I’ve read several articles describing how to buy property in Italy… The more I read, the more confused I am about what those articles advocate.
For example, many websites state that to buy a house in Italy, you have to hire a lawyer. My initial response is, “Really? But what about the notary?” The role of the notary is rarely explained. Sometimes, the notary isn’t even mentioned.
There’s little discussion about the purchase proposal, and no one talks about the down payment required to buy an Italian house…
It’s time to clear up the confusion.
Before I dive in, you need to know that every property purchase in Italy is unique. Each house has its own history, and every seller and buyer has his or her own needs. Still, a standard protocol is followed in nearly all Italian property sales.
The Real Estate Agent
If you don’t speak Italian, I recommend finding at least one agent who speaks English. By law, Italian real estate agents must be registered with the local chamber of commerce and hold a special identification card called the Patentino Di Agente Di Affari In Mediazione.
Ask to see your real estate agent’s card to verify that they’re legitimate. Italian law also requires that agents maintain a liability insurance policy for the protection of their clients.
In Italy, you must use a notary to purchase a house. The notary legally closes the deal. Italian notaries are public officials and lawyers who specialize in public deeds.
Notaries must have a university law degree, spend 18 months of training in a notarial office, and pass a very difficult public exam. If they don’t pass, they must take another 18 months of training, repeating the cycle until the exam is passed.
The notary processes all required documents and performs additional searches to make sure the house has no registered debt, mortgages, or liens. They’ll also check the title for the previous 20 years to trace the ownership history and make sure third parties can’t claim rights to the home.
Then the notary issues an estimate of their fees and the purchase taxes that the buyer will pay at closing. The transfer taxes are paid to the notary, who transfers them to the government when they register the deed. The buyer pays the notary’s fees, plus all taxes related to the purchase. It’s advantageous to have a notary who speaks English.
To buy a house in Italy, you shouldn’t need a lawyer because the notary checks the legal status, prepares the final deed and other documents, establishes the escrow bank account to receive the purchase money and the taxes, pays the transfer taxes to the government, and registers the deed to the Agenzia delle Entrate.
You might need a lawyer if you have a very complicated purchase requiring specialized investigation not normally done by a notary. Or you might want to hire a lawyer if you’re buying a house without the help of a licensed real estate agent or if you don’t trust your agent.
The real estate agent conducts the price negotiation between buyer and seller and then provides the notary with the necessary documents related to the purchase.
For the most part, there are six documents required by the notary:
- Atto di provenienza (ownership title)
- Floor plan
- Visura catastale (cadastral document)
- Attestato di prestazione energetica (energy certificate)
- Building permits if the house was built after September 1967
- Seller and buyer identification documents including passports and tax codes (your realtor will provide you with a tax code for free)
More documents might be required, especially if the house includes substantial land… but let’s start with the basics.
The Purchase Proposal
This document communicates the intention to buy certain property, at a certain price, within a certain amount of time. The purchase proposal is not binding until both parties have signed it. It provides time to perform due diligence and ensures that the seller won’t sell the property to anyone else in the meantime.
It also gives you time to apply for a mortgage without the risk of losing the house. Your offer will require a small deposit, for example 2,000 euros. This amount is returned if the house documents aren’t in perfect order or if the requested conditions can’t be met.
In my experience as a real estate agent, I’ve often skipped the purchase proposal step, usually for one of the following reasons:
- I request all necessary sale documents in advance, so I already know the property is ready to sell.
- The market in Abruzzo isn’t very fast, so potential buyers have time for due diligence without worrying that the house will be sold to someone else.
- My clients usually pay cash, so they don’t need time to obtain funds.
- Often, sellers don’t want to waste time on a contract that might end up going nowhere.
The Preliminary Agreement
Once you have your verbal or written offer accepted, the notary has checked all documents and provided a final estimate, you have your funds in order, and you’re ready to buy, you’ll proceed with the preliminary contract.
In Italian, this document is called the Compromesso or Contratto Preliminare and it specifies the official details, including the agreed upon price, the closing date, the deposit amount, existing mortgages, what’s included (furnishings and fixtures), and any other contractual points that need to be addressed or fulfilled.
The preliminary agreement can be prepared by your realtor or the notary. I usually write the preliminary agreement in both English and Italian. Generally speaking, the time frame between the signing of the preliminary agreement and the final closing at the notary office is two to three months.
The preliminary agreement is a binding document requiring a down payment of at least 10% of the total property price. The realtor registers it at the local tax office. If the buyer backs out of the deal, he’ll lose his deposit to the seller. If the seller breaks the contract, he pays the buyer double the amount received.
Final Deed Of Sale
The notary prepares the final deed, or Rogito, which is signed at the closing in front of the notary. If you can’t be present during the closing, you can assign a power of attorney. If you’ll be at the closing but you’re not fluent in Italian, you need to assign power of attorney to someone who speaks Italian so that they can act on your behalf.
Otherwise, if the notary allows it, you may appoint a translator to translate the deed into English, which will allow you to sign the document. In this case, the translator must be present during the signing to act as an interpreter. Not all notaries will consent to this, therefore, always ask your notary about their particular policies.
- Find a notary who speaks English so you can ask them any questions directly, and avoid the need for an interpreter or translator. Your notary will be able to explain every step of the final closing.
- Hire a qualified real estate agent who only lists properties that have all necessary documents in perfect order. A good agent has previously seen the documents of the houses they’re advertising, and they know that these properties can be legally sold.
- You don’t need an Italian bank account to buy a house because your notary holds your funds in an escrow account and makes payments to the seller as needed, but you’ll want an Italian bank account later to pay utilities and other expenses associated with maintaining your property.
Beyond the purchase price, you’ll have to pay taxes and fees. The taxes include:
Imposta Ipotecaria – land registry tax
Imposta Catastale – cadastral tax
Imposta Di Registro – registration tax or stamp duty tax.
The cost of the first two taxes is 50 euros each.
The Imposta Di Registro is calculated on the cadastral value of the house, not on its selling price, and will depend on whether you’re buying your home as a personal residence or a vacation house. If you’re buying a vacation house the tax is 9% (or for a personal residence, 2%) of the cadastral value of the house.
If you’re purchasing a home to be your main residence, beware you have 18 months to apply for residency in that house. If you fail to do this, the government will demand the additional taxes you owe, plus a fine. Once you obtain residency status, you’ll need to spend a minimum of 185 days a year in residence.
In addition to taxes, these fees may apply:
- Notary fees vary between 700 euros and 1,000 euros.
- Real estate agency fees are generally 3% or 4% of the total price of the house and are split by the parties. For low-cost properties below 100,000 euros, there is a minimum fee of 3,000 euros.
- Surveyor fee (if you have a survey done).
- Translator/interpreter fee (if you hire a translator/interpreter).
- Legal fees (if you hire a lawyer).
- Registration fee for the preliminary agreement is usually 250 to 300 euros.
- Land tax applies to homes with land such as an orchard, vineyard, or olive grove. This is 19% of the cadastral value.
- Value added tax (VAT) of 22% on each of the above fees.
Lastly, if you buy a house from a developer for rental purposes, you’re subject to a 10% VAT. If the same home will be your primary residence, you’ll only pay a 4% VAT. However, if you buy a house from a private seller, there’s no VAT on the purchase of that property.
Monia di Guilmi