STUDIO LEGALE ARCALENI
LEGAL EXPERTS ON ITALIAN PROPERTY LAW

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Beautiful landscapes, fantastic food and wine, good weather almost all over the year, and plenty of art and opera. Where, if not in Italy? Puglia, Marche, Sicily, Sardinia, Abruzzo, Tuscany, Umbria, etc. At the moment, plenty of bargains are available. The market offers something for every taste, from rustic rural getaways and seaside villas to Renaissance city apartments and modern ski chalets. 
 
So, if you are considering investing in a property in Italy, it is always very important to be assisted by a lawyer in the procedure from the beginning, even before starting the process. Differences are the jurisdictions, the laws, the regulations, and the habits of other countries. It is important to be careful and contact an expert in the field from the beginning. Agents and sellers have an interest in the deal to be done, so sometimes, you need to be careful, especially when signing documents or making offers. Firstly, it is always useful and important to understand the dynamics of the market so that it will be less dangerous to move in it. A lawyer is a person of trust who can walk you through your future investment in the proper manner. We have years of experience assisting clients with this kind of matter.
 
Let’s have a look at the various aspects to know when dealing with properties in Italy:
 
A. THE PROPERTY'S DOCUMENTATION AND EXPERTISE
 
When purchasing a property in Italy, it is important to know the relevant documents to see and check them. Here is a brief list of what is usually relevant for a property: Title Deed or Provenance, Town-planning Aspects and permissions, Cadastral Aspects, Co-Ownership Aspects (if there are condominium expenses, annual routine maintenance expenses, etc.), and Energy Certification. For the documentation to be read in the best way possible, and always in the most technical way, considering also the existence of local regulations and laws, we always advise to put in charge an expert, surveyor or building engineer, to check this most thoroughly.
 
B. STAGES 
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1. The Negotiation
This is the first stage of the purchase. It is necessary before signing any kind of contract or document. It is necessary to define the price and method of payment, the deadlines for the delivery of the property and the stipulation of the deed of sale, the dividing of joint-ownership expenses in the time that passes between the preliminary and the final deed, the extraordinary expenses already decided upon, the buyer’s notification of the possible need to obtain a loan and the seller’s notification of any encumbrances on the property, and any other aspect crucial for the client depending on the case and the property.
If the seller is a business and not a private one, we will need to take into consideration D.Lgs. 20 June 2005 no. 122, which provided further guarantees to protect the buyer. For example, the failure to provide the suretyship from the seller gives the buyer the right to declare the contract “null and void,” with the request for reimbursement of the amounts of money already paid, along with any compensation for damages, and also the builder’s obligation to issue the buyer an insurance policy that, for at least ten years, protects the buyer against damages deriving from the total or partial ruin of the building or serious flaws in the construction.
2. The Purchase Proposal (Proposta d’acquisto or Contratto Preliminare)
Before signing the final deed, it is usual to make an offer. Any kind of document related to an offer for the property to purchase may be binding, so it is important to carefully value the context and legal consequence of the document to be signed. Different are the forms; however, substantial is the result. A “Proposta d'acquisto” would be, at the beginning, only binding for the buyer and only for the seller once accepted. A “Contratto Preliminare” (Preliminary Contract) would be instead binding for seller and buyer and would be a more complete and protected option in consideration of the fact that it would be a result of a negotiation already completed. The main points that a preliminary must contain are: the personal data of the parties; the exact identification of the property; the agreed price; methods of payment; the date on which the parties intend to stipulate the notarial deed; existence of any mortgages or other encumbrances; the obligation for the seller to cancel the mortgage; the provenance of the real property and its accessories, and other pertinent data, such as common property, appurtenances, easements, etc.; the condition of the systems and installations, certifications, conformities, compliance with town-planning regulations, the possible releasing of the seller’s responsibilities; etc.
Before signing anything, it is important to value all the factors (provenance, cadastral and planning situation, rights, obligations, etc.), documents, and needs involved. It is essential to value all aspects (including taxes, conditional resolutions clause, if any, technical aspects, etc.) to avoid legal disputes and check the validity and importance of the clauses.
Under Article 1385 of the Italian Civil Code, it is usual to pay a deposit, upon signature, that by law can be retained by the seller if the buyer withdraws the purchase, or instead, if the seller withdraws the sale, paid back to the buyer, doubling the amount.
The essential data of these payments must be kept because the notary that stipulates the deed must quote them in the deed, also for anti-money laundering purposes.
With the acceptance of the seller and the entry into the contract, the Real Estate Agent has the right to receive the commission.
3. Registering and Transcription of the Preliminary Contract
After signing a preliminary agreement, the document will need to be registered with the Italian Revenue Office (Ufficio delle Entrate). Art. 1, paragraph 46 of Law 27 December 2006 no. 296 also extends the obligation of requesting registration to the real estate agent and makes the agent jointly liable for payment of the registration tax. This needs to be done within 20 days of the stipulation of the agreement. The registration tax is 168.00 euros. If there is a down payment, it is also taxed at the rate of 0.50% on the amount paid. The taxes paid with the preliminary
contract will be deducted from the taxes to be paid for the registration of the final deed.
Unlike the registration, which is valid essentially for tax purposes, the transcription undertaken with the Agenzia del Territorio Servizio di Pubblicità Immobiliare (Land Agency - Real Estate Advertising Service) is aimed at protecting the future buyer to avoid the danger of prejudicial formalities (sale to others, mortgages, distraints...) that could be transcribed or registered before the final contract, to attribute to the future buyer a lien in the case of the bankruptcy of the seller (given preference over all other creditors in case of bankruptcy), to block the challenge of antecedent transactions, etc. So this is usually used in stipulating a contract, especially when the seller is a contractor or a company that could go bankrupt if a fairly long time passes between the preliminary contract and the deed of sale or if the down payment is very large.
4. Final Deed (Rogito)
The last step in purchasing a property is to sign the final deed (Rogito) before a public notary. The notary is normally chosen by the buyer, who is charged with the expenses of the purchase.
It is the notary’s job to do the final checks on the full ownership of the property, ensure that it has no encumbrances, and verify the identity of the owners and the property to be purchased. The checking of whether or not there are encumbrances (mortgages, distraints, attachments, citations, preliminary contracts, liens, third party rights in general) is done at the Land Agency (Agenzia del Territorio). The notary also checks the identification of the correct plans and the classification of the property at the Registry Office.
Once these tasks are carried out, the notary begins to draft the deed of sale, which must also consider and provide all town-planning measures involved in the construction of the building and the conformity of the works to said measures, the seller’s right to sell (concerning the status with their spouse, with any other co-owners, to bankruptcy proceedings or authorization decisions by authorities) and the buyer’s right to purchase (concerning the status with their spouse, to bankruptcy proceedings or authorization decisions by authorities, to their citizenship if a foreigner who is not resident in Italy), the method of payment to the seller and to the real estate agent, the energy performance documentation of the building (APE) and the tax requirements (deed VAT or registration, any tax benefits, problems connected with tax deadlines).
Lastly, the notary handles the formalities after the deed, such as registration (for payment of taxes) and the transcription (to make the deed opposable to third parties). The taxes due will be transferred to the notary, who will make the payments to transfer the money in the buyer's name.
 
C. TAXES ON THE PURCHASING A PROPERTY 
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Upon purchase of a property, taxes will have to be paid. Taxation will differ depending on the circumstances, based on the seller's identity and the buyer's usage of the property. So, depending on the circumstances, it will be applicable the “Imposta di Registro” (Registration tax), or the “Imposta sul valore aggiunto”, IVA (VAT), as well as the “Imposta ipotecaria” (mortgage tax) and the “Imposta catastale” (cadastral tax).
1. "Prima Casa" Benefits
The property can be purchased as a main residence property (Prima casa), benefiting from numerous tax reliefs, or as a second home property. There are existing requirements to benefit from the “Prima Casa” Tax regime. First of all, the property must be a “non-luxury” home (Cadastral Category - A1, A8, A9). On the other hand, the buyer must live in the Municipality where the property is located or must move there within 18 months from the stipulation of the deed or prove that their main work is in the Municipality where the property is located. The buyer must not hold, either alone or together with their spouse, any rights (ownership, use, usufruct, or habitation) on another home in that Municipality or have another home purchased “Prima Casa”, anywhere within the national territory. To avoid speculating, the property purchased with “Prima Casa” benefits cannot be sold before five years have passed from the date of purchase, under penalty of loss of the benefits and the payment of surtaxes and interest. This loss of benefits can be avoided by purchasing another house within one year from the date of sale. In this case, one may also avail themselves of the “tax credit,” as a kind of discount on the new purchase, equal to the tax paid on the first purchase. 
As an exception of law, the “Prima Casa” regime tax can also be applied without residence if the buyer carries out his work in a different municipality from the one in which he resides or if the buyer moved abroad for work reasons and the main office of the company he works for is in the Municipality where the property is located, or if the buyer is a citizen Italian resident abroad (A.I.R.E.) or belongs to the personnel of the Armed Forces or the Police Force, in any municipality in the Italian territory. 
2. Purchasing from Privates,  a “non-construction” company, or a “construction” company after five or more 
So, in general, if the seller is a private individual, a “non-construction” company, or a “construction” company (or the company that has renovated the building) and has completed the work five or more years ago, the taxes to be paid are:
- registration tax: 2% if the property is purchased as a main residence - “Prima Casa”, or 9% if the property is purchased as an investment or holiday home;
- mortgage tax: €50 (fixed tax - in all cases);
- cadastral tax: €50 (fixed tax - in all cases);
- notary's archive fee: from €19.30 to €139.40 (variable based on the value of the document).
The taxable base is calculated on the purchase price unless the buyer is a private and is purchasing a residential property, and the deed is subject to registration tax (thus, sales subject to VAT are excluded). In this case, there will be the option of the “Prezzo-Valore” tax regime, under which it is possible to pay the registration tax on a taxable base represented by the cadastral value. The cadastral value of the property is obtained by multiplying the cadastral income of the house by 110 if the property is purchased as “Prima Casa” or 120 in all other cases. The minimum tax will be €1,000. Any advantages from making statements aimed at tax evasion are nullified. The price-value mechanism applies on the condition that the entire agreed price is indicated in the deed: if the agreed amount is concealed, even partially, the consequences and penalties are very high. The notary’s fees are also reduced by 30%. 
3. Purchasing from a company within five years
On the other hand, if the seller is a “construction” company (or the company that has renovated the building) and the sale is made within five years from completion of the work, the sale will also be subjected to VAT, and the taxes to be paid are:
- VAT (paid to the manufacturer and calculated on the purchase price): 4 % if the property is purchased as a main residence - “Prima Casa” or
10% if the cadastral category of the property is A other than A/1, A/8, A/9 (luxury properties), or 22% if the cadastral category of the property is A/1, A/8, A/9 (luxury properties).
As regards the expenses due to the notary, the following must be paid:
- registration tax: €200 (fixed tax - in all cases); 
- mortgage tax: €200 (fixed tax - in all cases);
- cadastral tax: €200 (fixed tax - in all cases);
- Stamp duty: euro 230.00;
- Mortgages fees: 90.00;
- Notary's archive fee: from €27.5 to €139.4 (variable based on the value of the document).
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Please note that this is only a general and indicative guideline and cannot be considered legal advice.
For further, detailed information, please Contact Us.

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