Buying a property in a foreign country whether for lifestyle reasons or as an investment is usually a new experience for a buyer so we have prepared a two-part brief note to explain the main steps involved in purchasing a property in Italy.
What are the final steps and what is the rogito?
At the date agreed in the preliminary contract, the buyer and the seller will meet with the chosen Notary ( Notaio) to sign the deed of sale ( rogito), which is a document prepared by the Notary ( Notaio). If the buyer is resident outside of Italy, it is possible to minimise travel costs by appointing an avvocato (Italian lawyer) to sign the rogito on his or her behalf and to pay the balance of the agreed purchase price, preferably using a bankers' draft ( assegni circolari).
A Notary ( Notaio) is a public official in Italy and when instructed to assist in Italian conveyancing procedures, the Notary is required to verify the identities of the parties, check the title deeds and the existence of any encumbrences. The Notary ( Notaio) will usually read the document aloud before the parties to ensure both parties are fully aware of their duties and rights and to ensure their intentions are correctly expressed. If the buyer does not understand Italian, an interpreter will need to be appointed or, alternatively, the buyer can appoint an avvocato (Italian lawyer) to attend on his/her behalf.
Once the deed of sale ( rogito) is signed, the Notaio will collect and pay any taxes due to the Agenzia delle Entrate (Italian Tax Agency), as well as register ( trascrizione) the rogito at the Italian Land Registry, a public database. A sealed, certified copy of the deed of sale is usually available for collection from the notary's office within one month from the date of actual completion, once all taxes have been paid.
What taxes will need to be paid?
In order to purchase a property in Italy, it is necessary to have an Italian Tax Code ( codice fiscale), which can easily be obtained from Agenzia delle Entrate (Italian Tax Agency) by completing the appropriate form and submitting it to the local tax office in person, or via a third party based in Italy together with a copy of the applicant's passport. It can also be requested at the Italian consulate in London.
Taxes on property transactions in Italy are calculated at different rates in accordance with the type of property purchased and the personal circumstances of the buyer. It is most common for taxes to be levied by applying a flat rate of tax (9%) to the contract price, as stated in the deed of sale ( rogito). A different rate (12%) applies to agricultural land. However, as from 2006, buyers purchasing a property from a private individual will have their taxes calculated on the cadastral value, which is usually substantially lower than the market price (around half of the value). These taxes can be reduced further (by 2%) if the buyer satisfies two conditions: (i) the property purchased in Italy will be the buyer's main residence/home ( prima casa) and (ii) the buyer makes a formal statement in the deed of sale ( rogito) undertaking to register as resident at the address of that property within 18 months from the date of completion. If the buyer satisfies these two conditions, the buyer will also pay reduced notary fees of up to 30%.
In the event the seller of a villa/flat is a company or a commercial entrepreneur, Italian VAT (IVA - Imposta Valore Aggiunto) will be due at differing rates depending on when: (i) the property was built and (ii) the property is sold. Italian Registration Tax and Italian Stamp Duty will also be payable, but these will be limited to a small fixed amount, as well as a VAT.
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