Buying a House in Italy: What you Need to Know
Although I’ve had several direct inquiries with regards to buying property in Italy, I’ve been avoiding the discussion up until now. Maybe I just don’t want to be responsible for someone else’s epic blunder. Or perhaps it’s the fear of litigation—somebody might actually believe that I know what I’m talking about and then subsequently hold me liable for my “expert advice” when the bank asks for the keys back.
However, I realize, kind readers, that you rely on me to help sort out the lovely chaos that is Italy. BUT, as with my so-called “expertise” on the malocchio, a little bit of knowledge is a dangerous thing—please take my counsel with a pinch of salt (and then don’t forget to throw it over your shoulder).
Too much Tuscan Sun
Oh, but it all sounds so heavenly—a country house with a view of rolling vineyards, quirky but friendly neighbors, and enough Chianti to drown yourself—right? Yes, I’ve read the book, too. Thanks to Frances Mayes, we all suffered a collective heatstroke under the spell of the Tuscan Sun. We all dream of recreating that same movie-ready fantasy for ourselves.
What could be more enjoyable than propping up the crumbling remains of a 17th-century barn while simultaneously battling unreliable contractors and the Italian bureaucracy? You just can’t buy that kind of fun at any price!
Still, it somehow manages to hold its appeal, doesn’t it?
So if you’re really that bored with life and feel that a colossal lapse in judgment will save you from an eternity of the mundane tortures of comfort and ease, then I’m willing to help. I’m here to facilitate your inevitable descent into madness and regret.
How to buy property in Italy
First of all the good news: there are no restrictions on foreign property ownership in Italy. Any chump with enough cash can purchase their Tuscan dream. Just make sure that money sent from outside of Italy for purchasing the property is officially documented to ensure that the proceeds of any resale can be repatriated. As if.
But before you do anything, save yourself a big headache and hire a real estate attorney to protect your interests. Seriously. Although the real estate transfer process is a regulated process, it is generally biased in favor of the seller. Also, make sure that the real estate agent that you’re dealing with is reputable.
Real estate agents must hold a professional license and carry insurance—they should also be registered with the local Chamber of Commerce. Ask them if they have a membership in one or more of the following agencies: AICI (Italian Association of Estate Agents), FIMAA (Federation of Mediators and Agents) or FIAIP (Federation of Professional Estate Agents).
Once you have chosen the property, make an offer. You must pay 1%-5% of the purchase price as a gesture of good faith. Unfortunately, an offer to purchase is only binding on the buyer; the seller may still consider other bids. You might want to specify a time limit in your offer agreement so as not to be left hanging indefinitely.
It would also be a good idea to retain the services of an architect or surveyor, too, to ensure that the property is sound. Some of these properties are pre-electricity or even pre-plumbing, so they may not exactly be up to code, if you know what I mean.
And if you know anyone in the “outfit,” (a.k.a. la malavita) now would be the time to send them over for a friendly visit with the seller. It can’t hurt.
So if your surveyor, lawyer, and padrino all give you the go-ahead, then you can sign a sales contract (compromesso) and agree upon a timetable. The buyer (that would be you in this scenario) hands over a second down payment, taking his total deposit to hefty 30%. Just know that pulling out at this stage carries severe financial penalties for both sides. Then in the last step, both sides sign a final contract (rogito) in front of a notary and the buyer (again, you, in case you’ve forgotten) settles IN FULL with the seller.
Notable here is the absence of a mortgage. Yes, that’s right. Mortgage lending has always been much tighter in Italy that in the U.S. or U.K, but it is even more so since the global economic crisis. Italians can’t even get a mortgage these days, so they’re certainly not keen to give them out to dreamy-eyed foreigners with no familial ties or legal status in the country. Money talks, folks, while all forms of promissory notes are conspicuously silent. Maybe I should have mentioned that in the very beginning.
When a rural property is sold, neighboring farmers have the right of first refusal. Under such circumstances, it is necessary to notify neighboring farmers of the preliminary contract. They have a set time period – typically three months – to exercise their right.
Taxes and Fees
Fees and taxes will usually add 7%-10% to the cost of a resale property, and 12-15% for a newly-built property. Typical add-on costs include around 3% to the realtor (the seller pays the other half of the 6%), €500-1500 for a surveyor, €150-200 per hour for a lawyer and up to €5,000 for a notary. For newly built properties, 4% VAT is levied if within a year and a half the buyer registers for Italian residency, a fairly simple procedure — otherwise, the buyer pays VAT at 10%.
For previously inhabited properties, the buyer pays 3% of the “cadastral value,” if residency is registered for within a year and a half, otherwise 10% of the cadastral value is payable. Cadastral value is decided by the Land Registry based on factors such as number of rooms, location, floor area, etc. It is usually less than 50% of purchase price.
So when’s the house warming party?
Hopefully I’ve been able to talk you down off the ledge by now. What’s wrong with renting, anyway? But since my true expertise are in superstitions (ha!) and not real estate, at least heed this bit of advice from a previous post:
“You must diligently sweep out the corners of a new house to get rid of the evil spirits that had taken up residence with the previous owner.” You’ve got your own problems, right? Why would you want to inherit someone else’s, too?
And if you must, here’s an article on the subject by Mrs. Tuscan Sun herself: