First, let’s go over the taxes and fees in regards to property buying in Italy. There’s something you need to familiarize yourself with first — the cadastral value. This is a government determined value based on standards, size, and location, among other factors. This is completely separate from the market value of the property. If you are buying from a private person, this is the number in which your taxes percentages are paid from. However, the percentage depends mainly on your residency or planned residency following the purchase.
If you plan to move to Italy for more than 180 days out of the year, you will need to apply for residency. This needs to happen within 18 months of the property purchase in order for you to be eligible for that tax percentage. If you decide to move and something falls through and you don’t apply for the residency within those 18 months, you will have to pay the tax difference and a 30% penalty… Yikes!
So be sure before buying what your plans are, otherwise just purchase the property under the assumption that you will not be moving there permanently. If you decide to in the future, sure you didn’t receive the tax benefit but it’s much better to proceed with caution because the fees following can be very expensive.
SCENARIO EXAMPLE, FEES
For a better understanding and hard numbers, please follow the following example.
House purchase between buyer and private seller.
House price: €180,000; Cadastral value: €65,000.
If you plan to move to Italy, and do not already own Italian property, your tax percentage is 2% of the cadastral value. 2% of €65,000 is equal to €1,300. There are some smaller fixed tax amounts also but this is the base of the tax fees for this situation.
If you do not plan on moving to Italy, your taxes are set at 9% of the cadastral value. 9% of €65,000 is equal to €5,850, plus additional smaller fixed tax amounts.
By changing one simple thing however, your percentages also change. If you are dealing with a purchase from a company, the rates differ. Let’s use the same numbers for comparison.
House purchase between buyer and commercial seller.
House price €180,000; Cadastral value: €65,000.
Residential percentage goes up from 2% to 4%; therefore you would calculate 4% of €65,000, paying €2,600.
Non-residential percentage goes up from 9% to 10%; therefore you would calculate 10% of €65,000, paying €6,500.
In addition to these taxes, there is also around a 1% notary fee. It could be more than 1% if the property is very inexpensive. This is a result of the fixed taxes, in order to make sales worth it for every player involved.
REAL ESTATE & NOTARIES IN ITALY
Sometimes people confuse the notary role with that of an attorney during the buying process in Italy. The notary, however, is very much different. The notary, or notaio, is a public officer that ensures that all the laws of Italy during the real estate process are followed. This is a completely impartial party, saying favors on neither side. This officer oversees all contracts and anything leading up to, following, or in moments of legally binding procedures.
While you can ask for legal council from the notary, their response is required to be completely unbiased. This party is responsibly for looking over and authenticating all documents in relation to the sale. They also write up the “Atto di Vendita”.
If you do not speak Italian, you need to have a translator during the proceedings with the notary. Typically this is all taken care of by the notary or real estate agents, if present, so you do not have to stress to hire someone. However, the fee can be up to €300, so be sure to take this into account during the initial fees in the process of buying. Of course if neither the buyer or seller speak Italian, you may split the costs of the translator.
FUNDAMENTAL PLAYER IN REAL ESTATE
The notaries in Italy function in all areas of law including inheritance, local authority proceedings, corporate business, family court, etc. The state of Italy employs these public officers for many different authentication procedures in a variety of instances. They provide a seal of legality and authenticity to the documents involved and insure the smoothest and completely legal aspects of all respective instances. They are a fundamental part of the real estate market in that no sale can be made without one. It is the most important that they remain as a neutral party.
Although the Italian State ‘employes’ them, they are not paid for by the government. The government has determined fixed rates for which they must be paid but the fees are paid for by the buyer in the transaction. If you would like to contact a lawyer or attorney, you are looking for a avvocato, not a notaio.