a reservation contract requires €3,000 to €5,000 while a preliminary
deposit can be anywhere between 10% and 30% of the purchasing price.
the funds into a client account means that you can have the preliminary
contract or reservation agreement overviewed by your lawyer before the
money is handed over. This releases the pressure that can be exerted by
agents to sign the contract before having it checked, while also ensuring
the agent that the funds are available should everything be in order.
the agents further. On your request, having reviewed the contract,
your lawyer will release the funds. The agent will receive the funds in
24 to 48 hours rather than waiting several weeks for international clearance
on a check. You should check with your lawyer that should you decide not
to buy a property, funds will be returned to you with interest due. You
shouldnít expect to pay more than €100 to €150 for this service.
Contract - If you are offered a reservation contract, this means that
on paying a small deposit you reserve the right to buy the property for
a fixed period of time that should be no less than three weeks. If
you fail to purchase the property within the specified time you loose your
I Be Aware Before I sign A Contract?
Contract - This contract requires you to pay between 10% and 30% of
the property price and commits you fully to purchasing the property, unless
the seller has a problem with proceeding. Even in this situation
it can prove difficult to have the deposit returned.
Formal Offer to Buy -
A formal offer to buy is similar in legal terms
to a contract.
may be unfair on the buyer, unsafe and structured in a way that has negative
financial effect on you in relation to ownership and tax. It is advisable
never to sign a contract without having it reviewed by your lawyer first
Donít be fooled
into thinking that if you are signing a contract in front of a Notaio,
an Italian Notary Public by whom all land transfers in Italy have to be
signed, that your interests are protected. A Notaio does not give legal
advice to either the Buyer or the Seller. His sole purpose is to witness
the signature of the title deed [the rogito] and other administrative functions.
[Notaryís fees are 2% to 4% of the property price].
Sign Anything While in Italy?
a booming sellerís market in Italy, buyers are faced with the dilemma,
sign now, without reviewing the contracts or loose the property to somebody
else. The implications are severe if you sign without having the contracts
reviewed and the property turns out to have bad title or other problems
associated with it.
If you havenít
deposited funds with your lawyer in a client account, before you make your
trip, arrange to be able to fax any documents relating to the property
to your lawyer for review. Your lawyer should be able to do this within
a few hours and go through the terms of the contract with you, before you
hand over any money.
Once you are
happy with the terms of the contract, your lawyer will instruct you to
pay a preliminary deposit, usually about €3000. This should be followed
by signing the main contract, two to three weeks later, after checks on
the property have been carried out.
To sum up,
donít sign anything before having it reviewed by your legal advisors. Doing
this, you will be certain that you fully understand the terms of the contract.
You will know that they are fair and reasonable and if they are not you
will be able have your legal representation negotiate required changes
to the contract.
name should I purchase my property?
The way in
which you purchase a property is worth giving considerable attention to
because of the potential tax savings that can be made later on. There are
a number of ways to purchase an Italian property and each has its own advantages
and disadvantages. You may purchase a property in your own name, in the
joint names of you and your wife, in the name of those who will inherit
the property or in the name of a limited company. The method you choose
will depend on your own personal circumstances and this should be discussed
with your lawyer.
There are three
points to note about the Italian taxation system when deciding on how to
purchase a property.
system of Inheritance: Gifts on death, although currently often tax-free
could until recently incur very high rates of taxation. There is
no guarantee that inheritance tax will not be re-introduced by the Italian
government. It therefore requires some consideration when choosing
in whose name to buy the property.
Each time a property changes hands, certain taxes become payable.
Minimising the number of times a property changes hands, therefore reduces
tax liabilities and is an important consideration when deciding on how
to buy your property.
It pays to
have a solid understanding of the Italian taxation laws and your lawyer
should bring you up-to-date with the current system of taxation. There
is no guarantee that tax saving loopholes will remain and they may not
always be advantageous to the purchaser. It is important that your lawyer
assess your situation with you, weighing up the advantages and the disadvantages
and helping you decide how you wish to deal with the transaction.
When Iím Ready to Sign Contracts?
There is normally
a binding legal agreement to complete the purchase of the property at some
future specified date, in the offices of a local Notary Public (Notaio).
In view of the fact that this is an unequivocal commitment to buy the property
and pay the agreed price at the time of signature, it is vital to have
acquired all the documentation and search reports necessary to complete
the purchase, or, at the very least to have ascertained all legal and practical
difficulties / problems, and agreed a timetable to sort them out before
completion. Italian law requires all contracts relating to land or buildings
to be in writing, signed by both parties.
a special duty of drafting the Purchase Deed [Rogito] and to ensure the
proper execution, registration, and payment of all Italian taxes ancillary
to the completion.
out by the Notaio
is the legal owner of the property and is entitled to sell the house
no debts or mortgages on the house
no written liens or burdens
is aware that they must declare any outstanding private agreements regarding
the property. For example if the vendor has agreed to allow a neighbour
to build or extend within the minimum laid down by Italian law or has given
a friend a right of way across the property.
buying the house may attend in person before the Notary, but, if this is
inconvenient, arrangements can be made for a Power of Attorney ("procura")
to be granted enabling another person to attend on their behalf. This must
be in the Italian form and signed in front of a Notary. Your lawyer may
appoint an associate in the area to sign on their behalf. However you can
have a Power for signature drafted in your home country.
Can I Expect To Pay?
tax is the main tax on real property. This is levied at 10% of the declared
value for 'urban' property, and 17% of the declared value for 'rural'
property. Most houses, even if the most remote rural areas have been 'urbanised',
and the 'rural' property refers to land, or land with an agricultural
building on it. In some cases, the property being sold is owned by a Company,
in which case I.V.A. (VAT) at a rate of up to 20% is payable on the declared
value instead of the Registration tax.
value is based on the official rateable value of the property, which depends
on the local comune, the category and location of house and the size. This
is generally considerably less than the actual purchase price. The amount
payable depends on many factors including whether the property is your
first and only home or a second home, whether it's a new home and whether
you are a resident.
Value added tax (IVA) is levied at 10% on new (for non-luxury
properties) and at 20% (on luxury homes with a rating of A1 in the
property register), and is included in the price charged by the builder
or developer. If you build your own home you pay a reduced rate of IVA
You may have
to pay all or part of the Estate Agents fees. These would typically be
3% -5% of the actual value of the property. Though some agents have been
known to charge up to 10%, especially when selling to foreigners.
It is important that you are aware of this and query any unreasonably high
You will also
pay the Notary's fee. This amounts to approximately 2.5% of the total declared
value of the property, with a minimum charge of approximately €1,300.
Bear in mind that there can be variation between notaries.
You will also
pay the Geometraís fee for the conveyance of the property. These can vary
between €500 and €2,000 depending upon what work is involved
in the conveyance.
cases you may not wish to be in Italy at the time when the public title
deed needs to be signed. In these circumstances you need to have a
Power of Attorney prepared authorising either someone nominated by you
or a person associated with your lawyer to sign on your behalf. Bear in
mind that you will also then have to pay the expenses of the person who
attends to sign and pay the taxes on your behalf. Obtain an estimate from
you lawyer in advance. Preparing the documents to authorize Power
of Attorney should not cost more than €250
In order to
buy property in Italy, you need to be registered with the Italian tax authorities
and to have a tax identification number. The fee for obtaining one should
not be any more than €250.