Tax benefits for first property purchases are contingent on transferring residence
Property buyers in Italy often decide to take advantage of tax reductions available for first property purchases. These consist of a reduced registration tax of 2%, a
fixed cadastral tax of €50 and a fixed mortgage tax of €50.
Delaying transfer of residence other than for force majeure means losing first property purchase benefits
To benefit from fiscal reductions, buyers must transfer their residence to the municipality where the property is located. This transfer must take place within 18 months of signing the deed of sale. Missing the residence transfer deadline entails the loss of tax benefits.
Delays in transferring residence may also involve a hefty fine unless there is an extraordinary event or circumstance that constitutes a force majeure. Examples of a force majeure event might be an earthquake, seaquake, flood, landslide. In general, an event beyond anyone’s control, which renders the property uninhabitable.
Buyers must prove force majeure to retain benefits of first time property purchases
In judgement n. 864, dated 19th January 2016, the Italian Supreme Court ruled that the purchaser should not lose the fiscal benefits granted to first time property purchases.
However, this is only applicable where a purchaser is able to prove that failure to comply with the 18-month residence transfer deadline is with cause. In other words, the delay is justifiable because of an unavoidable and unpredictable event.
Summing up then. In order to maintain fiscal benefits related to first-time property purchases, a delay in transfer of residence must be due to an event or circumstance beyond the control of the buyer. As such, the buyer must prove that the delay is unavoidable and unpredictable. If transfer is due to a general impediment, the purchaser loses fiscal benefits.
Property buying in Italy is a serious investment for most people and, often the fulfilment of a dream. Navigating Italian real estate laws and local customs can be complex. For more comprehensive information about the Italian property purchasing process, you might like to read our Guide to Buying Property in Italy. If you would like to discuss your situation or, if we can be of assistance, please get in touch.
De Tullio Law Firm provides specialist legal advice in all areas of Italian law. Our particular expertise is in cross-border property transactions and inheritance matters in Italy.
We also have a number of info videos on the subject of how to buy Italian property safely.