Thinking about buying a property in Italy?
Then what you need is a guide that will help you to take all the right steps to find and buy the house you want, where you want: at the seaside, in the mountains, by a lake, on a hill, or in the city.
But that's not enough.
In this guide, we also give you advice on how to solve all the different situations faced by a foreigner who decides to reside in Italy more or less long term, from opening a bank account to acquiring a residence permit.
- Why Italy?
- Who can buy a house in Italy and how long they can stay?
- How to select the house
- How to finance the purchase
- The purchase process
- Taxes in Italy
- Management of the property
- Relocation
1. Why Italy?
Maybe you have decided to buy a house abroad, but still don't know in which country – so let us show you what is so special about this country that attracts millions of tourists, from all over the world, every year.
The first point is simply this:
why do millions of tourists come to Italy?
Because Italy has the richest historical and cultural heritage in the world.
Here the Etruscan and Roman civilizations developed, the greatest Renaissance artists from Leonardo to Michelangelo were born, and unique cities arose – Venice, Rome, Florence, Naples...
And that's not all.
Italy is also second to none for beautiful countryside.
Here you will find the
highest peaks in Europe, a sea that offers more than
7,000 kilometres of coastline with well-equipped beaches, romantic coves, cliffs, marinas, and a myriad of seaside resorts. And then there are the lakes, the hills with their picturesque villages and castles
... and, lastly...
here also are metropolises such as Milan, which is not only the heart of the country's economy but also the fashion capital of the world.
If you're still not convinced of the beauties of Italy, think of
the number 54. That's the number of Italian Unesco World Heritage sites, a figure that makes Italy the country with the most in the world.
We Italians call it, somewhat jokingly,
Bel Paese ('Beautiful Country'), but it truly has more beauties than any other country.
However, there are not only the beauties of architecture and landscape – Italy is the right country for you, for so many other reasons.
First of all, let's talk about climate.
Italy has several weather conditions, so it can be adored both by those who are always looking for the sun (even in winter) and by those who prefer snow and ice.
The centre, the south and the islands are the ideal territories for those who love long summers, while the Alpine and Apennine areas are perfect for those who love the sparkling air of the mountains. The lakes and hills offer a climate without extremes of heat or cold.
Do you know which souvenirs are most purchased by foreign tourists?
Food and wine products – and the reason is simple: in Italy, the utmost attention is paid to everything that is grown and produced as food, so you will find hundreds of foods, from cheese to cured meats, that are real delicacies. As far as wines are concerned, Italy is the world's leading producer.
Lastly, there is one more reason that should convince you to purchase a home in Italy: very competitive prices.
Yes, the economic crisis that erupted in 2009 has seen a collapse of the real estate market and this has meant that, despite a slow recovery in recent years, property prices are still significantly lower than they were a decade ago.
2. Who can buy a house in Italy and how long they can stay?
You will doubtless have asked yourself the question:
which foreigners can buy a house in Italy?
The answer is: ALL, as long as there is a principle of reciprocity.
Therefore, no matter what nationality you are, the important factor is that Italians should be allowed to buy a property in your country. And if that is not possible, we have a solution.
If you buy a house in Italy, it is logical to assume that you want to stay there more or less long term, but be careful with the regulations that apply to foreigners' stays.
If you are an EU citizen, that is from one of the 28 EU countries or one of the other countries affiliated to the EU (Norway, Switzerland, Iceland, Andorra, Liechtenstein, San Marino, Vatican City and Monaco), you can freely enter Italy and stay there for a maximum period of
90 days. If your stay is extended, you must apply for registration in the Registry Office of the municipality where you reside. You will thus get a
proof of residence that allows you to stay on Italian soil on an ongoing basis. After five years you are entitled to
permanent residence.
If your country is not a member of the EU, you must have a passport to enter Italy and, in many cases, a visa is also required. Once you cross the border, you can stay for up to
90 days. For periods of more than 3 months, you must apply for
both a new visa and a residence permit.
The residence permit is issued mainly for:
- study purposes
- work – that is, if you work in Italy, even on a seasonal contract, or you start a self-employed business
- adoption, affiliation, family reunification, marriage
- tourism, business, medical care, sporting reasons (in these circumstances, you must demonstrate that you have sufficient resources to support yourself financially, and to return home)
- elective residence – you choose to reside in Italy demonstrating that you own a home and have sufficient financial means to support yourself.
The application for a residence permit implies that you want to stay in Italy for a long period, but be careful because
if your stay exceeds 185 days a year you are considered tax resident. This means that you also have to pay taxes in Italy on income that has been derived abroad.
3. How to select the house
So, you have thought about making an investment by buying a house in Italy, but before you take this step, you'll have to determine exactly what kind of house you want, indeed exactly which house you want!
It is essential that you also involve your partner – or the whole family, if your children are no longer little.
A house is an important investment from a financial point of view – so think what it would be like if your family members did not love your beautiful Italian home, and did not want to stay there. It would simply be an empty house, for which you would still have to pay taxes.
When discussing with the family, the first thing to determine is the location or area where you want to buy a home.
By the seaside?
Yes, but where?
Do you prefer the Mediterranean climate of the south or the islands, or do you love the more temperate climate of Liguria and Tuscany?
Thinking of the mountains?
Do you prefer Europe's highest peaks in Piedmont, Val d'Aosta and Lombardy, or would you opt for Dolomite or Apennine landscapes?
If you are thinking of the hills, Italy offers you gentle slopes in practically all its regions. There are hills that have been nominated World Heritage sites, such as those in Piedmont and Veneto, whose gentle reliefs are cultivated with vineyards, but there are also wild poetic hills, such as those in Tuscany, Marche and Umbria.
There are a thousand different landscapes in Italy – and there are also lakes, and cities of art – so the choice of a place for your holiday home is not easy.
Once you've decided the
where, you absolutely must ask yourself the questions that specifically relate to the
what. How should your Italian home be?
First of all, decide if you are looking for a detached house, an apartment, or a villa.
Then ask yourself which style you prefer, because you can find houses for sale in every style. There are properties with modern design, rustic properties such as farmhouses, period houses in the Art Nouveau style, but also palaces with a few centuries of history behind them, not to mention traditional houses.
For example, in the Alpine areas, many of the houses for sale are of wood or stone; in Puglia, you'll find the typical 'trulli'; in Pantelleria, there are the 'dammusi'; and in the Liguria region, the colourful tower houses.
As you can see, there are many types of house available – on the shores of the lakes, it is not uncommon to find properties that even have direct access to the water.
Another issue you need to address is the floor area and the number of rooms which, of course, must be able to comfortably accommodate you and your family.
It must also be pointed out that
most of the properties for sale in Italy are not new. For some, it is enough to perform minimal modifications, while others may need substantial renovations that require the appropriate permits and whose duration can last for a few months.
What do you think? Do you prefer a home that's already perfect, or you want to 're-create' it to suit your needs?
And speaking of needs, do you have any in particular as far as the house is concerned? For example, do you want a swimming pool, or maybe you want a house with a sea view?
These are some more questions that you need to ask yourself, to be able to identify what your Italian house should be like.
The budget you have available is also a key element in thinking about a real estate purchase, but you also have to determine if you are willing to apply for financing, and in what amount.
And after you and your family have finally clarified your ideas, the decision that remains is whether or not to use agents (realtors).
Buying a house abroad can present several difficulties, due to language barriers, different real estate regulations, and also the distance. You can't always afford to travel back and forth between your country and Italy to visit properties.
You can come once or twice, but you can't continue indefinitely until you find the right house.
The solution to these problems is offered by Property Finders, who will find you the home of your dreams.
If you decide to contact one of these professionals, find one that speaks your language fluently by contacting the most important associations in Italy: FIAIP, FIMAA and ANAMA.
4.How to finance the purchase
Once you've established what kind of home you want to buy, you need to think about how to finance the purchase.
Attention: cash payment is not feasible; in Italy, cash payments are only allowed for amounts up to 3,000 euros. Beyond this limit, cheques, bank drafts and bank-to-bank transfers are used.
And to apply for a mortgage, in case you do not have the full amount, do not hesitate to
get in touch with an Italian bank with branches also in your country. Remember, however, that in the best case mortgages can finance only up to 80% of the value of the property.
Before signing up for a loan, you should contact at least a couple of lenders to select the one that offers the most favourable conditions. However, it is not easy to work out which financing offers the lowest charges, because you need to compare not only the interest rates but also the various costs relating to the valuation, technical appraisals and insurance.
Moreover...
Any lending institution will send an appraiser to inspect the property and determine the market value. The maximum loan amount will depend on this valuation.
Also, an insurance policy is required to protect the property from fire and explosion risk, sometimes combined with life insurance to protect the heirs in the event of the death of the recipient of the funding.
In addition to these costs, if you are not an expert, you will probably find it difficult to assess what type of mortgage is most suitable for you, as you will be offered different solutions regarding interest costs and the resulting instalments to be paid.
These are:
- fixed-rate mortgages – with these you will be paying fixed instalments for 10, 20, 25 or 30 years;
- variable-rate mortgages which see rates fluctuate according to the performance of the economy. These may seem very attractive, but since no one can forecast economic trends 10 or 15 years in advance, future interest rates remain an unknown;
- mixed-rate mortgages, which involve alternating fixed and variable rates over fixed periods;
- capped-rate mortgages, which offer variable rates which nevertheless cannot exceed a certain threshold.
In short, it is not easy to disentangle all these options.
If you are unsure what to do, you can turn to a credit broking company such as
Auxilia Finance, which contacts various banks for you and, after evaluating the different conditions, recommends the mortgage best suited to your needs.
Once you have received the approval of the bank, be aware that the figure obtained is a mortgage loan, which means that your home will be
burdened by a mortgage that the notary will inscribe in the Public Register of Real Estate. The mortgage will be cancelled only when the debt has been repaid, and if you make payments late you will be charged interest on such late payments.
With regard to mortgages, it is important to remember that the financing is not paid out immediately. The period is around two months, so it is not a good idea to start negotiations with the seller without first knowing the willingness of the bank to grant financing. Who can tell if he is going to get tired of waiting, and in the meantime sell to someone else?
5. The purchase process
The actual purchase process to buying home in Italy involves
two or three phases, depending on what is established by the parties, however our advice is not to be in a hurry and not to skip any steps.
In this way, both buyer and seller are protected.
But before we look at these steps in detail, we will focus on the actors who are involved in the process of buying a property.
Estate agent (realtor)
This is the intermediary who connects the seller and the buyer and is a true professional registered in the Register of Companies. He or she acts in the interests of both the buyer and the seller and must inform the parties of anything related to the deal (from the presence of building violations to the chosen payment method).
His or her remuneration consists of a commission calculated on the amount of the property, which is usually around 3%. The commission is paid by both parties and VAT of 22% is added to the commission amount.
Notary
This the public official who is responsible for drafting the deed of sale, registering it and collecting the taxes on behalf of the tax authorities. He or she checks the absence of mortgages, and the correctness of the documentation. This is an indispensable figure, without whom any sale is null and void. He or she receives a fee calculated as a percentage of the value of the property (from 0.2% to 1%).
Lawyer
In Italy, he or she is not an essential figure in a real estate transaction, however, since you live thousands of kilometres away, it is a good idea to hire an expert who will protect your interests and can even represent you through a power of attorney. The task of the lawyer is to make sure that the person who represents themselves as the seller has title to sell the property, that the documentation regarding the house is complete and that no building violations have been committed. If violations are found, it is the duty of the seller to remedy them. Usually, his or her fee involves the application of a percentage to the value of the property (from 0.2% to 1%).
Inspector
He or she is a little-known figure in Italy. His or her task is to inspect the property on behalf of the buyer to check its condition by examining the foundations, services installations, roof, walls, etc. In Italy, these tasks are very often assigned to a surveyor or an architect.
Surveyor or architect
His or her task is to verify that the floor plans correspond to the actual state of the property, and to submit projects for approval by the Municipality for the renovation works. He or she also verifies the compliance of the property with the data recorded at the land registry. He or she is often in charge of inspections.
The purchase stages
If you have found 'your' home, you must submit an
irrevocable offer to purchase. This is a document in which you make a binding offer to the seller, and this means that you will not be able to have second thoughts.
The seller, however, is free to accept or not.
If the seller accepts, you can move on to the next step with the signing of the preliminary purchase agreement.
The preliminary contract can be drawn up between private individuals or in front of a notary. It contains all the data relating to the sale, from the amount to the date on which the act of purchase will be entered into and the keys will be handed to the buyer.
At the same time, the buyer pays a deposit. If the seller goes back on the agreement, he is obliged to repay double the amount of the deposit, while if the buyer withdraws, the seller withholds the deposit. As you can see, in this way both parties are protected in case one of them does not want to complete the deal.
The deed is the actual purchase agreement. Drawn up by a notary in Italian, it is usually accompanied by a translation into the language of the buyer. It also requires the presence of witnesses who can attest to the fidelity of the translation. The deed must be registered by the notary and then presented to the land register for the transfer.
6. Taxes in Italy
If you buy a house in Italy you become subject to taxes. In particular, you will need to pay:
- buying property tax;
- taxes on the ownership of the property;
- income tax (only if you live in Italy or your stay exceeds 185 days per year).
The buying property tax is paid when you sign the deed of purchase and is collected directly by the notary. This is the tax required to register the contract and has different rates depending on both the type of property you have purchased (economic, luxury, historic housing, etc.), and whether it is a first home or a secondary residence.
Ownership tax: all those who own a property in Italy are required to pay a tax called IUC (Unique Municipal Tax), the amount of which is the sum of three different taxes: IMU, TARI and TASI.
The IMU is the ownership tax and must be paid only for properties that are not first homes. The TARI is the garbage collection charge. The TASI is the tax on indivisible services; that is, on those services enjoyed by the whole community, such as public lighting, park maintenance, street cleaning, etc.
Each municipality is free to determine the rates for each of these taxes. The State simply indicates the minimum and maximum rates and each local government decides according to its financial requirements.
It is not easy to calculate the exact amount to be paid... let's say that this is a job for an accountant.
Income taxes: if you settle permanently in Italy, or spend more than 185 days a year there, you are required to pay income taxes, which must also be applied to income that is produced all over the world.
Personal income tax, IRPEF, is progressive as the rates applied increase as income rises. Currently, the following rates apply:
- 23% on income up to 15,000 euros;
- 27% on income from 15,001 to 28,000 euros;
- 38% on income from 28,001 to 58,000 euros;
- 41% on income from 58,001 to 75,000 euros;
- 43% on income over 75,000 euros.
The income tax is personal because it takes into account the situation of each individual person (number of dependents, existence of minor children, incurred expenses for medical care, school, veterinary care, etc.).
And not all incomes are the same. They are classified as follows:
- income from employment;
- income from self-employment; that is, those received by artisans, professionals, traders;
- capital gains, which come from capital investments (shares, bonds, etc.);
- property income, which comes from property ownership;
- corporate income, i.e. that received by entrepreneurs;
- other income, which is income not otherwise classified.
... and the flat tax
For foreigners with very high incomes, there is a flat tax. With this, you pay a fixed tax of 100,000 euros per year on income earned abroad, while income produced in Italy is subject to normal personal income tax (IRPEF) and corporate income tax (IRES). This preferential tax regime can be applied for a maximum of 15 years.
7. Management of the property
You finally have a home in Italy, but now you have to manage it, which means that you have to take care of the payment of bills, maintenance, possible renovation and maybe even choose to rent it during the periods when you remain in your country.
First of all, let's talk about utilities
The first thing you need to do is transfer consumption of electricity, gas, water and telephone to your name, since the previous owner definitely does not want to receive bills related to a home that he no longer owns. These procedures are fairly simple, but tedious, since you have to contact the various authorities and submit documentation from time to time. We recommend that you entrust this task to your estate agent, who will very often carry it out for free.
Once you have made the transfer, you will have the problem of the recurring payment of bills, the management of which is not at all easy if you're not in Italy. However, the solution is extremely simple: you just have to request that they are debited to your current account – obviously, an account opened in Italy.
Renovation
If the house you have bought needs some renovations, it won't be easy for you to manage them from your country. Distance, language barriers and Italian building regulations (sometimes a little too 'fussy'), do not help.
So what can you do?
The ideal solution is to assign the task to a trusted expert that can deal with projects, administrative permissions, and follow up on the works. There are not many professionals who offer this type of service. However, through your estate agent, you will surely be able to find a company that can deliver a 'turn-key' house, even dealing with the furniture.
Maintenance
If you have purchased a house with a garden or swimming pool, who will take care of their maintenance when you are not in Italy? Again you need a person or a trusted company to carry out these tasks while you are not there, and once again the estate agent can help you by recommending trustworthy companies to turn to.
Renting the house
To pay some of your expenses, you can choose to rent your home during periods when you are not in Italy. This is a solution that many foreigners use, and you can do so by turning to specialised web portals such as Airbnb, Booking or HomeAway.
If you bought a house in Italy as an investment and you don't plan to reside there, you can entrust the task of finding tenants to an estate agency.
8. Relocation
Are you moving permanently to Italy? Here are some more things you need to think about.
Residence permits
As mentioned above, to move permanently to Italy you have to obtain a residence permit, and therefore this will be the first task you have to face.
We have already seen the circumstances under which it is issued. Regarding the process to be followed, it is necessary to go to a licensed post office to collect a special kit of documents that must be returned, once completed and signed.
It is then forwarded to the police headquarters for the territory, which arranges an appointment to assess whether the conditions for granting the permit are satisfied. Filling out the documents contained in the kit can present difficulties for those who do not know Italian perfectly, however it is possible to turn to professionals for help.
Please note that the residence permit has a limited duration and must be renewed when it expires.
Health care
In Italy, health care is guaranteed for all in cases of emergency.
However, if you want to have a family doctor, access to non-urgent tests and specialist visits, and pay only for a ticket and not the entire amount, you must enrol in the Regional Health Service.
To do this, you need to go to the relevant local health authority (ASL), which will issue you with a TEAM (EHIC) card that entitles you to health care, including in all other EU countries.
Driver's licence and car
If you have obtained a driver's license in your country, you must convert it to an Italian licence.
There are no problems for EU citizens, as theirs is a European licence and the Italian licence will be issued when it comes up for renewal. For non-EU citizens, it is possible to drive for one year (as long as the document has not expired) after the acquisition of residence, after which the driver's licence must be converted.
Licences issued by some countries can be converted without having to take a test (see list of countries here: http://www.mit.gov.it/come-fare-per/patenti-mezzi-e-abilitazioni/patenti-mezzi-stradali/conversione-patente-estera). All other citizens, however, require to re-take the test. In either case, the application for conversion of the driver's licence must be submitted to the Motorizzazione Civile (Provincial Motor Vehicle Office).
As for buying a car, be aware that it is only possible if you are officially resident in Italy.
International schools
If you have children, you probably want them to be able to continue or start their schooling without issues. Although they may enrol in state, recognised, or private schools, perhaps you would prefer that they follow an international curriculum with classes in English or another language (French, Spanish or German).
In Italy you will find several institutions of this type, especially in Milan and Rome, but there are also many in other regional capitals. If the chosen school is quite far from your place of residence, several institutions have boarding facilities.