Patrick Kyd Real Estate

Procedure for Property Purchases in Italy

1. Contract of Sale

   Property acquisition in Italy is usually carried out in two steps. The first step consists in concluding a preliminary contract (contratto preliminare), through which the parties obligate themselves to conclude the final contract of sale (rogito also contratto finale). While the preliminary contract is indeed valid when signed only by the parties involved, it is recommended to have the document officially recorded by a notary public in order to be able to enter it into the property registry, thereby providing the purchaser with security. It is customary to stipulate a deposit (caparra confirmatoria) in the amount of 10% to 30% when concluding the preliminary contract. The seller would retain this sum in the event that the sale does not take place for reasons which the purchaser is accountable for. The second step is for a notary public to officially record the final contract of sale (alternatively, certification by a notary public suffices as well). At the latest by the time the contract is submitted to the registry office, (i.e. if the preliminary contract has not been entered, see above) the purchaser is protected against a double sale of the property as well as against the seller having any encumbrances entered.

2. Transfer of Ownership

   Ownership passes to the purchaser upon conclusion of the final contract of sale, regardless of the point in time, when the title is entered into the property registry (registri immobiliari). The only exception to this is in some of the formerly Austrian territories, where entry into the land registry (libro fondiario) is the precondition for transfer of ownership.

3. Conformance with Building Code

   In Italy building projects as well as additions or alterations to buildings are sometimes carried out without notifying the responsible authorities. Although it is primarily the official responsibility of the notary to inspect the building to ascertain conformance with the applicable building code, it is nevertheless advisable to make enquiries or better have a lawyer do so, in order to avoid later demolition or a fine.

4. Incidental Costs

   Be aware that to the actual purchase price there will be added considerable incidental purchase expenses and ongoing incidental costs. Apart from the certain notary fees and possible lawyer fees, registry tax, cadastre tax, stamp duties will in any event be added, and should a mortgage be taken up, with its registration there will also be mortgage tax and fees. In Italy the total of these incidental purchase expenses amount to 12% – 14 % of the actual purchase price.

5. Disclaimer

   The above are very general rules for a first impression. Specific and applicable advice can only be given from case to case. Taxes, laws and regulations change all the time and Patrick Kyd Real Estate cannot guarantee to constantly have the newest information quickly updated on its website and in any case does not accept responsibility for a reader’s or client’s actions or reliance on the above general rules.

Taxes

1. Purchasing Property

   Usual cases of real estate sold by Patrick Kyd Real Estate: although there might be exceptions, the percentages mentioned below can be calculated only on the cadastral value instead of purchase price, if the contract of sale regards a residential property and is between private parties, but this must be requested specifically to the notary. If not, i.e. one of the parties is not a private party or sale concerns terrains or commercial property the tax criteria is the price agreed and declared in the contract of sale.

   • if object is a historic house with official recognition
     • Registry Tax 3%
     • Mortgage Reg. 2% or Euro 168 (latter if first residence or bought from company)
     • Cadastre Tax 1% or Euro 168 (latter if first residence or bought from company)
   • if bought from private owner or company:
     • Registry Tax 7% or 3% (latter if first residence or bought from company)
     • Mortgage Reg. 2% or Euro 168 (latter if first residence or bought from company)
     • Cadastre Tax 1% or Euro 168 (latter if first residence or bought from company)
   • if bought from company under cert. cond. (construction comp. or restoration, etc)
     • VAT 10% or 4% (latter if main or only residence)
     • Mortgage Reg. Euro 168
     • Cadastre Tax Euro 168

2. Owning Property

   • if historic house – under certain conditions
     • 50% reduction (on the following tax)

   IMU (Unified Municial Tax) on property from 2012. The basic rate for IMU has been set at 0.76% on a sum related through coefficients etc. to cadastre value – however for first residence it will be reduced to 0.4%. Mayors will have the option of raising or lowering the basic rate by 0.3%, and the lower rate on first residence by 0.2%. However, IMU on second homes might even be less costly than the present ICI with its effective average rate of 0.64% because the municipal tax absorbs IRPEF tax on income from property. Note: The IMU has replaced the old ICI tax.

   RES is a new tax on refuse disposal and services at a rate of 0.02%, replacing the TARSU and TIA levies.