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Buying property in Italy
Your step-by-step guide to purchasing residential property with confidence
Introduction
There are many reasons to consider buying residential property in Italy, whether for lifestyle, an additional residence, a permanent home or an investment.
Buying property in Italy should be relatively straightforward, but we always recommend that you seek the assistance of reputable professionals and advisors (e.g. lawyer, accountant, Notary, etc.). This guide has been compiled for potential buyers of residential property in Italy. It does not seek to provide or replace legal advice, which you should obtain, nor is it intended to have any contractual effect.
Knight Frank's network in Italy
Throughout Knight Frank's Italian network, we provide all our clients with the most comprehensive level of service and care. Working in close collaboration with our growing network of associates throughout Italy, our dedicated team can help you find your ideal property in the perfect location.
All local network offices are well established and locally owned businesses trading under strict Italian real estate laws. Local agency and other contractual agreements are governed by Italian law. We can also help with sourcing any legal, survey, planning and tax advisory firms that you might need to assist you with due diligence, general advice and completing the transaction.
None of our agents are qualified to give you legal, survey, planning or tax advice, although they are happy to share their years of experience. We would also be glad to put you in touch with relevant associated professionals such as mortgage brokers, currency exchange specialists, architects, interior designers and more.
Defining your requirements
Using our combined decades of international experience and working alongside our local experts, we can advise you on how to fine-tune your search requirements. Elements that are important to consider are: reasons for purchasing, areas/locations of interest, property features (e.g. number of bedrooms, style, etc.), budget (to include purchase/financing position), and preferred timeframe.
Taking time to clarify these details early on helps you approach viewings with a clearer picture of the market, the buying process and your position as a buyer.
Budget & purchase costs
When setting your budget, it is advisable to consider purchasing costs (agency fees, notary fees, stamp duty/land registration costs, technical report costs, etc.).
Under Italian law, real estate agent fees in Italy are payable by both the buyer and the seller (our standard fee is 4% + IVA for the seller and 4% + IVA for the buyer).
The overall cost of purchasing property in Italy depends on the purchase tax rates applicable to the particular asset and whether the seller is a corporation or a private individual. The estimated total percentage cost of a typical re-sale property to a non-resident buyer in Italy is approximately 9% of the fiscal value of the property.
For new-build purchases, properties classed with an 'A' rating on the Property Register purchased from a company will have 10% VAT replace this purchase tax, with exception for properties classed with an A1, A8 & A9 rating being purchased by a company will have 22% VAT of the purchase price applied.
As a very general indication, total purchase costs can amount to c.10–12% of the purchase price. Please get in touch to learn more.
The buying process
Seven key stages from your first viewing to completion
1
Viewing properties
We work hand-in-hand with our local partners to ensure that your time spent viewing properties is productive and enjoyable. By consulting with you in advance of your visits, we can ensure that we show you the most suitable properties to match your criteria. When viewing properties, our local partners would be delighted to share their experience and insights into the local area, allowing you to make a fully informed decision when you find the right home.
2
Making an offer
Once you have identified a property of interest, our team will be on-hand to share their experience in the negotiations and the purchasing process. In certain circumstances, the buyer will be asked to confirm their intention to purchase in the form of a written offer letter (Proposta d'acquisto). The agency will request proof of identity and proof of main address. The offer letter will include the offer price, details of the property and seller, details of the buyer, any associated conditions (e.g. mortgage, survey, etc.), and a proposed timeline. Once signed by the buyer, it is sent to the seller for agreement. Great attention and ideally legal counsel should be obtained as the offer, if accepted, might become a fully binding contract under Italian law.
3
Due diligence
Upon signing the offer letter, the Notary will be chosen by the buyer to ensure the law is applied correctly and that the interests of both parties are protected. Notary's fees are payable by the buyer. The Notary will collate information, carry out relevant searches, check title registration, advise on planning permission records, check for agricultural or state pre-emption rights, review the surveyor's report and prepare the preliminary contract (Compromesso). The buyer should instruct a technician (Geometra) to check town planning and land registry compliance, and may wish to instruct other professionals such as a surveyor or legal/tax advisor.
4
The preliminary contract
The notarised preliminary agreement of purchase (Compromesso) may, in some cases, be conditional on specific events. The Compromesso does not transfer title but sets out all details of the sale and enables the seller to gather required documentation and the buyer time to prepare funds. Usually a deposit is exchanged at Compromesso; in particular circumstances it is entrusted to the Notary in escrow. The notarised Compromesso grants full protection to the buyer as it will be registered as a lien in the Registry of Property Titles.
5
Prior to completion
The buyer must have obtained an Italian tax code number (Codice Fiscale); the agent or lawyer can help in this process. Further tax advice should be sought regarding the advantages or disadvantages of becoming a resident in Italy and appropriate vehicles for ownership. If renovation work is planned, permissions can take approximately a year (sometimes less, but under certain circumstances even more), so early involvement of an architect or Geometra is advisable.
6
Completion
Completion of the sale (signature of Rogito Notarile) takes place at the Notary's office. The signature of the final contract can be executed by power of attorney by prior agreement. It will be necessary to transfer the purchase balance, agency fees, Notary's fees and taxes prior to signature. After signing, the Notary will record the transfer of title in the Title Office.
Key milestones
When to speak to the relevant professional
1
Speak to a property advisor/agent and a mortgage advisor
2
Speak to a tax/legal advisor
3
Instruct a Notary and consider instructing a surveyor
4
Speak to a currency broker about deposit and future transfers
Speak to a property advisor/agent and a mortgage advisor
Speak to a tax/legal advisor
Instruct a Notary and consider instructing a surveyor
Speak to a currency broker about deposit and future transfers
Ownership & tax considerations
Given the complexities of foreign ownership and succession, we strongly recommend that you seek independent advice from a financial and legal advisor as the below should be treated as a guide only.
Income tax
Income tax is payable in Italy by all property owners on the theoretical rental income of the property during the year; non-residents in Italy are subject to this tax only if the income exceeds a certain threshold.
Income tax is payable in Italy by all property owners on the theoretical rental income of the property during the year; non-residents in Italy are subject to this tax only if the income exceeds a certain threshold.
Council tax / IMU
IMU is a property tax based on the theoretical rental income of the property and is collected by the local authority twice a year.
IMU is a property tax based on the theoretical rental income of the property and is collected by the local authority twice a year.
Structure
A property in Italy may be acquired and held under a private name, in the name of a domestic or foreign corporation, or even by a trust. The choice of ownership vehicle is a sensitive decision and should be discussed with a legal or tax consultant.
A property in Italy may be acquired and held under a private name, in the name of a domestic or foreign corporation, or even by a trust. The choice of ownership vehicle is a sensitive decision and should be discussed with a legal or tax consultant.
Capital gains tax
Capital Gains Tax is not payable in Italy for private individuals if the disposal of a property takes place more than five years after the purchase.
Capital Gains Tax is not payable in Italy for private individuals if the disposal of a property takes place more than five years after the purchase.
All foreign owners are advised to draw up an Italian will. The standard IVA rate in Italy is currently 22%.
This note is meant to give a very basic indication of the purchasing process. No liability is assumed as each interested person should seek local professional advice.
Glossary
Proposta d'acquisto — An offer letter stipulating the terms of the buyer's intention to buy. If accepted and unconditional, it may qualify under Italian law as a fully valid, binding contract.
Notary — An independent, impartial professional appointed by the state who acts on behalf of both parties to register the transaction.
Suspensive clause — Between exchange and completion, suspensive clauses may be actioned by the Notary prior to completion (e.g. securing financing or planning permission).
Compromesso — The preliminary sales contract prepared by the Notary and including all relevant details of the proposed transaction.
Deposit — A financial sum payable, normally at the time of signing the preliminary contract (typically 30% of the purchase price).
Rogito Notarile — The final contract indicating the completion of the transaction.
Ready to find your Italian home?
Our local experts are here to guide you through every stage of the buying process.
Florence Office
Via del Purgatorio, 18/r,
50123 Firenze FI
+39 055 218457
Radda in Chianti Office
Viale XX Settembre, 5
53017 Radda in Chianti, Siena
+39 0577 738908
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