Tag Archive for: Italian Property Law

Italian Real Estate: How to Avoiding Pitfalls when buying

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Buying Italian Real Estate should be exciting but, it can also be a complex process

The best way to protect your investment when buying Italian real estate is to engage an English-speaking Italian lawyer. Instructing an independent, English-speaking Italian lawyer could save you money and stress in the long run.

Choosing the right Italian lawyer is a very important decision. Make sure you instruct an independent English-speaking lawyer, who has experience advising international clients in relation to property purchases in Italy.

Your Italian property lawyer should:

Be independent. Make sure the lawyer is not connected in any way to the estate agent, developer or seller. An independent lawyer will exclusively look after your interests and not the interests of the estate agent or developer. You should find your own lawyer rather than taking recommendations from an estate agent or using a developer’s in-house lawyer.

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Speak English. Unless you are a fluent Italian speaker, your lawyer should be English-speaking. You need to know that when you ask a question, your lawyer can fully understand and answer in a way you fully understand. There is no point in paying for advice that you don’t understand.

Have Professional Indemnity Insurance. You should check that your lawyer has adequate insurance. Should any problems arise as a result of advice you receive, you can be certain you are covered.

Why should you instruct a lawyer if you are buying Italian real estate?

It is impossible to evaluate a property just from viewing it. By instructing a lawyer you will have a better understanding of the property and the Italian purchase process.

Your lawyer can:

Guide you through the Italian buying process and the obligations of each party.

Check the property title, carry out checks and searches on the property before you sign any paperwork, which may well have binding financial and legal implications.

Arrange structural and geological surveys.

Review the purchase contracts to ensure that everything is as it should be and that your position is protected.

Advise about any inheritance and tax issues that may affect you. This is particularly important in Italy which has rules of ‘forced heirship’.

Help you make a Will to cover your Italian property, which is advisable in planning the succession of your assets.

Assist with matters such as Italian residency, tax codes, setting up a bank account or utility contracts for a property following purchase.

What is the role of the notary who buying Italian real estate?

An Italian notary (Notaio) is a legal representation of the Italian Government. Whilst they are part of the legal profession, it is important to ensure that you do not confuse the role of your lawyer with that of a Notaio.

The role of the Notaio in Italy is to oversee the property transaction, to collect the appropriate tax on behalf of the Italian State and to register the property in the Italian Land Registry. Legally a Notaio must remain impartial in the property purchase. A Notaio cannot, therefore, act on behalf of the buyer or the seller. You should instruct your own independent Lawyer to advise you specifically in relation to your property purchase and related issues.

Do I need to give my Italian lawyer Power of Attorney?

If you are not going to be in Italy during the purchasing process, it is a good idea to provide your lawyer with a Procura Speciale – a Limited Power of Attorney. This is a legal document that gives another person authority to act on your behalf, for example, to sign a property purchase contract.

Conferring a Power of Attorney to another person gives significant power to act on your behalf. You should therefore be comfortable that you fully understand what you are agreeing to, that you are happy with the wording of the document and that your agent is competent and trustworthy.

Finally …

Buying Italian real estate is a complex matter. With our extensive knowledge and experience of Italian and international law, we provide expert conveyancing services throughout Italy. If you are purchasing an Italian property, get in touch with us for a free consultation.

 

Italian Inheritance Law. A Short Guide

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Italian Inheritance law can be labyrinthine. At a very difficult time, those left behind find they need to navigate their way through a maze of bureaucratic procedures, red tape and paperwork. It is easy to get lost in Italian inheritance law without help. For more comprehensive information about Italian inheritance law and tax, download our free guide here.

The Italian succession process involves a series of steps that allow legitimate heirs to obtain possession of a decedent’s movable and immovable assets and bank accounts.

Firstly, heirs will need to gather all the required documentation (death certificate, residence certificate, will, bank statements and others). In order to proceed, having all the paperwork together is crucial.

Declaration of succession

Secondly, heirs will need to prepare a declaration of succession. This comprises all the assets in the deceased’s estate. Heirs must submit their declaration of succession to the Italian tax authorities.

Italian Civil Code regulates succession. It consists of transferring assets, bank accounts and properties to heirs, who are also responsible for managing any liabilities, debts and back taxes.

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The Italian tax authorities should receive the declaration of succession within one year from the deceased’s date of death. Where the value of an estate is below €100.000 and does not comprise property, a declaration is not necessary.

Italian inheritance law. What is taxable?

The third step is paying inheritance tax. In accordance with 2019 inheritance tax law, heirs who inherit Italian assets are liable for tax based on the assets in their declaration of succession.

Italian inheritance law stipulates that the following assets are liable for tax:

Immovable property (houses, shops, buildings), agricultural or building land.

Movable property, including boats, jewellery, works of art, bank and post office current accounts, money, investments such as shares, bonds, trust funds, etc.

Companies and shareholdings, with the exception of cases provided for by law which exempt heirs from the inheritance tax.

How is Italian inheritance tax calculated?

Once the Italian tax authorities receive a declaration of succession, they calculate applicable estate tax. The calculation considers any deductibles (franchigie). That is to say, the calaculation takes into account any thresholds for exemption from applicable tax[1].

The law governing taxation of inheritances and gifts is the “Consolidated Tax Registration Law” (Legislative Decree No. 346 of October 31, 1990).

For tax purposes, three bands have been created, based on the degree of kinship, for each of which a different rate of tax is applicable. Tax rates are determined on the overall value of the assets and rights – net of any charges borne by the beneficiary[2].

Band 1 inheritance law tax:

Spouse, registered partner and relatives in a direct line (parents and children, children and parents, grandparents and grandchildren)

Tax: 4% with an excess of €1,000,000 for each beneficiary

Band 2 inheritance law tax:

Other relatives up to the fourth degree (brothers and sisters, uncles and nephews, cousins).

Tax: 6% with a franchise of €100,000 for each beneficiary;

Band 3 inheritance law tax:

Others (relatives beyond the fourth degree and unrelated people such as friends).

Tax: 8% without any deductibles.

Finally …

As you can see, Italian Inheritance law and tax is complex. In addition, it may differ from case to case. Because of this, it is worth seeking expert support. Read more

Buying An Italian Property. A Short Guide

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This short guide aims to cover the key elements of the Italian purchasing process

For a more in-depth explanation, you may wish to read our comprehensive Italian Property Buying Guide.

Buying an Italian property proceeds through 3 key stages:

– Proposta irrevocabile d’acquisto (Reservation offer)

– Contratto preliminare di vendita (Preliminary contract)

– Atto di vendita (Deed of sale)

Once you have chosen your property you should engage the services of a solicitor, whether you buy through a real estate agent or directly from the vendor.

The knowledge that an Italian solicitor has about Italian real estate law is invaluable – plus, your own solicitor is there exclusively to look after your interests.

The first stage. Reservation offer

When buying an Italian property, the first document you will have to sign is a, “proposta irrevocabile d’acquisto” (reservation offer). This is normal practice when purchasing through an estate agent

In contrast, when purchasing directly from the seller (a private sale) a reservation offer is unusual. The implications of dispensing with a reservation offer is one of the many reasons why you should seek legal advice.

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By signing the proposta irrevocabile d’acquisto, you secure the removal of the property from the market for a limited period of time, normally 15 days.

It is important to highlight that a reservation offer is only binding upon the buyer when formal written acceptance of the offer has been received from the vendor. Once the agreement has been signed by both parties, it becomes a legally binding contract.

First deposit

You will need to pay a small deposit, which is normally held by the estate agent or solicitor until the vendor has formally accepted the reservation offer.

Should you finalise the purchase, this deposit becomes a part payment of the purchase price. If the seller does not formally accept the offer, your deposit will be refunded.

Due diligence

While the property is off the market, your solicitor, assisted by a surveyor, will make all the necessary searches to ascertain that the property doesn’t have any debts, mortgages, claims etc. Due diligence checks and searches ensure there will be no unpleasant and possibly costly surprises during or after the purchase.

The second stage of buying an Italian property. Preliminary contract

Normally at this stage, buyer and seller having agreed to go ahead with the conveyance, will formalise their agreement through a “contratto preliminare di vendita” (preliminary contract)

Some estate agents (and especially in the case of private sales) choose, or recommend, leaving out this part of the purchase process. However, this legal document really is essential. It sets out the detailed terms and conditions of the sale.

Estate agents often use boilerplate preliminary contract templates. These may not be suitable for your personal situation. Your purchase may be subject to certain terms and conditions. For example, you may have come across some structural issues during due diligence and want to make your purchase contingent on a surveyor’s report. This condition would need to be in the preliminary contract. A solicitor can draft the contract, or at least to examine the estate agent’s template and advise you on any implications before you sign it.

Second deposit

One of the essential legal elements of the preliminary contract is the payment of a deposit (caparra confirmatoria). This is normally equivalent to a minimum of 10% of the purchase price.

If you back out of the contract without a valid legal reason, you will lose this deposit. On the other hand, if the seller changes their mind about the sale, they will have to refund your deposit in full. You would also have the right to claim an amount equal to the deposit through the Italian courts.

In the preliminary contract, the parties also set the date to finalise the conveyance in front of the public notary.

The third Stage of buying an Italian property. Completion of the sale

By law a notary must oversee Italian property transactions. The notary is a public official who has State authority to validate contracts transferring the ownership of a property. The notary is also responsible for paying all land registry fees and cadastral taxes.

A notary must remain absolutely impartial

A notary may not therefore offer legal advice to any party involved in a property transaction. The notary cannot therefore act as a substitute for a solicitor in terms of representing the interests of the buyer.

In order to ensure you have proper legal safeguards, the only way is to engage the services of an independent solicitor. Only by having your own solicitor, can you be confident that no unpleasant surprises will be revealed at this late stage of the purchase process.

Deed of sale

Buying an Italian property concludes with the, “atto di vendita” (deed of sale).

The deed of sale is drafted by the notary and has to be fully compliant with the preliminary contract. In other words, the preliminary contract dictates all the essential elements of the transaction.

Translation

Should any of the parties not understand the Italian language, Italian law requires a translation of the deed of sale. Unless you have an Italian solicitor who speaks your language, the notary may also require that a qualified translator be present at the signing.

Unlike a translator, the advantage of having a solicitor with you is that should any last-minute legal issues arise at the signing, your solicitor will be able to immediately resolve these.

You should be aware that the Italian version of the deed will prevail in a court of law if any issues arise at a later stage.

Signing day

On the appointed signing day, all parties to the transaction convene, usually at the notary’s office. The notary reads the deed aloud and all parties then sign it in front of the notary. Once signed, the buyer pays the balance of the purchase price to the seller and the new owner receives the keys of the property.

New owners can collect a copy of the deed from the notary approximately one month after the signing. It takes approximately one month to register the deed at the relevant land registry office.

If the buyer cannot be present to sign the deed of sale in front of the notary, the buyer can give a power of attorney to their solicitor. This will permit the solicitor to sign the deed of sale on the buyer’s behalf.

Finally …

As a general rule, it is wise to familiarise yourself with the legal framework regulating international property sales.

For over 55 years, De Tullio Law Firm has been providing international clients with independent legal advice throughout Italy. We are specialists in cross border property, inheritance and family law.

If you would like further information about buying an Italian property, we are here to help. We can guide you through the whole process or even organise the whole process on your behalf. Get in touch with us for a free preliminary consultation.

Buying an Italian property. Glossary
  • Proposta irrevocabile di vendita: An initial formal offer with a small deposit. It contains the price you are willing to offer and any conditions.
  • Contratto preliminare di vendita: This contract sets out, in detail, the terms and conditions of the sale and also all the relevant cadastral and land registry information. Also called a, “Compromesso”.
  • Caparra confirmatoria: Italian Civil Code regulates this deposit under art.1385 of the. If a deposit is defined as a “caparra confirmatoria” its payment gives rise to legal rights and obligations on both parties.
  • Atto di Vendita: All parties sign the deed of sale in front of a public notary. The buyer makes outstanding balance of payment and receives the keys to the property. Also called a, “Rogito”.

Selling Your Italian Property. A Short Guide

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Selling your Italian property can be a difficult and lengthy process 

To aid the process in the long run, it is therefore important to make things easier at the outset. Prior to selling your Italian property there are certain preparations that are worthwhile making.

Preparing a sales package

The first step is to gather all the legal paperwork relating to the property.

Amongst other things, this includes the title deeds which prove you are the legal owner. Also, land registry entries to show that the whole property has planning permission and complies with building regulations. In addition, the property’s certificate of habitability and energy performance certificate.

Having this paperwork before you start marketing the property will facilitate the whole sales process for you as well as potential buyers.

Marketing your Italian property

The next step is putting the property on the market. You can either do this as a private sale or through a real estate agent (agente immobiliare).

If you are appointing an Italian real estate agent, it is important to ensure that the agent is qualified and registered with the local Chamber of Commerce in full compliance with Italian law. Legislation governing real estate agents aims to guarantee professional qualification. An unregistered agent could be prosecuted for carrying out a reserved activity and may not be legally entitled to request commission. Legislation also ensures that the agent has adequate indemnity insurance to cover clients in the event something goes wrong.

It’s important to think about whether the real estate agent can market the property locally, nationally and internationally. Perhaps ask a few agents to appraise the property. And, be sure to discuss brokerage fees before you choose.

Checking Italian real estate agent terms and conditions

Usually, both the buyer and the vendor pay the estate agent commission. Estate agent commission is negotiable but is generally equivalent to 3% of the full sale price. Amongst other aspects, it is important to assess the agent. In particular, their brokerage fees, minimum sale price, duration of the mandate and their exclusivity.

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Frequently, real estate agents require a foreign seller to sign standard terms of engagement. The seller must carefully evaluate this before signing. All the more so if the document is in Italian. Even with the translation of the terms of engagement into your language, the Italian version will prevail.

Reservation offers in Italy

Once a potential buyer is considering the purchase of your property, the potential buyer will generally sign a legally binding document called, Proposta Irrevocabile d’Acquisto, a Reservation Offer. Often the buyer makes a small deposit to the vendor at this point.

Both the buyer and the property vendor should sign the reservation offer. In effect, the reservation offer removes the property from the market for a period of time, usually 15 days. This allows the interested buyer exclusive rights to conduct due diligence on the property.

Property checks and searches in Italy

Due diligence includes: conducting surveys, planning and building application/permission searches, local authority and land registry searches, and legal searches.

This is where preparing your sales package before marketing your property comes into its own.

The aim of due diligence, amongst other things, is to establish that the property exists in relevant records. In other words that it is as described, and the seller has the right to sell the property in question.

That there are no mortgages/charges or any third party rights or other undisclosed encumbrances affecting the property.

The property complies with all local planning and building regulations and complies with any relevant local authority urban plan.

That the property is fit for human occupancy, unless the property is selling for reconstruction, and that the owner holds the relevant certification of habitability Certificato di Abitabilità.

The seller has complied with all the relevant Italian tax legislation by lodging tax returns, and paying tax. This includes tax which may have been due in the previous tax years. In default of this requirement, the property may be legally unsaleable.

That where the vendor is the owner of a company, the vendor is not insolvent. In addition, no application to this effect should be pending against the owner; 

That where the property is in a block of flats, the vendor is up to date with all service charges due.

Make sure the preliminary contract fits your buyer’s specific needs when selling your Italian property

Having a tailored preliminary contract will facilitate your sale. Often estate agents use a standard form for this, but this may not meet your buyer’s specific circumstances. What happens, for example, if your buyer is purchasing subject to getting a mortgage? Make sure you cover all the bases to ensure that selling your Italian property doesn’t become more protracted than it needs to be.

Conditions precedent in a preliminary contract protect all parties when buying and selling property in Italy. However, to provide protection, conditional clauses must actually be written into the preliminary contract in order for them to be legally binding.

Selling your Italian property: completing the sale

This usually takes place in the offices of a notary (Notaio). In Italy, sellers and purchasers often use the same notary to oversee the transaction. However, you are perfectly within your rights to have your own notary.

The notary will draw up the deed of sale based on information contained in your preliminary contract.

Liability relating to an Italian deed of sale, involves not only the selling and buying parties but also the notary. Failure to disclose all relevant facts about your Italian property represents a complex legal matter which can have far-reaching consequences.

Finally …

For more detailed information about selling your Italian property, we have prepared a free Guide to Selling Property in Italy. 

If you are thinking of selling a property in Italy, why not talk to us? We offer a pre-sales service. This ensures that all the legal sales-related paperwork is correct before you put your property on the market.

De Tullio Law Firm can advise and guide you throughout your Italian property selling journey. We have over 55 years of experience working with clients on their Italian and cross border property, family and inheritance matters. Get in touch.

 

You may also be interested in Selling Property in Italy. A Short Guide.

You may also like to watch our info videos regarding Italian property law.

Certificato di Abitabilità – Certificate of Habitability

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What is a certificato di abitabilità?

A certificate of habitability, or a certificato di abitabilità in Italian. This is a document that validates the suitability of a residential property for human habitation.

The certification is issued by local municipal offices. It follows verification that the building and its systems comply with health, safety and building regulations.

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According to Italian law, prior to issuing this certificate, the competent authorities should also verify that the building complies with planning permission.

The case law of the Italian Supreme Court is unanimous. In property transactions, the vendor must supply a certificate of habitability to the buyer. Furthermore, the vendor must give the document to the buyer before, or at the latest, at the signing of the deed of sale.

“The vendor of a property intended for residential use has a duty to deliver to the buyer the Certificate of Habitability without which the property is unmarketable”. (Cass. 23rd January 2009, n. 1701).

A buyer has the right to verify that the property is suitable, that it is useable and will be saleable at a later date. Because it has direct effects on the legal use of the property as stipulated in the contract, a certificato di abitabilità is an essential requirement for all properties.

Does a lack of a certificato di abitabilità consitute a breach of contract?

Unless otherwise stipulated in contractual agreements, the responsibility to provide the certificate of habitability belongs to the vendor. Where there is a delay or a failure to supply the certificato di abitabilità, there is a clear case of non-execution of a contractual obligation (breach of contract).

Where no certificate of habitability exists, a buyer can still buy the property. However, the buyer must expressly consent to the lack of certification. In addition, the lack of certification must be included in the notarial deed of sale. The onus is on the buyer to verify the existence of the certificate of habitability before completion. It should form part of the buyer’s legal due diligence.

Finally …

If you are looking at a real estate investment in Italy, why not talk to us? De Tullio Law Firm can advise and guide you throughout your Italian property purchasing journey. We have over 55 years of experience working with clients on their Italian and cross border property, family and inheritance matters. Get in touch.

 

For more information, you may find our buying and selling property in Italy guides useful.

Renovating a property in Italy: Avoid common mistakes

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Avoid common mistakes when buying a property to renovate in Italy

Buying and renovating a property in Italy is a common scenario. It is also a common scenario for these projects to end in heartache.

At De Tullio Law Firm we often don’t meet these buyers until after they have purchased a property. They have usually spent way more than they expected and need to fix problems.

The best advice we can give you is to engage an Italian lawyer before buying a property to renovate in Italy. It will save you time, money and anguish.

A Renovation property in Italy: the right project for you?

No matter how experienced you are, a renovation project anywhere can be a stressful and time-consuming process. Even more so if you live overseas, can only visit Italy periodically and you are not a fluent Italian speaker. Unless a project is guaranteed to give you your dream home, or make you money, think carefully. You may be taking on the wrong property.

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Make sure you know exactly what you are buying

Don’t wait to discover major legal issues such as lack of planning permission until after your purchase is complete. Having a lawyer means you have someone to work on your behalf to conduct thorough due diligence. Any legal non­-compliances will be detected before you complete the purchase.

In addition, your lawyer will assist you in obtaining a structural survey. A survey of the property will reveal important information about construction and building materials. It will highlight problems and remedial actions. Moreover, it will give you a good indication of the likely cost of renovations. It is also worth commissioning a measured survey of the building. This will give you a detailed set of floorplans and elevations on which to base your proposed renovations.

Builders

Even minor renovations can turn into a nightmare if your builders or subcontractors fail to do a good job.

Always ask for references, and speak to previous clients. Your lawyer can help you hire reputable builders and can act as project manager on your behalf throughout the project.

Buying a renovation property in Italy: costs

Work always costs more than you expect. This is because you can’t foresee some problems until renovations start. You may have to change your mind or alter designs or specifications.

Always include a budget contingency of 10 – 20% to cover unforeseen costs and fully expect to spend it.

Make sure your plans are as detailed as possible; list all the tasks and materials and, who is going to do the work. Don’t forget to allow for skips, scaffolding, tools and plant hire. Estimate costs by comparing similar projects in the area. Make sure you, and/or your lawyer, get builders’ quotes.

We would recommend that you instruct your lawyer to draft a building contract with your chosen builder. A building contract makes the builder’s quote legally binding.

Heed Italian rules and regulations when buying a property to renovate

Under no circumstances, should you ignore requirements of the Italian law, as it will eventually catch up with you. Do not undertake any work without first checking whether you need to satisfy requirements such as planning and building permits.

You may also need to notify neighbours or others regarding your renovation plans. Your lawyer can advise you if property deeds contain restrictive covenants, leases or other overriding interests in the property and land.

What are the penalties if you don’t follow the Italian law?

You may think that you can obtain the required planning permission retrospectively. However this is not always possible. Even if you can make  a retrospective planning application, it may be rejected. Your illegal work could then  constitute a criminal offence. In this case, the Italian State may seize your property. Getting your property back will likely be a very lengthy and costly process.

If you fail to obtain the relevant approvals, you will have to prove compliance. This may mean undoing completed work.

Breaching a restrictive covenant or the terms of a lease can lead to a court injunction, you may have to pay fines or even have to undo your renovations.

Before you can start renovations, you will probably need to do some demolition.  As building materials need careful disposal, demolition work is a procedure that will also require authorisation.

Finally …

With over 55 years of experience as specialist property lawyers throughout Italy, we strongly recommend that you seek independent legal advice before purchasing or renovating a property in Italy. If you have already purchased a property but have run into trouble and would like to discuss your situation, please get in touch. We can help!

 

You may also be interested in Building a House in Italy: a short step by step guide and our Guide to Buying Property in Italy. We also have a number of info videos on the subject of how to buy Italian property safely.

Resident in Italy for tax purposes?

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One or more of the following conditions makes you resident in Italy for tax purposes

According to the provisions of Article 2 (2) of the Italian tax code, Testo Unico delle Imposte sui Redditi (TUIR), if you spend more than 183 days per fiscal year in Italy, the Italian tax authorities will consider you resident in Italy for tax purposes.

If you meet one of the following conditions, you qualify as a resident for Italian tax purposes:

– you have registered at your local town hall’s (comune) registry office;

– you have your domicile in Italy, i.e. your principal centre of business, economic and social interests, e.g. your family, as defined by paragraph 1 of Art. 43 of the Civil Code;

– you have your residence in Italy, i.e. your habitual abode, as defined by the paragraph 2 of Art. 43 of the Civil Code.

The requirements indicated by TUIR are stand-alone: the occurrence of one of the above conditions is sufficient for the Italian tax authorities to consider you resident in Italy for tax purposes.

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Registration at your local comune confirms your residence for tax purposes in Italy

If you spend more than 3 months in Italy you must register at your local comune.

Your registration with a comune presumes your residence in Italy for tax purposes.

At the end of your stay in Italy, you should de-register from your comune.

Double Taxation Agreements for residents of two countries

Double taxation agreements (DTA) protect a government’s rights to collect tax and protect against attempts to avoid or evade tax. DTA contain provisions for the exchange of information between national taxation authorities. There are more than 3,000 DTA world-wide.

If you can prove you are resident in two countries, you may have recourse to the application of Article 4 of the relevant DTA in order to resolve any conflict of dual residence for tax purposes. You can find more information about DTA here.

The onus is on the taxpayer to provide documented evidence of tax residence outside Italy

You will need to request a certificate of tax residence under the relevant DTA. It is also important to keep records such as travel documents and receipts. These help evidence how long you were physically present in Italy in any given fiscal year.

Finally …

For over 55 years, De Tullio Law Firm has been providing international clients with independent legal advice. If you need support with your Italian and cross border tax matters, we are here to help.

You may also be interested in Elective residence Visa Italy: general information

How to get a mortgage in Italy

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Can foreign nationals get a mortgage in Italy even if they are not residents?

The short answer is yes. However, compared to foreign nationals resident in Italy, obtaining a mortgage in Italy is more complex for non-resident foreign nationals with an income from outside Italy.

There are fewer options when it comes to lenders who offer mortgages to non-residents in Italy, and receiving a negative response from lenders is not unusual.

It is crucial to follow the right procedures and seek advice from professionals. Providing a mortgage to non-resident foreign nationals differs from the domestic market. This is mainly because lenders put constraints on the level of mortgage borrowing. Usually, lenders will only offer mortgages of up to 60% of the property purchase price.

Lenders have to take a number of factors into consideration pursuant to the European Mortgage Credit Directive. These include the currency of your income and your age. Generally, the mortgagee should not exceed 75 – 78 years of age by the end of the mortgage term.

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A lender will also take into account the level and the source of your income; whether you are self-employed or employed for example.

In addition, a lender will required proof of creditworthiness and that you have sufficient funds to make Italian mortgage instalment payments on top of any other mortgages and loans elsewhere.

What are the steps to getting a mortgage in Italy?

The first stage of the mortgage application procedure includes gathering documents. We would always recommend that you seek independent legal advice at this stage. Your lawyer will be able to advise you what documents you need, identify whether you qualify for a mortgage and how best to proceed with your application.

Usually, obtaining financial pre-approval from a mortgage lender takes 3 – 4 weeks in Italy. The second stage of the mortgage application involves due diligence requested by the lender. This will entail getting a legal report and a technical survey of the property you want to purchase. If technical and legal assessments are accepted by the lender, the mortgage application will progress to the lender’s final approval.

It is essential to highlight that the real estate you wish to buy with your mortgage must be habitable and in compliance with current Italian technical, energy performance and building regulations on the matter. In the event that finalising your Italian property purchase is contingent on obtaining a mortgage, it is vital that the property you wish to buy meets the stated requirements of habitability and technical regulations. You should also make sure that the preliminary contract reflects the fact that your purchase is subject to getting a mortgage.

Finally …

For 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 and inheritance matters. Get in touch.

You may also like to watch our info videos on the subject of Italian property law.

Buying Property in Italy

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The Italian property market

Dreaming of buying property in Italy? The country’s rich heritage, magnificent buildings, cities steeped in history and regions with landscapes are as sublime as they are varied. This territorial diversity and widely different prices per square metre of property make the Italian real estate market very interesting.

Property Prices

The average price per square metre for Italian property was around €2,300 at the end of 2019.

However, it was much lower in southern Italy. In Puglia for example, it is possible to buy a house for 1,300 €/m².

If you’re looking for a property in Florence or Venice, prices are much higher: expect to pay more than 5,000 €/m² for an apartment in Venice.

Fees and taxes

Before committing to the purchase of a property in Italy, it is essential to consider the inherent costs.

First of all, as a foreign national, you are more likely to use a real estate agent. Estate agent fees vary and can be as much as 4% of the selling price, i.e. €12,000 for a property worth €300,000.

Do You Understand the 3 Main Stages of Buying in Italy?

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In Italy, a notary public (Notaio) must oversee the transaction on behalf of the Italian state. The notary’s fees are also variable: allow for between 2% and 4%.

However, in Italy, the most important fees are the registration fees, which represent 9%, or €27,000 for a property worth €300.000. That said, these costs should be put into perspective, as the rate is based on the land registry (cadastral) value of the property, which is generally lower than the actual value.

As for property taxes, they vary between 0.46% and 1.06% per annum. Nonetheless, these are costs that should be anticipated before buying a property in Italy.

Buying property in Italy: the legal steps

It is crucial to clarify the situation before buying. Italian property law is complex and may differ from your own country. You should always seek independent legal advice before signing any paperwork.

Reservation Offer

Once you decide to purchase a property, you and the vendor will sign a reservation offer. This is an irrevocable letter of intent to purchase (proposta irrevocabile d’acquisto) and means the vendor agrees to remove the property from the market for a defined period of time – usually two weeks.

Due Diligence

While the property is off the market, you should conduct legal checks and searches into the property. This includes verifying property ownership, planning permits, zoning regulations and mortgages on the property. In addition, we would recommend that you have a property survey conducted.

Deposit

Following your due diligence if you decide to proceed with the purchase, you will have to pay a deposit. If the sale falls through, you will get your deposit back in full. If on the other hand you continue to completion, the deposit will form part of the agreed purchase price.

It is advisable to sign a preliminary contract (contratto preliminare di vendita), even though it is not a compulsory step in the process. Having a preliminary contract allows you to fix terms and conditions of the sale based on your due diligence.

Deed of Sale

Any conditions contained in the preliminary contract will be included in the deed of sale (atto di vendita), which you sign when you complete the transaction.

It should be noted that when one of the two parties does not understand Italian, a second draft of the deed in your language is required, but the Italian version of the deed will prevail in a court of law.

Finally …

For more comprehensive information about the Italian property purchasing process, you might like to read our guide. If you would like to discuss your situation or, if we can be of assistance, please get in touch.

1 Euro Houses in Italy

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1 Euro houses in Italy: too good to be true?

In recent years, to combat dwindling populations in rural areas of Italy, a number of Italian villages, have been launching charm offensives by putting a number of houses up for sale for the symbolic sum of 1 Euro.

The aim of local municipalities is to attract Italian and foreign investors to revitalise their areas. Cinquefrondi in Calabria is the latest Italian town to launch 1 Euro houses in Italy for sale.

Although these 1 Euro property schemes seem attractive, it may be wiser to pass on them. The €1 schemes are widely advertised and, with so many people expressing interest in these homes, there are always more applications than homes available.

Don't Buy a €1 House Without Understanding the Buying Process

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How do you buy 1 Euro houses in Italy?

Whereas other towns selling homes for 1 Euro have required a deposit of up to €5000 that buyers forfeit if they fail to renovate the house within three years, Cinquefrondi is requesting an annual €250 fee for an insurance policy, payable until renovation works are complete.

Located in the historical centre of Cinquefrondi, properties are roughly 40 – 50 square metres in size. New owners will be liable to a fine of €20,000 if they do not complete their renovation projects within three years.

1 Euro houses at auction

As with all 1 Euro house schemes around Italy, sales take place in public auction (vendita con incanto).

It’s impossible to tell what you are taking on just from looking at a few photos of a property.

In some countries house auctions are common. In Italy however, they are not. The vendor’s lawyer does not prepare a set of documentation known as a, “legal pack”. Legal packs contain essential information including official titles and searches, property information and planning permission are therefore not available. In effect, you are responsible for conducting property-related searches.

To avoid buying what seems like a bargain but subsequently turns out to be a money pit, it is advisable that you go and inspect the property before you decide to make a bid. Obviously, this may not be possible because of time constraints and it can become costly. As you may not speak fluent Italian or have the expertise to assess what you are bidding for, we would recommend that you seek independent legal advice and professional expertise in Italy to evaluate the property before you submit a bid.

1 Euro is just the opening bid for properties

In fact, usually properties end up costing at least €20.000 at auction. On top of this, there is the legal requirement to renovate within a specific time frame. These properties therefore often end up costing a minimum of €50.000.

There are plenty of other reasonably-priced houses in Italy without the terms and conditions attached to €1 property schemes. These properties may be a better option for you.

Finally…

If you are thinking of applying to buy a 1 euro house in Italy, or any other property in Italy, at De Tullio Law Firm, we can help you with everything from property checks and searches, to facilitating the transaction, liaising with construction companies, obtaining Italian residence and providing tax and inheritance advice.

 

You may also like to read: Homes for 1 Euro in Sambuca, Sicily (Italy). You may also find our info videos about buying property in Italy useful.