How to buy a property in Italy

Step 1: Obtain a Codice Fiscale

The first step in the process of buying a property in Italy is to obtain a Codice Fiscale. This unique identification code is calculated based on your personal information, including your name, place of birth, and date of birth. It is issued by the “Agenzia delle Entrate" that is the Italian Revenue Agency and it is required for any interactions with the Italian authorities.

Step 2: Open an Italian bank account

Opening an Italian bank account is essential, not only for transferring funds for the property purchase but also for automatic utility payments. Typically, the final payment is made using Italian banker's drafts. You can also opt to transfer the funds to an "escrow account" for added security.

Step 3: Formal Purchase Offer ("Proposta d'Acquisto")

Once you've visited properties and decided on one to purchase, the negotiation begins with a formal purchase offer. This offer should be in writing and accompanied by a check as a down payment. The seller can communicate their acceptance verbally. Once the offer is accepted, the seller commits not to sell the property to others until a specified date to protect the buyer's opportunity.

Step 4: Cadastral checks

Before proceeding further, it's advisable to investigate the property's title at the Land Registry ("Conservatoria e Catasto"). This helps ensure the property is correctly registered, belongs to the seller, and is free from outstanding loans.

Step 5: Due Diligence and documentation

Before making a purchase, it's essential to perform due diligence that includes documentation about the origin of the property, urban authorizations and certificates, Condominium rules, other administrative and technical aspects and environmental compliance.

Additionally, assistance is provided for obtaining a Codice Fiscale, opening an Italian bank account, formal purchase offers, cadastral checks, and support for notary procedures.

Step 6: Funds evidence letter

For high-value transactions (over one million euros), the seller may require a "funds evidence letter." This document demonstrates that the buyer has legitimate and obtainable funds for the transaction. Without this letter, the seller may not accept the offer, even if it is otherwise compliant.

Step 7: Preliminary Sales Agreement ("Compromesso")

The "Compromesso" is a legally binding document specifying the sale price, completion date ("Rogito"), and property information and rights. The "Rogito" is usually executed within 1 to 3 months after the "Compromesso."

Step 8: Deed of Purchase ("Rogito")

The final contract, also known as the "atto notarile," is signed after the "Compromesso." This is done when all necessary documentation is available. Both parties sign the deed, and the property is officially transferred. The notary issues a certified copy of the deed and registers it with the Land Registry.

Step 9: Purchase taxes

Purchase taxes in Italy vary depending on the type of property and the buyer's status. For example, the tax rates for first homes, second homes, and purchases through companies differ. Ensure you understand the applicable tax rates to avoid unexpected costs.

Step 10: Buying a farm

Purchasing a farm in Italy comes with its own set of rules and benefits.

It's essential to have an agricultural consultant and a trusted accountant to navigate the process effectively. Certain tax advantages and incentives are available for farm purchases.

Step 11: Real estate taxes

Apart from purchase taxes, property owners in Italy must pay real estate taxes, including IMU (municipal tax on real estate) and TARI (refuse/garbage tax). These taxes vary based on the property's assessed value.

Step 12: Taxes on leases

If you plan to rent out your property, you may be subject to income tax.

The "Cedolare Secca" is a flat tax rate of 21% applied to the annual rental income.

Step 13: Who can buy in Italy

The right to purchase property in Italy is generally available to most foreigners, with different procedures based on nationality.

European Union and European Economic Area citizens follow the same procedures as Italian citizens. For other nationalities, the ability to buy property depends on reciprocity agreements.

Step 14: Investor Visa

Italy offers visas to immigrant investors who make capital investments benefiting the Italian economy. The program encourages investments leading to job creation, research, and patronage activities. Tax and financial reliefs are also available for foreigners transferring their tax residency to Italy.

Navigating the Italian real estate market can be a complex endeavour, but with the right knowledge and assistance, you can make your dream of owning a property in Italy a reality. Be sure to work with experienced professionals who can guide you through the process and ensure a successful property purchase.

Engel & Völkers Lago Maggiore is glad to talk with you about your Italian dream! Do not hesitate to visit our shops or to contact us for any further questions!