your Italian property

It’s the first time I’ve bought a house – a wreck in need of demolition and complete rebuilding in fact – but I was pretty sure it goes a bit quicker where I’m from, in the UK.

Friends back home laughed at the system I’d found myself in and confirmed my frustrations were founded. This was a long time.

On the other hand, we were doing our sums and riffling through Italian bureaucracy in the meantime, to work out how much of a mortgage we’d need and how much of the various bonuses we may be eligible to claim.

And that’s how we unearthed this surprising discovery.

Photo: Katy Cao on Unsplash

The Agenzia delle Entrate (Italian Revenue Agency) stated, “The relief is also available if the work is carried out on buildings that are not condominiums, as they consist of several building units (up to four) owned by a single owner or in co-ownership.”

Nowhere does it plainly state that you can claim up to €96,000 more than once, which is why it’s easy to miss.

However, in a question posed to the Italian Revenue Agency, officials published a response that clarified how it’s possible to claim the sismabonus repeatedly on the same property.

A case study of coinciding Sismabonus claims

A petitioner submitted a query as co-owner of a property with her husband.

Along with their home, they have an independent garage and two other units, C/2 ‘magazzini e locali di deposito’ (warehouses and storage premises) and C/6 ‘stalle, scuderie, rimesse, autorimesse – senza fine di lucro’ (stables, sheds, garages – non-profit making).

The applicant stated that her residence is separated from the latter two units by a partition and “is functionally independent in that it has all its own installations and independent access from the outside.”

READ ALSO: 

Their renovation plans include “total demolition and reconstruction of the above-mentioned building units, without any increase in volume”, the document stated.

This is in order to merge the house with the extra buildings.

Therefore, the four existing building units will be demolished and that, once the work is completed, the result will be a single-family dwelling and a garage.

They asked for clarification on the maximum amount of expenditure permitted in the superbonus, as they believed that they could access the superbonus “as individual units since they are functionally independent”.

With regard to the earthquake-proofing interventions, they stated the expenditure limit of €96,000 should apply to “each of the three initial real estate units considered independent from each other” (the house and the other two units C/2 and C/6).

Here’s the response

“The superbonus also applies to interventions carried out by individuals, outside the exercise of business, art or profession, with reference to interventions on buildings consisting of two to four separately stacked real estate units, even if owned by a single owner or co-owned by several individuals,” stated the Italian Revenue Agency.

That means for property owners hoping to get government funds for renovations – you can claim the bonus on each part of your property, as long as they are separate units.

So for example, a garage, a shed or storage building are all eligible for up to €96,000 of bonus each in addition to your home. That’s confirmed in the amended article 119 of the Relaunch Decree.

We worked out that we can now claim up to €96,000 for the main property and the ‘magazzino’ (storage building) separately.

That’s €192,000 in government aid to contribute to our house building fund – a life-changing figure for us.

Photo: Maria Ziegler/Unsplash

What to watch out for

As we haven’t yet got to the part where we actually claim the state aid, it’s still a case of wait and see if it’s too good to be true. However, after a conversation with our geometra (surveyor), it all looks above board and good to go.

There are other exceptions to watch out for, though.

First of all, the bonus doesn’t extend to certain types of buildings – prestigious villas and castles, for example, are excluded.

To access the bonus, you’ll also need to remember to hire an expert to assess the seismic risk and provide a certificate to prove the work has been effective in guarding against earthquakes.

READ MORE:

The final result must demonstrate a reduction in seismic risk by one or two classes.

If you’re buying a wreck to knock down and want to rebuild it completely differently, you’ll need to make sure it’s not in a historic centre, for example.

If it is, it’s essential to maintain the previous characteristics of the old building and rebuild the property the same size.

Next Steps

To check whether you are eligible, speak to a professional and check the Agenzia delle Entrate website before you begin any work on property.

If you’re keen to buy, you may also want to take a look at our guide to the additional costs you might not be expecting, and read up on some of the common mistakes to avoid when buying a house in Italy.

See more in The Local’s Italian property section.

Member comments

  1. So far as I have read these monies are not a grant but a tax abatement/saving. Yes increased from about 50% to 110%. Not many people can recover 192,000 in tax otherwise payable in the likely short life time of such a baited trap…. BEWARE.

  2. Do I have the maths correct? To gain 192,000 in tax refund one needs an income of 834,783 taxed at 23% to recover the bonus?

  3. Of course everyone in Italy wants to utilize the ecobonus 110% and sismabonus so many architects (who do all of the extensive documentation) are accepting all clients and their deposits without limit. The end result is that architects have way more projects than they can handle and many projects are going nowhere.

    In Sicily there is widespread doubt that the government money will ever arrive and if not, the projects get stuck in limbo as construction teams won’t work without funds.

    Hoping for the best but in the south very few projects have started work and we’ve heard of none that have been finished/paid yet.

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For members

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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