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First Step : Seek Independent Legal Advice Buying a house
in Italy is no more complicated than buying a house in Britain provided
that the appropriate precautions are taken, especially with regard to legalities.
This means ensuring that you have independent legal advisors. Many
agents offer legal advice as part of their range of services. Though
this may seem to simplify the purchasing process, there may be a conflict
of interests should you require changes or clarifications of the contract.
An independent lawyer is motivated solely by the desire to make sure that
the property you buy has good title, appropriate planning consent, is free
of debt, charges and other burdens. This motivation is compromised
if the agency selling a property to you is also advising you legally.
A lawyer based
in your own country will be obliged to work at the legal standards of that
country, which tend to be more stringent and efficient than in Italy.
What I should I discuss with my lawyer? At your initial meeting, a good lawyer will be able to discuss with you your motivation for buying a property. Are you looking for a holiday home, looking to retire, seeking a big return on investment, buying to let and so on? They will also discuss areas that might best suit your interests, the types of properties available to you in the region, the types of ownership available to you, the best way to pay for the property, mortgage, inheritance and tax issues. Forward Planning And Preparation Before you make a trip to Italy to view and buy property, some forward planning is necessary. It is easy to get caught up in the rush of buying a new home. It is difficult to anticipate what you may or may not find. However, should you find the property of your dreams, be prepared to hand over some cash. It’s a seller market in Italy and common practice, especially in the areas popular with overseas buyers to pay an immediate holding fee, despite not having time to make all the checks you would like to make on the property. There is a way around this. Handing over a check to secure a property while on a viewing trip is not a good idea. It narrows the safety net considerably should there be a problem with the property. A good lawyer will facilitate you making a deposit into a client account before you leave for your trip to Italy. The amount you will have to deposit will depend on the type of contract that you are being asked to sign. Typically, a reservation contract requires €3,000 to €5,000 while a preliminary deposit can be anywhere between 10% and 30% of the purchasing price. Depositing 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. This benefits
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
shouldn’t expect to pay more than €100 to €150 for this service.
What Should I Be Aware Before I sign A Contract? 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 [see below]. Don’t 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. [Notary’s fees are 2% to 4% of the property price]. Should I Sign Anything While in Italy? Because it’s a booming seller’s 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 haven’t 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, don’t 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. In whose 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. The Italian 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. Property transfer: 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. What Happens When I’m Ready to Sign Contracts? Signing Before Notary
Notaries have 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. Checks carried out by the Notaio
Power of Attorney The person 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. What Fees Can I Expect To Pay? Land Registration 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. The declared 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. New Property. 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 at 4%. 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 fees. 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 Geometra’s fee for the conveyance of the property. These can vary between €500 and €2,000 depending upon what work is involved in the conveyance. In many 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.
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