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Despite the fluctuations in the markets across Europe in recent years, statistics suggest that there is an increase in investment in the Italian real estate market on the part of foreign investors. Italy has always had a powerful charm, enticing people to its shores from all over the globe. The lure of the wonderful climate, unique history and culture, not to mention the fabulous cuisine and wines, all combine to make Italy a superb choice for a holiday or retirement property.
Tuscany, Sicily and Sardinia appear to rank higher in the preferences of foreign investors. British citizens are among those who have shown particular interest in real estate investment in Italy. Property purchase in Italy need not be any more stressful than buying in the UK with the right professional advisors by your side. There are considerable variations in the process of property purchase in Italy compared with that in the UK and it is wise to be aware of the differences in the procedure before you start out.
The term “foreign” describes both EU and non-EU citizens and incorporates non-EU citizens legally residing in Italy. Such citizens have the right to purchase a property or a company, providing they can produce evidence of their right to stay in Italy, such as the visa. Should the prospective purchaser be a non-EU citizen who does not hold the right to reside in Italy or to purchase property, it will be necessary to verify that a reciprocal agreement exists between the non-EU citizen’s country of origin and Italy allowing an Italian citizen either to reside or buy property in the country of origin of the non-EU individual attempting to invest in the Italian real estate market.
As far as the definition of property is concerned, according to article 812 of the Italian Civil Code: “property it is to be considered as anything that is naturally or artificially connected to the soil; the soil itself, water sources and streams, trees, buildings and other constructions, even if only transitionally connected to the soil”.
In order to complete the purchase of a property, the foreign citizen must follow a rather complex procedure which necessitates the use of the services of a notary. Should they not be particularly proficient in Italian, they can request the deed is drafted into another language (the notary must be proficient in the specific language) or request the assistance of an interpreter for the translation of the Italian contract.
The sale is facilitated by the following steps:
Throughout all the steps listed above the support of an experienced property lawyer is crucial during this phase.
On a fiscal level, the purchase of a property from a private individual is subject to the registration charge, mortgage registration fee and the Land Register fee. The charges vary depending on whether tax-breaks for the purchase of the first house apply.
The registration charge is in the sum of 2% of the sale price if tax breaks apply if there no tax-break the registration charge amounts 9%. The mortgage registration fee and the land register fee both amount to 50 Euros.
However, should the property be bought from a construction company, VAT amounts to 10%, in case of no tax break, should a tax-break apply the rate is 4% VAT. The registration charge, the mortgage registration fee and the Land register fee is 200 euros.
Once you own your Italian property you will need to address a number of issues surrounding real estate ownership in Italy. Perhaps the most pressing is dealing with the tax liabilities attaching to an Italian residence or commercial property. The tax responsibilities for property owners in Italy are very different from those in the UK and can be far more burdensome, in that the complexity of the system has created a situation whereby certain taxes can only be paid via an Italian bank account. The tax regulations change frequently and there is no room for error and the penalties are costly.
For more information about purchasing property in Italy, please contact clientservices@giambronelaw.com or +44 (0) 207 183 9482.