"Complete Guide to Real Estate Purchase in Italy: Discover All Taxes and Fees!"
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If you're here because you're considering purchasing property in Italy, you're in the right place. Today, we'll explore the current regulations and unveil all the taxes and fees involved in the buying process, whether you're a private individual or a business.
Let's start with real estate purchase as a private individual. When deciding to become a homeowner, there are several items to consider.
Taxes on the Deed of Sale: The first item is taxes on the deed of sale. These include the registration tax, mortgage tax, and cadastral tax. The percentage varies depending on whether it's the first or second home, averaging between 8% and 15% of the property value.
Notary Fees: Notary fees are another important part. These cover the notary's fees and cadastral transfer and can represent approximately 1-2% of the purchase price.
Real Estate Agent Commissions: Let's not forget real estate agent commissions, which generally range between 3% and 6% of the purchase price.
Preliminary Investigations: Before closing the deal, some preliminary investigations, such as cadastral and mortgage searches, are necessary, with an approximate cost of €100-€300.
Other Expenses: There are also other expenses to consider, such as the certificate of habitability and any changes to the land registry, which can vary between €50 and €400.
If you are considering purchasing as a business, the expenditure items change slightly.
Taxes on the Deed of Sale: Taxes on the deed of sale are similar but with a cadastral tax of €200.
Notary Fees: Notary fees increase slightly, with notary fees ranging from 1% to 2% of the purchase price.
Real Estate Agent Commissions: Real estate agent commissions remain unchanged, between 3% and 6% of the purchase price.
Preliminary Investigations: Preliminary investigations have a similar cost, but it's advisable to budget between €100 and €300.
Other Expenses: Other expenses, such as the certificate of habitability and changes to the land registry, can vary between €150 and €400.
In conclusion, it's important to keep in mind that these are estimates, and costs can vary based on different factors. I recommend consulting a real estate professional or an experienced lawyer before taking any steps, ensuring accurate information and a full understanding of all legal and financial implications.
Summarizing
If you are ready to embark on the path of real estate purchase in Italy, it is essential to understand the current regulations, as well as all the taxes and expenses involved.
This comprehensive guide will walk you through the purchasing process, distinguishing between buying as a private individual and as a business.
Real Estate Purchase as a Private Individual:
1. Taxes on the Deed of Sale:
- Registration Tax: 9% - 2% of the cadastral value depending on whether it's the first or second home.
- Mortgage Tax: 2% of the cadastral value.
- Cadastral Tax: €50.
2. Notary Fees:
- Notary Fees: Approximately 1-2% of the purchase price.
- Cadastral Transfer: €50-€200.
3. Real Estate Agent Commissions:
- 3% - 6% of the purchase price.
4. Preliminary Investigations:
- Cadastral Searches: €50-€200.
- Mortgage Searches: €50-€200.
5. Other Expenses:
- Certificate of Habitability: Varies by region but generally €100-€300.
- Changes to the Land Registry: If necessary, around €50.
Total Estimates:
8% - 15% of the purchase price.
Real Estate Purchase as a Business:
1. Taxes on the Deed of Sale:
- Registration Tax: 9% - 2% of the cadastral value depending on whether it's the first or second home.
- Mortgage Tax: 2% of the cadastral value.
- Cadastral Tax: €200.
2. Notary Fees:
- Notary Fees: Approximately 1-2% of the purchase price.
- Cadastral Transfer: €200-€500.
3. Real Estate Agent Commissions:
- 3% - 6% of the purchase price.
4. Preliminary Investigations:
- Cadastral Searches: €100-€300.
- Mortgage Searches: €100-€300.
5. Other Expenses:
- Certificate of Habitability: Varies by region but generally €150-€400.
- Changes to the Land Registry: If necessary, around €100.
Total Estimates:
11% - 18% of the purchase price.
Summary Tables:
Tax Type | Purchase as a private individual | Purchase as a private company |
Taxes on the Deed of Sale | 4% | 11% |
Notary fees | 1% - 2% | 1% - 2% |
Agent Fees | 3% - 6% | 3% - 6% |
Preliminary investigations | €100-€300 | €100-€300 |
Other expenses | Vary | Vary |
Tax Type | First house | Second House |
Registration tax | 2% | 9% |
Mortgage Tax | 2% | 2% |
Land Registry Tax | €50 | €200 |
Type of Expense | Private (First house) | Private (Second house) | Company (First House) | Company (Second house) |
Taxes on the Deed of Sale | 2% | 9% | 9% | 9% |
Notary fees | 1-2% | 1-2% | 1-2% | 1-2% |
Agent Fees | 3-6% | 3-6% | 3-6% | 3-6% |
Agent Fees | €50-€200 | €50-€200 | €100-€300 | €100-€300 |
Other expenses | Varia | Varia | €150-€400 | €100-€400 |
Please note that these are only estimated costs and may vary depending on various factors, including the region where the property is purchased and the complexity of the transaction.
Before taking any steps, we recommend consulting with a real estate professional or an experienced lawyer to ensure the accuracy of the information and fully understand all legal and financial implications.
VAT Regime
The application of VAT in the transfer of residential real estate follows specific rules based on the type of property.
The transfer of residential properties by companies is subject to VAT by obligation if the selling company is involved in the construction or renovation of the property, and the transfer occurs within 5 years from the completion date of the construction.
The same transfer becomes subject to VAT by option (expressed in the deed by the seller) if the transfer is made by the same construction/renovation company more than 5 years after the completion of the work (otherwise, the transfer is considered exempt).
In any case, if the transfer is made by a party other than the construction/renovation company, the transfer is VAT exempt. In the case of the transfer of residential buildings intended for social housing, according to the D.M. 22.4.2008 (decree for dwellings defined as "Social Housing"), the transfer is subject to VAT by option expressed by the seller in the deed. Naturally, if a VAT taxable transfer is involved, the registration tax is applied at a fixed rate.
VAT Rates in the Transfer of Residential Real Estate
The transfer of residential real estate involves the application of the following VAT rates:
- 4% – Residential houses other than A/1, A/8, A/9, transferred to individuals meeting the "first home" requirements;
- 10% – Residential houses other than A/1, A/8, A/9, transferred to individuals not meeting the "first home" requirements;
- 10% – "Tupini" buildings and similar ones other than residential houses, transferred by the builder;
- 22% – Residential houses A/1, A/8, A/9.
Example of Expenses for the Purchase of a First Home
Let's assume the house has a cadastral income of €536.43.
The corresponding cadastral value will be determined by the calculation:
Cadastral Income x 1.05 x 110 = CI x 115.5 = €61,957.66.
PRIVATE | FROM COMPANY | |
Purchase Price | 100.000€ | 100.000€ |
Registration Tax 2% (for private) VAT 4% (for company) | 1239.15 | 4000,00 |
Transcription Tax | 50.00 | 200.00 |
Cadastral Tax | 50.00 | 200.00 |
Archive Tax or Registration Tax | 30.40 | 200.00 |
Notarial Deed of Sale (including VAT) | 1600.00 | 1600.00 |
Notarial Deed of Bank Mortgage (including VAT) | 1600.00 | 1600.00 |
Agent Mediation Fee (4% + VAT 22%) | 4220.00 | 4220.00 |
Preliminary Registration | 268.00 | 268.00 |
Bank Processing Fee | 300.00 | 300.00 |
Bank Appraisal | 350.00 | 350.00 |
Bank Substitute Tax (assuming 80% mortgage) | 200.00 | 200.00 |
Energy Performance Certificate - EPC | 200.00 | 200.00 |
Preliminary Investigations Mortgage Searches | 150.00 | 150.00 |
110.257,00€ | 113.488,00€ | |
Percentage of Purchase Price | 10,25% | 13,48% |
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