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UPDATE: Under 36? Here’s how Italy plans to help you buy a house

Italy's government has announced that young people hoping to get on the property ladder can apply for the 'first home bonus' from June, a scheme offering tax cuts and help with mortgages.

UPDATE: Under 36? Here's how Italy plans to help you buy a house
The Italian government wants to help more young people in Italy to buy their own home. Photo by Katy Cao on Unsplash

The text of the new decree law was published on Tuesday clarifying the details of the ‘first home bonus’ (Bonus prima casa), following an announcement last week by Prime Minister Mario Draghi.

People under 36 years old who want to buy their first home can submit an application to get financial help from 24th June, with the scheme lasting a year.

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 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).

Purchasing a property in Italy involves no small amount of added fees and taxes – in fact, many property experts advise buyers that they’ll need to budget as much as ten percent of the property price for additional charges.

Photo: Maria Ziegler/Unsplash

What help is available?

People under 36 – the classification for ‘young people’ in Italy – will benefit from two main types of help:

Firstly, there will be a raft of reductions on the taxes paid when buying a first home.

And secondly, taking out a mortgage is set to be made more straightforward, as the state will put down the deposit for young homebuyers.

EXPLAINED: How you could benefit from Italy’s Covid-19 financial support

That’s been made possible thanks to new funding from the ‘First Home Loan Guarantee Fund’ (Fondo di Garanzia Mutuo Prima Casa).

Firming up plans to help young people buy a home is the latest step following Draghi’s pledge to boost the country’s economy following the coronavirus crisis.

In a press conference earlier in May, he promised financial help would go to  businesses, young people and healthcare services.

Photo by Tiziana FABI / AFP

Who can access the first home bonus and how?

For those hoping to buy their first property in Italy with state help, the bonus will run until 30th June 2022 and people under 36 years old are eligible to apply.

It’s available to those who have an ‘ISEE’ – a social-economic indicator of household income – of up to €40,000.

Young people falling into this category can benefit from certain exemptions on registration, mortgage and land registry tax, saving up to €9,000 on the costs of buying a first home.

If you buy property from a private individual, the bonus cancels out registration, mortgage and cadastral taxes, meaning that only stamp duty, mortgage taxes and special cadastral taxes remain to be paid, amounting to a total of €320.

On the other hand, if you buy a house from a company, you won’t pay registration, mortgage and cadastral taxes and again, you’ll need to pay stamp duty, mortgage and cadastral taxes.

The difference in the second case is that VAT must be paid to the seller, but the buyer accrues a tax credit to spend equal to this VAT for house-buying costs.

In effect, it means if the purchase of the property is subject to VAT, it will be reduced to zero with the first home bonus.

READ ALSO: 

Further to that, eligible candidates will also be exempt from the VAT on stamp duty, which comes in at around 2% of the cadastral value of the house. That’s if you live in Italy full time – it’s 9% if you don’t.

Claiming tax credits

The tax credit can be used to deduct directly from these house-buying costs, or alternatively, it can be used as tax relief to deduct from the taxes on your personal income (IRPEF).

Notary fees, which are generally fixed for each part of the sale, will be halved. The notary checks that the property is legally registered and their fees can vary from town to town.

If buying a house through an agent, a notary does all the required checks and may be able to take care of the preliminary agreement as part of their service.

How about loans?

Included in the first home bonus is state help with the deposit, after a government decision to extend the First Home Loan Guarantee Fund.

It exists already and covers up to 50% of the total value of the property, but is set to be extended to 80% of the total value, of up to €250,000, without a deposit – and the banks get a state guarantee.

Watch out for the conditions

To access the bonus, it must be your first home and you’ll need to keep in mind that not all properties can benefit from the government help, including stately homes, villas, castles and places of historical or artistic value.

The decree text appears to state that you’ll also need to not reach the age of 36 in the year in which the deed is drawn up. So that means if you’re buying a house this year, you’ll need to be no older than 35 for the whole year. In other words, if you sign the deed for a house this year, you’ll need to turn 36 from next year onwards.

The home must also be located in the municipality in which you work, study or currently live.

And once the benefits have been used, you can’t sell the property for five years – unless you buy another house.

You also can’t access the bonus if you’ve already used it for a first home anywhere in Italy.

As some aspects of the process for claiming the bonus remain unclear, anyone hoping to benefit from the scheme is advised to contact a mortgage expert for further information.

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MONEY

From renovations to cinema tickets: The Italian tax ‘bonuses’ you could claim in 2023

Italy's latest budget bill has confirmed which of the tax breaks or 'bonuses' will continue into 2023. From property purchases and renovations to cinema tickets, here's what you could save money on in Italy this year.

From renovations to cinema tickets: The Italian tax 'bonuses' you could claim in 2023

Each year, the Italian government provides a range of tax deductions to encourage residents to engage in economy-stimulating, energy-saving, or otherwise worthwhile projects.

READ ALSO: Flat tax, superbonus and wild boar: What’s in Italy’s 2023 budget?

While the paperwork involved can be a headache, it’s well worth knowing what discounts are available – in some cases they can end up saving you tens of thousands of euros.

Here are the key reductions on offer in 2023.

Superbonus

Italy’s popular ‘superbonus 110’, which offers homeowners the chance to claim a tax deduction of up to 110 percent of the cost of renovation work, has been extended into 2023 under the budget bill – albeit in a reduced form.

READ ALSO: Who can claim Italy’s building superbonus in 2023?

From January the maximum available rebate will drop from 110 to 90 percent, and the scheme will exclude many of those who were previously eligible to claim.

You can read more about the precise changes planned for the bonus HERE.

Furniture and appliances bonus

The 50 percent discount on the purchase of new furniture and energy-efficient appliances for properties which have been renovated will remain available in 2023. 

However, the discount will now only be applicable to expenses of 8,000 euros or less (down from the 10,000 euro limit for 2022).

Find more information on the Agenzia delle Entrate (Italian tax office) website here (in Italian).

You might be able to claim a discount on your washing machine in Italy this year.

You might be able to claim a discount on your washing machine in Italy this year. Photo by Anna Moneymaker / Getty Images via AFP

Earthquake bonus

The sisma bonus provides a reduction in costs related to reinforcing homes in parts of Italy at medium to high seismic risk (categories 1, 2 or 3). 

The incentive allows property owners to claim between 50 and 80 percent of up to 96,000 euros on improvements that will make buildings more earthquake-safe, depending on the extent to which the changes reduce seismic risk.

The extended deadline for completing the renovations and applying for the tax deduction is December 31st, 2024; after this point, the benefit will return to its original value of 36 percent of up to 48,000 euros.

READ ALSO: Six things you need to know about claiming Italy’s ‘Sismabonus’

For more details, see the Agenzia delle Entrate’s Sismabonus website here (in Italian) or get in touch with the Agenzia delle Entrate directly. Find contact information here

Ecobonus

If you carry out work to make your home more energy efficient and eco-friendly, for example by replacing your boiler with a low-carbon alternative, improving insulation, installing solar panels, adding blackout blinds or shutters, or even adding charging points for electric cars, you can claim a significant portion of the expenses back. 

Savings of 50 percent or 65 percent can be claimed, depending on the type of work done; in common areas of condominium buildings, that figure rises as high as 75 percent. 

The current deadline for taking advantage of the bonus is December 31st, 2024; after this date, like the sisma bonus, the benefit will reportedly shrink to 36 percent of up to 48,000 euros per real estate unit.

Italy residents who install solar panels on their homes could claim a large tax reduction.

Italy residents who install solar panels on their homes could claim a large tax reduction. Photo by Bill Mead on Unsplash

First home bonus

People buying their first residential property in Italy are eligible for reductions on registration, mortgage and land registry tax, as well as a lower rate of VAT if the purchase is subject to sales tax.

They can also claim credit against personal income tax on estate agent fees and mortgage interest.

If you’re a first-time homebuyer under the age of 36, a couple with one person under the age of 35, or a single-parent family with minor children, you’re eligible for even more savings – provided your household’s ISEE doesn’t exceed 40,000 euros a year.

READ ALSO: What’s an ISEE and when will you need one in Italy?

Certain taxes are wiped out altogether, notary fees are halved, and the state will even guarantee loans of up 250,000 euros. This subsidy, which had been due to expire in 2022, was recently extended until December 31st, 2023.

For more details, see the Agenzia delle Entrate’s website here (in Italian).

‘Green house’ bonus

Back for 2023 (having briefly been trialled in 2016-2018) is the bonus case green, which provides financial incentives to people buying more energy-efficient homes.

Buyers of houses with energy class A or B ratings can benefit from a 50 percent VAT reduction on their purchase until December 31, 2022; however they must buy directly from the construction company or a real estate fund.

Renovation bonus

The bonus ristrutturazione allows you to apply for a 50 percent tax reduction on renovating your property, on expenses up to 96,000 euros, until the end of 2024.

Work might include repairing structural damage, having the wiring replaced, adding a garage, making the property more wheelchair-accessible, installing security systems, removing asbestos or adding safety features such as gas detectors. 

What you can’t claim for is ordinary upkeep and maintenance expenses; to be eligible for a subsidy, the work must involve a significant change or addition to your property.

You can claim significant discounts for making home improvements in Italy.

You can claim significant discounts for making home improvements in Italy. Photo by Stefan Lehner on Unsplash

Garden bonus

If you’re considering adding or renovating green space, you can apply for a 36 percent tax deduction on landscaping, installing irrigation systems, building a well, creating a roof garden or other significant work on your property’s outdoor areas until the end of 2024.

The bonus verde can be claimed on expenses of up to 5,000 euros per property and can be claimed on more than one home in your name. Routine maintenance and upkeep of your garden does not qualify. 

For more details, see the Agenzia delle Entrate’s bonus verde website here (in Italian).

Drinking water bonus

To incentivise people in Italy to ditch plastic bottles in favour of more environmentally friendly alternatives, the government has extended the bonus acqua potabile until the end of 2023.

A 50 percent discount will be available for the purchase and installation of products that provide tap water filtration, mineralisation, cooling or carbonation.

The tax reduction can be applied to expenses of up to 1,000 euros for private individuals, or up to 5,000 euros for businesses.

Psychologist bonus

Italy’s psychologist bonus (bonus psicologo), a voucher for residents looking to access public mental health services, will increase from 600 euros to 1,500 euros in 2023. 

The bonus, which was first introduced by Draghi’s government in July 2022, will remain available to residents with an ISEE below 50,000 euros a year.

However, with just 5 million euros allocated to the scheme this year, down from 25 million in 2022, it’s estimated that only around 10 percent of the roughly 400,000 who have applied will be able to benefit.

See more information about claiming the ‘psychologist bonus’ on the INPS website here (in Italian) 

‘Culture bonus’ for 18-year-olds 

A 500-euro payment made to young people on their 18th birthday to spend on books, museum and cinema tickets and other culture-linked items will be means-tested from 2023.

The existing 18App bonus will be replaced by two new payments: the ‘Carta della Cultura Giovani’ (Youth Cultural Card) and the ‘Merit Card’ (Carta del Merito).

The former will be awarded to 18-year-olds whose households have an ISEE under 35,000 euros, and the latter will go to those who graduated from high school with full marks.

Both bonuses will be worth 500 euros and will be applicable to the purchase of the same items encompassed by the former bonus cultura.

Bills bonus

The bonus bollette or bonus sociale, designed to offset ever-rising gas and electricity bills for lower-income households, will be available to those with an ISEE of up to 15,000 euros in 2023, the threshold having been raised from 12,000 in 2022.

Households with at least four dependent children that have an ISEE of up to 20,000 euros are also eligible.

An estimated 6.2 million people should benefit, up from 5.2 million last year. Those who qualify shouldn’t need to take any action; the discount will be automatically applied to energy bills.

Please note that The Local is unable to advise on or assist with claiming tax deductions. For more information, consult an independent financial advisor or get in touch with the Agenzia delle Entrate. Find contact information here

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