Property Buyers Advisory Guide to Tuscany & Sardinia
Why Buy a property in Tuscany or Sardinia?
The appeal of buying a property in Italy is obvious with a huge selection of housing styles to suit most budgets. Obviously, there is also the allure of the outstanding food and wine not forgetting that Italy has the largest number of World Heritage sites in the world so if you are attracted to culture, you will be spoilt for choice.
Very high rental prices also make it attractive to own a property in Italy as the investment is quickly paid off and the potential to use it as an income property is high.
Financial Planning when buying a property in Tuscany or Sardinia
The first thing we would recommend you do is sit down and review your numbers, ideally even before you start looking at properties. It may be that you can afford to spend more than you had thought with some thorough financial planning.
Residential Mortgages in Italy
Even if you have sufficient capital to buy property in Italy outright, you may wish to consider using a mortgage to fund the purchase for various reasons:
Fiscal: You may be eligible for tax allowances
Financial: You may earn a higher rate of return on capital invested than you would pay to service a loan
Security: A bank will carry out its own due diligence and only lend against a property that meets its criteria
Mortgages in Italy are widely available and the terms are similar to those in the UK. All mortgage applications will require a property valuation before the loan is approved.
The Process of buying a property in Italy
Once you have found a property, the procedure is generally as follows:
Buying Proposal (Proposta d’acquisto)
This is a short contract, prepared in Italian and English with which you pay a confirmatory deposit (usually 5%to 10%) to take the property off the market for a short period, whilst the necessary checks and paperwork are undertaken.
Further to satisfactory results from due diligence, your solicitor will proceed to drafting, negotiating contractual issues and signing an agreement insert text here
This is a contract prepared in both Italian and English, this is a legally binding contract between the purchaser and the vendor. The contract defines all selling conditions including description of the property, rights of way, mortgage obligations, liens, impediments, payment conditions, ownership rights etc.
On signing of this contract the purchaser is required to pay a deposit of approximately 20% of the property price. This payment can be paid directly to the vendor or held in Escrow; please discuss these options with lawyer. The preliminary contract can be notarised or prepared by the agent with the lawyers of both parties.
The Final Contract (Atto or Rogito)
The final contract is signed at the Notary’s (notaio) office. The Notary is an impartial chartered mediator, legally obliged to protect the interests of both parties, and ensure full transparency of all relevant facts relating to the purchase and sale of the property. The notary will check the properties legal and cadastral status, and assume the responsibility of preparing the purchase deeds.
You either need to be present to sign the documents in front of the notary or you can give someone present in Italy the power of attorney to sign on your behalf. If you don’t speak fluent Italian you’ll be assisted by a qualified translator and the contract will be read out in both Italian and your own language.
Purchase taxes and the notary fee are to be paid by the buyer at the signing as well as the balance of the purchase price. Once all documentation is signed and all monies paid you will be handed the keys to your Italian property.
The purchase deed is then sent to the land registry and returned to you after approximately two months.
Residential Property Purchase Taxes in Italy
As a general rule, when purchasing a property in Italy you will be required to pay fees to the Notary, commission to the estate agency and tax on the price of the property. These fees are listed and explained below.
• Registration Tax: 3-7%
• VAT: 4-22%
• Land Registry Tax: 1%
• Notary Fee: Up to 2.5%
• Legal Fees: Up to 2%, plus 22% VAT
• Exchange Rate: Variable, but should be calculated based on the mid-market rate.
Unlike the UK, in Italy each property has a sale price (that which is paid to the vendor) and a “book value” which is the value according to the land registry office. Please note that the “book value” tends to be lower than the purchase price on resale properties and is often as much as 70% less than the purchase price. We will be happy to provide estimates on individual properties.
If you are planning to come and live in Italy permanently
If this is the case and you do not own another property in Italy you can apply for Italian residency. If you are a resident or are planning to apply for residency within 18 months of signing the final contract you will be required to pay the “Imposta di Registro”, this is a tax of 3% of the “book value” of the property. This tax is increased to 10% on the sales price and is referred to as IVA (VAT) if you are acquiring the property from a company rather than from a private vendor.
If your Italian house is to be a holiday home (Or if you already own a property in Italy)
If so and you are declaring your Italian house as your second home, you will be required to pay the “Imposta di Registro” of 9% of the book value of the property.
Land Taxes in Italy
If you are acquiring a property with land then tax of 12% is paid on the declared value of the land. It is the notary that decides the acceptable market value of the land and therefore the corresponding tax.
Notary fees in Italy
Notary fees vary according to the purchase price of the property (not the book value), the area and the chosen notary. The fees are usually somewhere between €5,000 and €6,000 but will not exceed 2.5-3 % of the total cost of the property.
If you are not a fluent Italian speaker you will be required to pay for a certified translator for the signing of the final contract.
Property Finder and Estate Agency fees in Italy
These are usually divided equally between buyer and seller and range from 3-8% of the price of the property. Be sure to confirm the percentage that your agent charges before you begin your property search so that you know exactly what you can afford. We are happy to request a full estimate of fees from a notary prior to signing the preliminary contract.
Property Surveys in Italy
We advise that you employ the services of a geometra (surveyor) to check the status of the property with local land registry, and a lawyer to oversee this contract and coordinate the due diligence process.
Italian Money Transfers
Currency prices fluctuate all the time so it is a good idea to fix your rate via a specialist foreign exchange company. You can literally lose or save thousands of Euros depending on the currency provider you use. In most situations, a specialist FSA regulated currency broker can offer you a much better exchange rate than your bank. Please contact us for our list of recommended currency brokers. We recommend you only use brokers regulated by the FSA.
Cost of Ownership of residential property in Italy
Once you own a property in Italy, it is important to understand the associated expenses. These include:
ICU – single municipal tax regardless of whether you own or rent a home in Italy, it includes:
IMU on the ownership of the property
TASI which covers indivisible communal services (lighting, street maintenance etc.)
TARI which covers the costs for the collection and disposal of waste in the municipalities
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