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PROPERTY

The real cost of buying a house in Italy as a foreigner

How much does buying a home in Italy really cost? Here's our expert guide to the fees, taxes and charges involved.

The real cost of buying a house in Italy as a foreigner
Are you dreaming of buying your own home in Italy? Photo: D G Design

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.

  • The €2 tax stamp is applied to invoices and tax receipts with an amount exceeding €77.47.

  • 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 .

READ ALSO: The ultimate guide to getting residency in Italy

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.

READ ALSO: How to beat (or just survive) bureaucracy in Italy: the essential guide

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.

Buying property in Italy: An illustrated tale

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

Member comments

  1. 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?

  2. 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.

  3. 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.

  4. 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.

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PROPERTY

‘It’s so frustrating’: My 25-year Italian property renovation nightmare

When US-based Davide Fionda embarked on renovating his mother's Italian property, he couldn't have imagined the obstacles and the timescale in store.

'It's so frustrating': My 25-year Italian property renovation nightmare

Building a home in Italy was almost inevitable for Davide, as he’s been visiting the same area in the Le Marche region, where his Italian-born mother grew up, since he was five years old.

Although he lives in Boston, US, and speaks with a charming East Coast twang, he’s also an Italian citizen and has long dreamed of having his own place to stay for the summer.

He began making this dream a reality back in 1997, when a barn that had been in his mother’s family for generations, in the village of Schito-Case Duca, was damaged by an earthquake.

“My mother, who had both her mother and sister in Italy, decided that it would be really nice for us to build our own new home instead of relying on family to host us each time we visit,” Davide said.

“The goal was simple. I would acquire the barn from my mom, renovate it and move in for the summers, as I’m a college teacher and can spend time in Italy,” he added.

“Simple” the goal may have been, but the project itself proved anything but, as Davide came up against unforeseen bureaucratic problems, legal hiccups and personal disappointments.

READ ALSO: The hidden costs of buying a home in Italy

As a former entrepreneur in his professional life, he said he’s “used to getting things done”, owning five companies and selling three.

But conquering Italian property renovation is his biggest challenge to date: “Never in my life have I had so many complications as I’ve had with this house,” he told us.

The earthquake-damaged barn. Photo: Davide Fionda

“In the beginning, I knew exactly what I needed and the costs to carry out the project. My mother was, and is still, living in the United States: the project started when she was approached by her godson, who is a geometra (civil engineer), to help her rebuild this barn.

“I started with what I could control. I sat down with an architect and we created a design. I did research on furniture and fixtures. But then the problems started,” Davide said.

His mother wanted a simple design: an open plan house with floor-to-ceiling windows facing the mountains, spanning two floors – a ground floor and a first floor for the bedrooms.

When they went to look at the progress in 2004, he said they were “horrified” at what they saw.

Instead of windows across the front as we asked for, with views of the spectacular Gran Sasso mountains, he took the entire view with two hallways for entering the property and for the bathroom. The bedrooms upstairs were unusable,” he added.

Davide describes himself as “not a typical Italian”, at two metres in height ,and says he always looks for suitable showers and beds when visiting Italy.

It was one of the reasons building his own home was so attractive, as he could custom-make it to fit his needs.

READ ALSO: What taxes do you need to pay if you own a second home in Italy?

But when they viewed the build, he discovered the first floor had ceilings of just one metre and 40 centimetres – not liveable for most people, never mind someone with Davide’s towering frame.

The results didn’t match the renovation plans that had been filed with the comune (town hall) – they wouldn’t have been approved otherwise, as Davide discovered Italian regulations deemed this height of ceiling in a bedroom uninhabitable.

He said he grew up with the geometra and knew him well, saying they were “best friends”. However, on raising the problems with him, Davide said the building professional “refused to fix the house”, adding, “he took my mother’s money and built a house with no bedrooms”.

He said his mother decided to stop construction after spending almost $100,000 on a house that they “could not live in”, adding that they “returned many times over the years to see the shell of the building that we thought we were going to call our home”.

READ ALSO: My Italian Home: How one ‘bargain basement’ renovation ended up costing over €300K

Faced with a stalled project and unsure what to do next, Davide tried to sell the property but got nowhere. He said the “market wasn’t right” for selling it, so he considered his options for fixing the botched renovations to date.

His Italian property project has been stalled for over two decades. Photo: Davide Fionda

Then, eventually, in January of this year he decided “he was sick of looking at it and it was time to act”.

He intended to use Italy’s Bonus ristrutturazioni (Renovation bonus), which allows homeowners to apply for a 50 percent tax reduction on carrying out renovation work.

On asking for professional opinions on whether the house qualified for this bonus, he said he asked five different people and got five different answers.

In the end, he discovered it was eligible and so he could, in theory, proceed with his latest plans.

READ ALSO:

The aim is to create his mother’s original vision – an open plan space with huge windows overlooking the mountains and bedrooms on the first floor – but habitable this time.

Since the beginning of this year, however, Davide has been stuck and hasn’t made progress.

Setbacks have included trying to get a permit to renovate the house, which has proved difficult since the first geometra reportedly didn’t update the changes to the building.

This thorny issue goes back to exactly who owned the house, as Davide told us it had been sectioned off and parts of the house were owned by various members of the family.

The building headaches roll on for Davide. Photo by Martin Dalsgaard on Unsplash

“Italian law makes you want to rip your hair out,” he said.

Getting the deed in his name has been a huge obstacle in itself, as his mother wasn’t the sole owner and some parts of the land that belonged to her were never recorded.

It’s meant months of waiting while archives have been searched and deeds have been drawn up and transferred, made all the trickier by coordinating it all from thousands of miles away.

Plus, the house category was never changed to a residential one, listed previously as farmland and therefore illegal to live in.

It’s just more unexpected bureaucracy for a project that seems to have no end.

“It has been months and months of all these twists and turns, it’s so frustrating,” he told us.

“This has been a 25-year nightmare,” he added.

A partly restored, but unliveable barn for Davide now. Photo: Davaide Fionda.

Although Davide had originally planned to sort out the more practical parts of the project by the end of May, with a ticket booked to Italy to choose the windows, he’s still stuck in the paperwork part and can’t move forward.

Nothing has happened since January. Three or four times I said, ‘screw this’. But it’s not in my DNA to give up,” he said.

Although he has a strong will, the house has taken its toll on him.

Every time we go, this house stares us in the face and it’s upsetting. Family always ask us, ‘when are you going to finish the house?’ It’s a real source of heartache,” he told us.

From this point, he hopes the paperwork will be completed by August and then he can meet with the contractors to get the process started.

That in itself was a tall order, due to the construction demand and shortage of building companies Italy is currently experiencing.

READ ALSO:

It’s a problem made even more challenging by the fact that he’s based in the States and had to find a company that would apply for the credit for the bonus on his behalf.

Despite it all, he’s hopeful that he will get the house they dreamed of by next August and says he’s learned a lot about renovating property in Italy.

For other would-be home renovators, he advised people to “adjust their timeframe expectations” and expect “anything to do with land or real estate to take forever”.

So what is his secret for not giving up, despite the rollercoaster of events and emotions?

It seems he’s holding on to his vision of blissful summers in il bel paese.

“The beauty of Italy is to be, sit in a town square and have conversations,” he told us.

“It’s a beautiful thing.”

See more in The Local’s Italian property section.

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