Property purchase costs in Italy

What are the costs of buying a property in Italy? 

The main costs when purchasing a property in Italy are notary fees, taxes and estate agents commission – and collectively they do not make it the cheapest place in Europe.

Allow 10 to 20% of the purchase price for fees, taxes and costs. If you are a cash buyer, there will be fewer buying costs. If you are buying using an Italian loan or mortgage must pay for the atto di mutuo (mortgage contract) to be registered by a notary.

What are the fees when buying a property in Italy?

You can expect to pay fees and/or commissions on the following:

• Notary fees of between 1 and 1.5%, depending on the area, the value of the property and the rates charged by the individual notary.
• Non-Italian speakers will also have to pay for a certified translator when it comes to the final contract.
• Both buyer and seller pay estate agent commission, usually 2 to 3% percent of the real value, not the book value, plus VAT (IVA) of 20%.
• Land registry taxes, the “cadastral” tax, plus 20% IVA on the legal fees are also factored into the overall figure.

What taxes do you pay when buying a house in Italy?

Purchase taxes depend on whether you are buying a first or second home (a holiday home) and whether you are buying from a company rather than from a private seller.

For old properties, registration tax is 3% for those buying their main home, and it must not be classified as a ´luxury´ home. The registration tax for non residents and those buying second homes is 7%, so if you're planning to become a resident in Italy, do so 18 months before buying your home.

The tax is calculated on the declared value of the property and not on the purchase price. Buyers of new properties do not pay registration tax and instead are liable to pay IVA/VAT, which ranges from 4% to 22%. This is 4% for first-home resident buyers, 10% for second-home and non-resident buyers, and 22% on luxury homes. New properties are defined as those dwellings sold within five years of completion of construction or restoration. VAT rates have been frozen at the above rates until 2022.

If you originally decide on a second (holiday) home however it becomes a residential home, or vice versa, you have 18 months to declare this to your notaire who can change this for you and calculate the tax difference (this will incur some additional notaire fees).

What is capital gains tax on property in Italy?

Be aware of capital gains tax – if you pay taxes based on the cadastral price (declared value of the property) and it is much lower than the purchase price, then you sell the property within 5 years, you could be eligible to pay a much larger capital gains tax as you would have created an artificial gain compared to what you have claimed. This would not be an issue if you are selling the property after 5 years, you reinvest the money in Europe within a certain time period or if the property was not your main/only residence.