Italy

For food lovers everywhere Italy is a firm favourite with its fabulous and world famous, regional dishes. Couple this with its relaxed pace of life and appreciation of the importance of family and it's easy to understand its popularity. Steeped in culture, it enjoys a beautiful climate and its varied landscape offers you a wide choice of properties for potential investment.

Costs

Before you allow yourself to be seduced by the dream of an Italian holiday home, it's worth considering the additional costs attached to your purchase. As a guide, budget for at least 15% on top of the purchase price and 20% for a new property.

Estate Agent Fees: Typically these would be 2.5%-4% of the actual value of the property, although some agents may charge more and so query all quotes.

Notary Fees: This amounts to approximately 2.5% of the total declared value of the property, with a minimum charge of approximately €1,300.

Geometra's Fee: This covers the cost of the conveyance of the property and can vary between €500 and €2000 depending on the work involved.

Tax Identification Number: Before you can buy property in Italy you need to be registered with the Italian tax authorities. The cost should be around €250.

Land Registration Tax: This is levied at 10% of the declared value of urban property and 17% of the declared value of rural property. The amount payable depends on many factors including whether the property is your first and only home or a second home, whether it is a new home or whether you are a resident.

IVA - Value Added Tax: This is a tax levied at 10% on new, non-luxury properties or 20% on luxury homes and is usually included in the price charged by the developer. If you build your own home this is reduced to 4%.

Process of buying

In some ways Italy is a safer environment in which to purchase, for example 'gazumping' is not possible. Be prepared to barter, it is expected and room to negotiate is built into the asking price.

Codice Fiscale: One of the first things you need to do if you are serious about buying a property is apply for your Italian tax number. You will need it in order to complete a purchase.

Notaio: You are required by law to appoint a notary to oversee your purchase, a 'notaio' is a property lawyer and neutral government official.

The Offer: To secure a property you want in the absence of having a 30% deposit readily available, you can sign a 'proposta irrevocabile d'acquisto', an irrevocable purchase agreement which is signed by both buyer and seller. You will need a 10% deposit. If you change your mind you will forfeit this. It is not uncommon in Italy for deposits to run as high as 50% of the overall purchase price of the property.

Preliminary Contract: This is called the 'compromesso' and commits both parties to the sale, at this stage you pay the additional 20% of the required 30% deposit if you have opted for the above option or just the standard 30%. This contract covers any agreements between the two parties relating to the property. If you withdraw from the sale you lose your deposit, however if the seller withdraws they must pay you double that amount.

Final Contract: This can take place anytime from one to three months after the 'compromesso' has been signed and is the final stage of the process. At this point you will sign a document called a 'rogito' which is drawn up by your Notaio who represents both parties and it transfers ownership of the property. You will be expected to have funds in place in time for the signing.

Tip

A translation of all documents will be mandatory so if you are not fluent in Italian you will need to incur this additional cost.

Final Tips

Tip 1: It is not unusual for Estate Agent's fees, usually about 4%, to be split 50/50 between the buyer and seller.

Tip 2: Italy is one of the only countries in Europe where Inheritance Tax has been abolished for small to medium estates.

Tip 3: You are not liable for Capital Gains Tax if you sell the property after five years.

Tip 4: In Italy, as in France, there is a tendency to sell the property stripped bare. If you want the sale to include fixtures and fittings you must state so clearly in your contract.

Tip 5: A permit for pool installation will be difficult in an area with water shortages, and remember having a pool can also elevate your property into a higher tax bracket

Tip 6: Rural tourism is becoming a strong tourist market and there are grants for property renovation in rural areas.