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EXPLAINED: The hidden costs of buying a home in Italy

If you're weighing up whether to buy a property in Italy, you'll also need to factor in substantial fees and taxes. Here are some of the hidden costs you might face.

EXPLAINED: The hidden costs of buying a home in Italy
Casa dolce casa? Make sure you've budgeted enough before making your final offer. Photo by Alejandro Olalde Miranda on Unsplash

Italy’s infamous cheap property deals and building ‘bonuses’ attract international attention, but for most people, purchasing a home in the country remains an expensive process thanks to the fees and charges involved.

READ ALSO: The red flags to watch out for when buying an old house in Italy

As anyone who has gone through a home purchase in Italy will know, it isn’t as simple as snapping up a bargain – regardless of whether it’s your primary residence or a second home.

Before you get to the cost of any renovations, property experts warn that the additional costs of buying a home in Italy usually add up to around ten percent of the purchase price.

These often seem like ‘hidden’ costs to buyers from overseas, who often aren’t expecting many of these charges – or for them to be so high.

So before you make your final offer, here’s an overview of the fees and charges you may need to budget for.

Taxes

The number and variety of taxes associated with buying a home in Italy is considerable.

They may change according to the type of property and the condition you buy it in. Here’s a look at the most common charges that apply to almost all types of property in Italy.

– Stamp Duty

The Italian equivalent of stamp duty will be 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.

The value recorded on the property’s cadastral record might be much lower than the market value of the property, as this gets recalculated only when the property is sold – the property may have been with the previous owner for decades when the house price was much lower at its last sale.

You can access the cadastral records and check this value – it won’t be declared by sellers – but remember the value may be updated upon purchase, meaning you’ll end up paying more.

The rules surrounding this type of duty are complex and your estate agent or a tax advisor should be able to explain how they apply in your case.

It’s worth knowing that if you are legally resident in Italy full time – which means you are in Italy more than six months of the year – and you buy from a private seller, duty will be 2 percent.

If you buy from a private seller, but you intend to live in the property fewer than six months of the year, this duty is nine percent of the cadastral value.

On the other hand, if you buy from a registered company in Italy, the tax will amount to a fixed rate of €200. This is true for both homes used as a primary residence or a second home.

OPINION: Why Italians aren’t snatching up their country’s one-euro homes

You’ll need to do the maths on fees and taxes when buying in Italy. Photo by Cristina Gottardi on Unsplash

There are ways to reduce this cost if you buy the property as a second home. You have 18 months after the purchase to register as a resident in Italy.

If you intend 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.

If the house isn’t finished, such as one bought off plot or is a development project, there is no duty to pay.

– VAT

VAT, known as ‘IVA’ in Italian, is due on the purchase of property in Italy. You shouldn’t have to pay it if you’re buying from a private seller, however if you’re buying from a company, the amount you pay depends on the property.

It’s four percent if it’s your primary residence, 10 percent if it’s your second home and 22 percent if it’s categorised as a ‘luxury’ property.

– Land registry tax

Known as ‘imposta catastale‘ in Italian, this is a fixed rate of €50 for buying a property from a private seller. It rises to €200 if you buy from a registered company.

This tax is to update the owner of the property in the government’s cadastral list.

Be prepared for the taxes on property purchases in Italy. Photo by Daniela Turcanu on Unsplash

– Mortgage tax

Another fixed rate tax, ‘imposta ipotecaria‘ in Italian, will cost €50 if you buy from a private seller and again, €200 if you buy from a registered company.

– Marca da bollo

This is a mandatory tax in the form of stamps added to contracts or invoices over the amount of €77.47. You can buy these from your corner shop or tabbachi, or post office, and attach them to the invoice.

You’ll pay this per contract over that amount. As a guideline, expect to pay €16 on any invoice for a contract that is over that amount and includes VAT (IVA), and €2 if there’s no VAT.

Notary costs

You’ll need to pay a €16 ‘bollo’ on notary documents. But that’s just the start, of course.

You’ll need a notary to validate the contract and check that the property is legally registered. This isn’t a tax – it’s a cost that is part of buying a house in Italy.

There is no fixed fee for this and it depends on the town, the type of property you buy and the purpose you intend to use it for, such as residential or commercial.

The absolute baseline would be €1,000 or one percent of the sale value, but fees vary from company to company and are known to run into the thousands even on cheap homes bought for major renovation. Notary fees are subject to IVA, which when it’s a sales tax, is 22 percent.

My Italian Home: ‘We bought the cheapest house in Piedmont and live mortgage free’

The amount of fees you need to pay depends on the property. Photo by Ehud Neuhaus on Unsplash

Agency fees

If you’re buying a house through a real estate agent, they take a percentage, usually around three percent of the purchase price from both the seller and the owner.

A general range you can expect to pay is between one and five percent of the property cost. Again, this varies from town to town and firm to firm.

Legal fees

You may choose to use a lawyer to help you navigate the process and explain the steps in English. They will charge you based on a percentage of the value of what you’re paying for the property, which again, can differ considerably. These fees are also subject to VAT.

Geometra or civil engineer’s fees

If you’re looking to renovate a property or if it’s an old building, you’re strongly advised to speak to a geometra, or civil engineer, who will inspect the property and will recommend the work that needs doing.

They can also suggest a building company to carry out these works and provide you with a quote for all the restorations needed.

Without one, it would be very hard to go through all the processes required to get building approval and understand the local rules and regulations.

As well as considering restoration costs, those buying an old house in Italy should check for hidden problems that could prove expensive down the line. Photo: Tiziana Fabi/AFP

Sometimes, you will have to use one as they may need to legally certify certain parts of the work.

The cost for these services depends on the professional you work with and the degree of the works required. It could be a few thousand euros or could be much higher if the project is extensive.

Tied in with this are other fees such as licences and registration fees – simply submitting your planning document to the local comune (town hall) can be substantial, costing upwards of €10,000.

Architect or engineering costs

For larger scale projects, you may also need to hire an architect, whose fees will also vary depending, again, on the area and company.

While they would design the spaces and analyse the functionality of the property, an engineer would deal with the strength and stability of the structure.

READ ALSO:

You may also need the involvement of a termotecnico, or a heating engineer, who chooses the materials to be used and the type of system, according to the geographical area of your home.

All in all, these experts will cost a hefty wedge and may change your renovation budget when you get final quotes.

Energy connection

Sometimes, if you purchase an old property, you may need to pay for disconnection and connection of gas and energy supply.

This will change depending on your location, as always, but don’t be surprised if it takes the best part of €1000 to perform what you might think is a simple cut to an old supply.

Plus, you’ll then need to account for the cost of connecting up to new utilities when your property is ready.

Deposit

You’ll need to pay a deposit, or a down payment, to the seller of the property which acts as a guarantee of sale. If the buyer pulls out, the seller can keep this deposit.

On the other hand, if the seller pulls out, the buyer can demand double the amount back.

Mortgage broker fees

You may want to enlist the help of a mortgage broker when it comes to getting a mortgage on the property you buy. This professional has existing relationships with lenders, meaning that as well as negotiating a better deal than you could get on your own, they should help smooth the application process and speed things up.

They’ll also set up a good relationship with your local bank for any future loans or home purchases. They may also speak English to clearly explain what you need to do.

Again, what you’ll pay will change depending on where you are and each professional’s rates, but you can earmark around one percent of the mortgage value.

Time

As the saying goes, time is money. And you will need to allow for a whole lot of time to buy a house in Italy. Unlike the market you may be used to you in your home country, where buying and selling moves fast, be prepared for a slow process in Italy.

It can take months for just the sale to go through and renovation projects may go on for years, depending on the works and the current state of the property market.

As always, seek professional advice before you buy and check what incentives or exemptions you may be eligible for.

Please note that this list is not comprehensive, but covers most scenarios that buyers may find themselves in. See more in our articles about property in Italy on The Local.

Member comments

  1. My advice is to never assume that things work the same way in Italy as in your home country. When buying a home you can encounter some legal issues and situations that you could never have imagined possible. And Italians won’t think to point these out to you because to them it’s just business as usual. Anyway, it’s much better to avoid these land minds then try to fix them afterward.

  2. The section on “stamp duty” is not very clear here. First of all the term “stamp duty” meaning property purchase tax, is I believe, totally British and could be confusing to anyone not British. It can be an awful lot of money – when I bought my property it was easily the largest payment I made in taxes and fees. It is based on the “rendita catastale” (“cadastral value”), a fixed value that, at least when I way buying my property several years ago, was not published for any of the properties I looked at, which seems odd as it is so important. The sum you pay is derived from a rather obscure formula using the cadastral value, and is 2% if you are resident and it is your primary residence, 9% otherwise. It means as a non-resident you could pay as much as 9% of the purchase price which can be an awful lot of money. I would advise anyone who is buying as a non-resident to look really closely at this. The cadastral values tend to be much less in older properties than new ones.

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PROPERTY

Where in Italy are house prices rising fastest?

Property values are expected to continue rising overall in Italy in 2023, but the situation looks much better in some cities than others. Here's how average prices compare.

Where in Italy are house prices rising fastest?

Until 2020 Italy’s real estate market had long suffered stagnation, weighed down by a large number of old, neglected properties which were proving difficult to sell.

But the pandemic turned Italy’s property market on its head, leading to the first increase in house prices for years at the end of the first quarter of 2020.

This trend has held up since, and industry experts cautiously predict further price growth in 2023 – albeit more modest than previously hoped.

Factors putting the brakes on growth include the soaring cost of living eroding households’ purchasing power, rising mortgage interest rates, the soaring cost of building materials, and a shrinking economy.

REVEALED: Where in Europe have house prices and rent costs increased the most?

Mortgages are also expected to become more difficult to obtain in 2023, meaning fewer people able to make a purchase.

But despite the gloomy picture overall, the outlook varies significantly around the country and some cities are expected to see a significant rise in prices this year.

Milan remains by far the most expensive major Italian city for a property purchase, but prices are rising faster elsewhere. Photo by Ron Dylewski on Unsplash

A recent report from Idealista Insights, the property search portal’s research team, looked at changes in the average prices per square metre in property listings in Italy’s biggest cities.

In 2022, the price per square metre “generally increased throughout the country, with ‘exclusive’ neighbourhoods becoming even more inaccessible to the average buyer,” the report found.

But, while bigger northern cities saw rising prices across the board, most southern cities were struggling with “stagnation”, it said.

Based on Idealista’s data, here are the ten most expensive cities to buy property in Italy, in order of the rate at which prices are rising.

  1. Genoa: the Ligurian capital is Italy’s tenth-most expensive city to live in – but prices here are rising faster than anywhere else on average, according to Idealista. An increase of 4.5 percent is forecast for Genoa in 2023, meaning the price per square metre will go from 1,602 to 1,674 euros.
  2. Bologna: Bologna records the second-highest price increase in Italy compared to 2022. The citywide average price per square metre will rise by an estimated 3.9 percent, reaching 3,419 euros.
  3. Verona: in seventh place we find the city of Romeo and Juliet, where the increase in prices is substantial, equal to 3.2 percent. The average cost will rise by around 80 euros per square metre, going from 2,483 to 2,563 euros per square metre.
  4. Milan: Italy’s economic capital will easily remain the most expensive city for property purchases, with prices set to rise by 2.9 percent compared to 2022. The average price per square metre is expected to exceed 5,300 euros, 150 more than now, with significant price variation between city districts.
  5. Bari: The capital of Puglia in the south-east is set to record an price increase of 2.8 percent, with the citywide average price per square metre going from 1,909 euros to 1,962 – making it the ninth most expensive Italian city in which to buy property and the only southern city to record a significant increase. 
  6. Turin: The northwestern city can expect an overall price increase of 1.5 percent, equal to around 30 euros more per square metre for a final price of 1,979 euros on average. 
  7. Florence: The Tuscan capital still has the second-highest prices, and can expect an average price increase of 1.4 percent, with the cost per square metre to rise from 4,128 to 4,184 euros .
  8. Rome: The capital may have some highly sought-after and expensive districts, but overall average prices will remain at around 3,336 euros, up slightly from 3,360 in 2022. This is equal to an increase of just 0.76 percent.
  9. Venice: La Serenissima remains the fifth-most expensive city to buy property again this year as the average price will remain almost unchanged with a reduction of -0.3 percent, meaning the cost per square metre will be around 3,090 euros.
  10. Naples: The southern capital is set to go against the trend, with a -1.5 percent drop in house prices expected. This means the average price per square metre will go from 2,737 to 2,696 euros, a difference of 41 euros.
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