Italian Luxury Property: Legal And Fiscal Definitions

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What is a luxury property in Italy?

From a legal and fiscal perspective, the Italian luxury property category of real estate includes castles as well as certain types of property such as historic villas, mansions and palaces.

Before you sign any paperwork relating to a property, you should check its legal and fiscal category.

If you need advice on any aspect of managing property searches and checks in Italy, we can help.

Legislation relating to Italian luxury property

Italian law specifies purchase tax and annual municipal tax rates on luxury properties in Italy.

Contrary to what many think, luxury homes are not exclusively large properties – in terms of square meterage. Real estate location, cultural value and the quality of finishes also determine the classification of a property.

Buying a luxury property means that as a purchaser, you will not be able to take advantage of certain benefits relating to property registration tax.

Furthermore, once you own the property, you will not qualify for municipal tax deductions and exemptions.

Italian law uses two sets of guidelines to determine luxury property: Ministerial Decree 2/8/69 and cadastral criteria.

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Luxury properties: Ministerial Decree 1969

According to this law, the definition of luxury real estate means a property must meet precise criteria. It must have at least one of the characteristics set out in the Ministerial Decree 2/8/69. These include: properties in areas which, according to town planning and zoning laws, are for villas or private parks.

Single-family homes, which sit on building plots of not less than 3,000 square meters. This category excludes agricultural areas, even if planning provides for the possibility of building residential properties.

Single-family homes with certain types of sports facilities. In particular, the law refers to swimming pools with a minimum area of 80 square meters and to tennis courts on drained ground extending to at least 650 square meters.

Single dwellings with a surface area of more than 200 square meters, excluding balconies, terraces, cellars, attics, stairs and parking spaces, that have an open area of land more than six times the covered area.

Individual real estate units with a surface area of more than 240 square meters excluding balconies, terraces, cellars, attics, stairs and parking spaces.

Properties on land where the value of the land exceeds the value of the property by at least one and a half times.

Even if a property does not have any of the above characteristics, there is a table attached to Ministerial Decree 2/8/69. This table states that a property can belong in the luxury property category if it has at least four characteristics among a list of finishes.

Specifications are complex and for the avoidance of doubt, we would advise you to seek independent legal advice.

The Ministerial Decree of 1969 is quite exhaustive in defining the characteristics of luxury homes. However, Italian legislation governing cadastral classifications also contains important indications.

Luxury properties: cadastral classification criteria

Article 33 of Legislative Decree 175/2014, assesses the cadastral classification of Italian properties. Its use is almost exclusively limited to assessing property tax rates. In particular for principal residences (prima casa).

For cadastral purposes, luxury properties are those belonging to the following categories:

A/1: stately homes – classical buildings with above-average finishes in areas considered valuable due to the presence of parks and/or gardens.

A/8: dwellings in villas. These are residential properties with fine finishes set in a park or a garden.

A/9: castles, palaces and mansions of outstanding cultural and historical and value. These mainly consist of single real estate units.

Italian properties belonging in these categories are luxury properties. Owners cannot therefore benefit from tax benefits and/or tax exemptions.

Finally …

Italian Luxury Property: a Legal and Fiscal DefinitionFor over 55 years, De Tullio Law Firm has been providing international clients with independent legal advice. We offer services in all the major fields of Italian law with particular expertise in real estate, inheritance and family law matters. Get in touch: info@detulliolawfirm.com

 

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Building A House in Italy: A Brief Guide

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Purchasing the right plot of land when building a house in Italy is crucial

Self building, or having a house built, in your own country can be daunting enough. However, when it comes to building a house in Italy things can get really tricky.

If you decide to build a house in Italy, you will be subject to stringent building approvals and regulations.

Building work carried out in breach of approvals or that do not comply with regulations, expose you to criminal charges and prosecution. Court cases in Italy are protracted and costly procedures.

Non-compliances will also impact the future saleability of the property and, in a worst-case scenario may even lead to a demolition order.

You will need to deal with many professionals and legal restrictions. Building a house in Italy requires a deep knowledge of Italian law, technical aspects and working with building companies and contractors.

There can be many pitfalls along the way and we strongly advise you to seek legal advice before you even start looking for a building plot.

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Get your team in place

Involve professionals from the get go. This will make the whole procedure easier.

In addition to an architect and builder, engage a lawyer. This will give you more confidence in the building procedure since your team will guide you through what is a very complex project.

What are the steps to building a house in Italy?

Firstly, check before you buy. Can actually build on a specific plot of land and if so what size property can you build? You can ascertain this information from the land registry, certificates of intended use and, by investigating the presence of any restrictions related to zoning and urban planning.

Secondly, get your architect, surveyor, engineer to design the property. This should take into account current legislation regarding energy efficiency and any incentives available.

During this phase, we would recommend you define, in detail, a list of materials and finishes. You should then start getting estimates from construction companies or builders.

Thirdly, you will have to apply for planning and building permits and/or appropriate authorisations. The application needs to go through your local municipality. Depending on the municipality, permission can take several months.

How can a lawyer help with building a house in Italy?

Essentially a lawyer will safeguard you, your project and finances by ensuring that everything complies with Italian legislation.

In the first instance your lawyer can run checks and searches for you.

For example, so as to eliminate the risk of choosing a company that may become bankrupt during your building project, a solvency check on potential building companies is vital.

In order to have genuine benchmarks, your lawyer can request quotations from a number of building companies. Usually, for new construction, there are at least four different types of companies involved, (excavation, construction, electrician, plumber), but for easier management, it is advisable to contract the works to one company that will sub-contract the work. This is important in order to have only one point of contact on-site.

It is mandatory to check the building company you engage is tax compliant. Your lawyer can check DURC (Documento Unico di Regolarità Contributiva). This shows whether the company is in compliance with employees’ social security contributions.

Your lawyer can provide project management services. In order to avoid any conflicts of interest, you should avoid nominating a project manager related to the building company.

It is essential to have a legally drafted building contract. This is critical as it ensures you have all the legal guarantees and protections throughout your build and beyond. Again, your lawyer can manage this for you.

What needs to be in place before building can start?

Building works can only commence once you have nominated a project manager and building company and you have received all the relevant permits and documentation from the Municipal Technical Office.

A Safety and Coordination Plan (Piano di Sicurezza e Coordinamento) must also be in place, pursuant to Legislative decree 81/08.

A Safety Coordinator (Coordinatore della Sicurezza in fase di Esecuzione) must oversee the building phase. All the companies involved in the building phase must comply with the provisions of health and safety regulations. In addition they must prepare their own Operational Safety Plan (Piano Operativo di Sicurezza, POS).

Waste management produced on the construction site is particularly important. All materials must be disposed of in accordance with local regulations.

Finally …

As you can see, building a new house in Italy is not a straightforward process. Relying on our legal expertise and knowledge of Italian building laws and regulations will give you certainty and peace of mind.

Should you need further information concerning the process of building a new house, please feel free to contact De Tullio Law Firm at the following email address: info@detulliolawfirm.com.

 

You may also be interested in Insurance Policy for Off-Plan Properties.

You may also like to watch our info videos about Italian property, succession and family law.

Illegal Construction in Italy (abuso edilizio)

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Do you own an Italian property that completely or partially lacks planning permission?

Illegal construction in Italy is not uncommon. The Office for Italian Statistics (ISTAT), estimates that nationally, some 20% of Italian properties are completely illegal builds.

On top of these statistics, many properties are partially illegal. For example, an outbuilding or extension that doesn’t have planning permission.

Before buying any Italian property, you should conduct planning searches in the land registry and municipal planning records. It’s crucial to check that the whole property has all the relevant building consents.

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If you are building a property in Italy, you should make sure that you have all the relevant permits and authorisations.

We advise that you seek independent legal advice to avoid the risks of prosecution and buying a property that is later unsaleable.

What is illegal construction?

Illegal construction, “edilizia abusiva” in Italian, is a crime.

If you make changes to a property without relevant consent or, you carry out building work which does not comply with permits, you are breaking the law.

Building work is also illegal if notification of commencement of work notice is missing (comunicazione di inizio lavori, CIL). This is a formal notification by the owner of the property to the municipality regarding the intention to make a change to the internal layout of a building.

There are several categories of illegal construction in Italy

Construction of an entire building without a building permit. This also applies to buildings on land in non-building zones.

An extension to an existing property without a building permit.

Work that diverges from the building permit issued.

A change of use to the property, for instance from business to residential use.

Any internal work without a required CIL notification.

Who is accountable for illegal construction work?

Those at risk of prosecution for Italian planning violations are the person named on a building permit if work is non-compliant with said permit.

Whoever commissioned the work. This may not necessarily be the property owner.

The builder or person who carried out the illegal work or the project manager may also be held liable.

It is also worth noting that if a new owner either commissioned or instigated the vendor to carry out certain illegal work prior to purchasing the property, both parties may be liable.

What are the risks of illegal construction in Italy?

The first possible consequence of commissioning illegal construction is the imposition of an administrative sanction. These vary according to the type of illegal work carried out. Possible administrative sanctions include a demolition order. This would entail removing all illegal building work and restoring the property to its original state.

If the municipality does not issue a demolition order, it may sequester the property and the owner will be given a fine. This will equate to the value of the illegal work or the estimated market value of the work.

Work that diverges from a permit or work done without a CIL notification is subject to a fine. Fines start at 516 Euros. However they can equate to twice the increase in the estimated market value of the property based on the work done.

Provided work complies with planning and building regulations in force at the time the work was carried out, it may be possible to apply for retrospective building permission.

The criminal consequences of illegal construction in Italy

Illegal building work is a criminal act in Italy. As such, it is therefore potentially punishable by arrest and a custodial sentence. More frequently however punishment involves hefty fines.

The penalties vary, depending on the type of crime committed and are in addition to previously mentioned administrative sanctions. More specifically, in the event of non-compliance with building regulations, town-planning laws and building permits, the fine is exclusively pecuniary – up to 10,329 Euros.

In the case where building work differs from a building permit, offenders could face a custodial sentence of up to two years plus a fine ranging from 5,164 to 51,645.00 Euros. Likewise if construction lacks a permit or, despite a work suspension order, work has continued.

Illegal construction on land with no zoning for building purposes can involve a custodial sentence of up to two years and a fine of between 15,493 and 51,64.00 Euros. The same penalty is applicable where illegal building work has been carried out in areas with historical, artistic, archaeological, landscape and/or environmental restrictions.

Finally …

Property buying in Italy is a serious investment. Italy has unique real estate laws and local customs. We recommend having the right team of advisors in place to make your purchasing experience successful. Should you need further information or help concerning illegal construction, please contact us.

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