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:
Funny, I’d be happy just getting a nice place in a town like Rimini and living there year-round… or a country house that has already been restored to turn into B&B. I have a friend who runs one outside of Bologna who I plan on eventually interrogate.
I must say, I’ve never heard of Rimini being on anyone’s wishlist. I’ve been there twice–nice, but overrun with partiers in the summer, and perhaps a bit melancholy in the off-season. Still, if you really like the coastal towns, or the club life, or are keen to channel the ghost of Fellini, I suppose it would be a good choice. Bologna is great…I stayed there for 3 months back in 2008 and loved it. The weather is really nasty, though.
So, I’ve been to Rimini 3 out of the past 4 summers for a total of about 7-8 weeks… Rimini is the kind of city you have to dig deeper and then all of its charms and benefits come flowing out. Tons of history, very family friendly (we always stay in Marina Centro which is a great part of the city), excellent food, lots of variety (not just the beach but Borgo Giuliano, the Centro, lots to do in the entroterra) and reasonable prices. I was born and raised in Bologna so we used to go to Milano Marittima but I’ve fallen in love with the Riminesi and their hospitality. That said, life in the wintertime in Rimini goes towards the interior so the centro comes alive with markets, fairs and other events. There’s much more beyond the surface.
Good to know! I’ll probably be back there in October for TTGIncontri at the fiera.
It’s a wonderful town but a bit “typecast”
I guess all towns are typecast in some way, the result of trying to describe a place in just a few sentences. Takes time to truly know a place; not just a few days on holiday.
That, in many ways, is the story of Italy. The masses think of Italy as the same old places and have a hard time thinking outside of the box. Italy? Oh, I love Tuscany and “Tuscany” to them is really limited to a certain part of Tuscany that involves Florence, Venice and a picture holding up the leaning tower. Maremma? Cala Violona? Elba? What are those? Southern Italy? “Oh yes, I saw Naples in one day. Terrible.” Don’t get me started… 🙂
Eye opener article. Especially the part about settling in FULL with the seller as well as waiting 3 months for the neighbors right of 1st refusal. Maybe renting in the future wouldn’t be a bad idea. Who needs more headaches?!
Right! Don’t add to your bureaucracy challenges if you don’t have to!
Is better to make a cadastral survey and mainly HISTORIC SURVEY, and do this BEFORE purchasing the estate. This will show you if actual landlord is real.landlord of the estate, or if there is some mortgage pending.
Also you must check if there is emphyteusis (burden of lease) pending on the estate.
Italy is an old country and you may discover actual landlord is just owner of an ancient centennal leaseholding contract, and the estate belongs to a noble gentlemen family, or to an old institution (for example it could brlong to an abbey).
For example this is very common in England too, where vast part of territory was originally property if the king or of the crown.
If you do not ransom emphyteusis you are just a tenant of the estate, and someone else who ransom it, he/she become the new landlord.
Great article as usual Rick…….my advice to anyone wanting to purchase a property in Italy is….DON’T……lol….unfortunately I found this out too late and now we are stuck with another new tax….IMU…although not too sure what is happening this year with that one…..but I don’t believe they will remove it altogether.
Riccardo Primo…..where in Tuscany are you interested in renting …?? I may be able to help you……there are still houses to rent there…..!!!,
Thanks, Carla! And as you’re well aware, my article contains enough conspicuous sarcasm not to be taken too seriously. I’m sure for the right person, owning a piece of their Tuscan dream is well worth the challenges. But for me, like Riccardo, renting would be the way to go…no matter what Seinfeld says!
Very interesting to me, Rick, since I am a Florida Real Estate Broker and had no idea of the “hidden agenda” in purchasing some Tuscan Sun! Most everyone who has visited and fallen in love with Italy dreams of the “perfect retirement” getaway somewhere in the Tuscan countryside. However, you have given us a “realty check” in doing so….
Thank you for the words of wisdom,
Prego! Piacere mio!
Nice piece, Rick. This has always been a dream of mine~
Your timely article probably saved me a lot of money since I was preparing for a discovery trip to Italy to find a house to purchase. I wasn’t aware of all the additional fees and taxes! Do they have such a thing as short sales there? Short of that, I suppose that I could rent a house while I look for an affordable property factoring in all the additional expense over and above the cost of the house itself that you had detailed. Could you recommend a good source for home rentals in Tuscany? I’m sure that there must be many available. Thanks for yet another interesting, amusing, and informative blog!
In the words of Jerry Seinfeld’s friend, “The Maestro,” “There are no more houses for rent in Tuscany!”