CHIAVARI, Italy - Owning a property in Italy is the dream of many. Apart from the differences in the laws that cover real estate transactions, the process is unlike any you may have experienced in the past.
When I found this article by Italian real estate lawyer Nick Metta, I immediately thought it might help explain the intricacies of the Italian real estate system. I hope you find it useful. However, let me say that it is absolutely not meant to be used as a substitute for legal guidance, nor is it a recommendation of the author or his law firm. If you are planning on buying a property in Italy, contact your nearest Italian Consular for a list of qualified attorneys to help you through the process.
BUYING A PROPERTY IN ITALY: 10 THINGS YOU NEED TO KNOW
1. In Italy, each property has a list price and a "sale" price. The list price will of course gladly be accepted, but the sale price is the one the vendor is actually expecting to get. Italians go into a property purchase knowing this difference, as an inflated price is typical in order to embed negotiation room into the deal. As a buyer, you should always start by offering lower than list price and expect to negotiate from there.
2. Ask whether the property has a Habitability Certificate. If not, this gives you leverage to negotiate a substantial price reduction, as the vendor is required by law to provide a Certificate.
3. Ask whether the vendor recently did any renovation work. If so, a recent law allows income tax benefits to be transferred to the buyer – but only if this is mentioned in the agreement of sale.
4. Check whether the vendor has a mortgage on the property. If so, as the buyer, you could take over the mortgage under the existing terms saving substantial money on a new mortgage process. Furthermore, with the banks tightening up on mortgages, this could mean the difference between getting a mortgage or not.
5. Italian Notary Publics are highly skilled legal professionals who act as a neutral player in real estate transactions. The Notary meets the parties for the first time at the very final moment to sign the title transfer deed. The Notary will typically transfer the title by means of a standard purchase structure that fits the needs of average buyers. It is important to know that there are variations to this standard structure that could often benefit a foreign buyer. Be sure to communicate your particular situation and estate plans to the Notary so the ownership structure that best fits your needs can be adopted. To work out the details it is important to do this prior to the final completion meeting.
6. Italian real estate intermediaries typically act as dual agents, representing both the buyer and the vendor. Also, their fee is due as soon as the offer is accepted, even if the sale does not go through. It is possible to negotiate terms in advance, for instance, that the intermediary fee is due only if the transaction is completed. To obtain a safe deal that is best for your situation it is advisable to have your own independent expert working exclusively in your best interest, such as an experienced English speaking Italian lawyer.
7. In Italy the vendor (even a developer) is entitled to spend the deposit as soon as the buyer pays it. Ask for confirmation that the 20-year history of the title has been duly verified prior to giving any deposit to the vendor.
8. Transfer taxes vary from property to property. The buyer pays 100% of the transfer taxers. Request an accurate estimate of applicable taxes for your specific transaction and factor that amount into your budget.
9. Several tax reductions might apply depending on the case circumstances. If the buyer does not live in Italy but has (or is entitled to claim) Italian nationality, there is the opportunity to unconditionally save 70% on transfer taxes.
10. Remember to apply for and receive your Italian tax number (Codice Fiscale) as it is required for all Italian real estate transactions. It is the equivalent of an American Social Security Number and is free for the asking at any Italian tax office, through the consular office, or through a representative in Italy.
Nick Metta, Studio Legale Metta