Real Estate

A Concise Overview of the Italian Home-Buying Procedure

There are three main documents involved in buying property in Italy: the offer to purchase, the preliminary agreement (known as a “compromesso” in Italian), and the deed of sale (known as a “rogito” in Italian). The only one of them that must be done is the last one because it is what the Land Register (known locally as the “Registro Immobiliare” or “Catasto”) uses to record the transfer of ownership. Preliminary agreements (“compromesso”) are commonly used since they bind the parties until the price is paid in full and the final deed may be done. The parties agree on the price and any other conditions (such as the payment plan). This brief explanation is meant to acquaint a potential buyer with the essentials. Having a lawyer or notary public by your side at every turn is highly recommended.

Fiscal Regulations

You’ll need the “codice fiscale” (tax code) to complete the procedure. This is a unique number assigned to each individual and is readily available at any office of the Tax Agency (the “Agenzia delle Entrate”). A tax identification number (codice fiscale) is required not only for the rogito but also for opening a bank account, activating utilities (such as electricity, telephone, gas, water, etc.), and paying property taxes (ICI and waste tax).

Questions to Ask Before Making a Purchase

Before making a formal offer or signing the “compromesso,” it’s a good idea to confirm the property’s status with the Land Register. The purpose of this is to ensure that there are no liens or mortgages on the property, and that the seller has the legal right to sell the home. You should also check (a surveyor can help with this) that the house complies with local building codes. The additional costs of buying (taxes, intermediation charge, notary fee, etc.) and the costs of maintaining the house, notably the condominium expenses, which may be substantial and that the vendor must document to the buyer, should be factored in when estimating the total amount needed. We can better describe all these prices down the road.

Invitation to Bid

The aim of making a purchase offer is to demonstrate to the seller your earnest intent to acquire the home and to elicit a definitive reaction (acceptance or refusal) from him. If the seller accepts the buyer’s offer to sell to him at a given price and before a certain date, he is prohibited from selling the property to anybody else. Since the purchase offer is not a binding commitment to purchase, it is recommended that legal counsel or a notary be consulted prior to signing. Although the realtor or seller may insist on a down payment, the buyer is under no obligation to do so when making a purchase offer. In any case, the deposit must be returned in full if the seller rejects the offer.

Accord in Principle (also known as a “compromesso”)

The preliminary agreement is a private contract between the buyer and the seller that outlines the terms and conditions of the sale, including the price, the payment plan, the date of the “rogito,” the specifics of the property (servitude, etc.), and any other criteria that may apply to the transaction. At the time of signing, the buyer will make a down payment (called a “caparra”) that is typically equal to ten percent of the total purchase price. The money will be forfeited if he cancels the transaction. If the seller backs out, the buyer gets their money back plus double.

The Sales Contract (in Spanish, “rogito”).

This agreement constitutes the final step in the sale process. A visible structure exists. The contract is signed by both the buyer and the seller in the presence of a notary public. In most cases, the remaining payment is paid at the time the “rogito” is executed. Since the buyer is the one footing the bill, it is customary for him to select the notary. The notary must verify the parts and validity of the document. He also pays the taxes (more on that below), records the deed at the Land Registry (20 days after it is recorded), and transcribes the document.

Taxes and Other Fees

Consider the following purchase-related expenses:

Commission for real estate services (often 3% of the purchase plus 20% VAT).
Notary costs (which can range widely based on factors including the asking price of the property and the complexity of the transaction).
If you buy a home directly from the firm that constructed or remodeled it, you’ll save 10% in value-added tax.
If purchasing directly from the corporation, the registration tax (known as “tassa di registro”) is 168 Euros, but if purchasing privately, the registration tax is 7% of the cadastral value (i.e., the value the house is registered at, which is typically much less than the market value).
Mortgage Tax (“imposta ipotecaria”) is 2% of the cadastral value if purchasing from a private individual, or 168 Euros if purchasing from a firm.
When purchasing a home from a corporation, the cadastral tax (known as “imposta catastale”) is 168 Euros, while when purchasing from an individual, it is 1% of the home’s cadastral value.

Finally, if you purchase the home directly from the firm that constructed or restructured it, you will be responsible for paying a 10% VAT on the declared price of the home (i.e., the value indicated on the “rogito”), as well as an additional 504 Euros in taxes (Registration, Mortgage, Cadastral). Taxes on registration, mortgages, and cadasters add up to a total of 10% of the cadastral value of a home purchased from a private seller, but no VAT is required. A more precise statement would be that the law gave you the option of paying based on the announced price or the cadastral value, which is typically significantly lower than the market price. This is done so that the parties don’t try to cheat the tax system by declaring a lesser price than what they actually paid.

In addition to utility bills, there are other recurring costs associated with maintaining a home.

The “Imposta Comunale sugli Immobili” (ICI) is an Italian property tax. This is money that goes to the local government where the home is located. It’s split into two installments, due in June and December. In this case, the “house value” is expressed as a percentage. The “house value” is calculated as the annual rent paid to the local government (known as the “rendita catastale”) times 100. The Municipality has the authority to set the rate (known as a “aliquota ICI”) between 4 and 7 x mille. If the “aliquota ICI” is 7 x mille and the cadastral rent is €600, then the value of the property is €60,000 and the ICI tax due is €420 (7 x mille of €60,000).

Tax on solid waste disposal that is levied based on a property’s square footage (SQFT) and the number of persons living there. Four individuals living in a 100 square meter home can expect to pay as little as 300 Euros each year.
The annual cost of maintaining the common areas of a condominium building (including utilities, landscaping, cleaning services, and more). The amount of these costs should be verified by the vendor and provided to the purchaser. This year and last year’s payments must be documented as well. The purchaser may be required to make up for the vendor’s unpaid balance.
liguriaforsale.com was created by Massimo Viola.

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