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 STAGES IN THE BUYING PROCESS:
Normally, there are three main stages to buying property in Italy as follows.
STAGE 1: PROPOSTA D’AQUISTO: (Promise to buy) Firstly, the buyer makes an offer to purchase, which commits him/her to buying the property at the price given (usually for a period of between 14 and 30 days). If this offer is accepted a deposit (usually 10%-30%) is paid to the seller. Upon the offer being accepted, the agent will produce a Memorandum of sale which details the identities of buyer and seller, the property, agreed price, and comments/conditions and completion date. Notary appointed by the buyer. This Memorandum of sale will be sent to all parties involved and instructed.
STAGE 2: COMPREMESSO: (preliminary contract) Secondly, the solicitor will undertake initial searches, and check conformity with permissions & regulations, and check for any pre-emption rights. The parties involved then sign a preliminary contract (“compromesso”) outlining the details of the transaction, which is legally binding as evidence of an offer to buy. Once this document has been signed, another deposit (ranging between 10% and 30%) is payable. Withdrawal at this point will result in the forfeiture of all deposits (if the seller withdraws, he/she must refund the deposits plus a penalty of the same value). Agents fees are usually split between the buyer and seller in Italy (circa 3-3% on both sides), and these maybe payable or at least 50% at compromesso.
The vendor is obliged to declare any charges/local planning applications they are aware of at compromesso. Any conditions of the sale (the need for lending/further planning permission) that need to be completed before the sale will also be recorded in the compromesso. The compromesso may be registered at the local registration tax office if required (meaning that should any other sale be attempted the searches will find your existing compromesso).
STAGE 3: ROGITO: (Final contract) After the ‘compremesso’ the notary, will undertake any final necessary searches, complete any conditions declared, and prepare the final contract or ‘rogito’. If the vendor is found to have not declared any charges/ applications, then the purchaser may withdraw. If the vendor withdraws after compromesso, a penalty of twice the deposit level is paid to the purchaser, but the purchaser may obtain a judgement enforcing the sale.and having received an official tax code (codice fiscale), the buyer proceeds to the final contract (“rogito”), which is normally signed a couple of months after the compromesso. Both parties sign this in the presence of a Notary, who collects the outstanding taxes.
Upon signature of the final contract, the purchaser pays the final sum to the vendor, the notaio’s fees (circa 1%) mandatory, the solicitor’s fees (circa 1%) optional, and stamp duty (11% of the catastal value on buildings when sale is between 2 private individuals, and 19% of the declared value on land). The remaining agents fees are also due at this stage. By law (2007) the full sale price must be declared on the contract but stamp duty will be based on the ‘catastral’ (land registry) value. The catastal value is normally less than the purchase price, but increasingly this value is brought into line with actual market values in Italy; individuals should seek legal and financial advice on this. The notaio, upon final signing of the contract, will transfer legal title of the property, and register the change at the land registry.
Please note that we have included the above information as a basic indication of the purchasing procedure, but we recommend that it should be verified in each individual case.
EXTRAS, TAXES & VAT:
We recommend that you seek further tax advice as to the advantages/disadvantages of becoming resident in Italy (you would need to be resident for minimum of 183 days); for purchases this would bring a purchase tax rate of 4%. In the meantime, here are some other figures / taxes to keep in mind.
INCOME TAX: If over 183 days are spent in the country you become a tax resident, and liable for income tax on worldwide income. Income tax is also payable by all property owners on the theoretical increment on the value (%) of the property during the year.
COUNCIL TAX: Imposta Comunale sugli Immobili (ICI: Council tax) is based on the property’s taxable value (at 0.5%) and is collected by the local commune twice a year.
CAPITAL GAINS TAX: There is currently no Capital Gains Tax in Italy for individuals if the disposal of a real property takes place five years and one day from the purchase.
INHERITANCE TAX: Inheritance tax has recently been brought back. All foreign owners are advised to draw up an Italian will.
VAT (IVA) is between 10 and 20%
WHO IS WHO IN THE BUYING PROCESS?
AVVOCATO / SOLICITOR: In Italy the purchase of a property is a regulated process.Whilst Bridgewater will act as your representative overseeing the sale through to completion you will need to choose a legal representative in Italy to act on your behalf and take responsibility for the purchase process. You are welcome to choose your own lawyer or Bridgewater can recommends one.
GEOMETRA / SURVEYOR: A Surveyor (“Geometra”) will be required to carry out a survey on the state of the property and all searches connected with the local planning and building regulations. If renovation work is planned, permissions can take up to a year, so the earliest involvement of a geometra (architect/surveyor) is advisable.
NOTAIO / PUBLIC NOTARY: In addition to appointing a solicitor, to complete the transaction, a local Notary Public (“Notaio”) will be necessary. In most cases only Notaries can validly transfer title to property under Italian Law. Notary fees on a property of €250,000 would be in the region of €2,000. The higher the price of a property, the higher the notary fees are likely to be.
PROCURA / POWER OF ATTORNEY: A Power of Attorney (“Procura”) is required when the buyer is not going to attend the completion formalities in person, and wishes to enable someone else to attend and sign on his/her behalf. A “Procura” may also be required if you are not fluent in Italian, and therefore will not, normally be allowed by the Notary to sign the completion documents, because you cannot readily understand them. In either case a third party should be empowered to sign for and on your behalf.
FINANCE / MORTGAGES: Financing can be negotiated with Italian Banks – they will usually provide a mortgage of up to 85% of the purchase price. If you own a property in your home country, equity can be released by way of arranging a mortgage against this. This service is provided directly by most UK and Irish lenders, or you can seek advice from an independent mortgage advisor. Bridgewater can refer you to professional financial advisors in the UK and Ireland who will analyse your financial needs, advise on various types of mortgage schemes, and find the best mortgage deal for you.
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