Many foreigners dream of living in Italy, and with excellent reason - the quality of life is world-renowned, the food incomparable, and art is around and in every corner. This is the best time to buy a home in Italy. The prices are the lowest they have been in ten years.
Italy is often referred to as “il bel paese” which literally translates to “the beautiful country”; a name attributed by arguably one of the greatest poets in the world, Dante Alighieri author of the Divine Comedy. Could one dare disagree? Soaring snow-capped mountains, a fabulous and extensive coastline, low grassy plains and thousands and thousands of hills. Plus large metropolitan cities, sleepy country villages, seasonal seaside resorts, fashionably-wintertime ski locations. A country of contrasts and contradictions, steeped in history and rich in architecture. Passionate. vibrant and sometimes a little crazy too! Mediterranean Climate – Many people think of Italy as a hot summer country, but Italy really does have four well-defined seasons. Intense summer heat gives way to a mild autumn. Indian summers are not uncommon and eating “al fresco” can often occur until October. Winters are relatively short, bringing plenty of snow to the mountains but little below freezing to other areas. Spring starts early (March!) and often includes great beach days to start on your summer tan. There really is something for everyone!
Art & Culture – The official Cities of Art are of course Venice, Florence and Rome. But this excludes the wealth of cultural, artistic and architectural phenomena found right across Italy. History literally bursts from every brick in every building, and the spectacular and varied countryside can be found no-where else in the world.
Quality of Life – Life is generally good in Italy! The food is fabulous, the wines are to die for, but there is more. Health services and education can compete with the best in the world. In a nutshell it’s more simply called “La Dolce Vita“.
Stable and Unique Housing market–The property market is extremely stable, and what makes Italy a little bit unique is the widerange of property types that are available on the market: mountains chalets, beach homes, rural properties, townhouses and apartments, castles, studio apartments, city lofts and much, much more. You can see some examples here. Tourism– Italy also can predictably boast a fabulous tourism industry. Florence alone attracts some 12 million tourists every single year. A strategic investment purchase of a property for rental or B&B purposes is highly attractive in the current market conditions and there are lots and lots of locations where this makes very sound business sense. The Italian lifestyle is a undeniably enviable one; a truly exceptional opportunity for anyone thinking of purchasing a foreign property. “La Vita è Bella” (Life is Beautiful) is now a phrase of international fame, and we really could not agree more. What is your reason for choosing Italy?
Who can buy a house in Italy?
There are many foreigners who dream of buying a house or any other form of real estate property in Italy. However, it is important to first understand the laws that govern land buying issues by foreigners in Italy. The current legislature provides the following conditions and distinctions for foreign nationals seeking to buy real estate property in Italy:
1. Foreigners who do not reside in the country can buy property in Italy if there is an international treaty that permits a material condition of reciprocity between their country of origin and Italy. This is a treaty that also allows Italians to buy a house in the foreigner’s country of origin. It is the Ministry of Foreign Affairs that periodically verifies reciprocity between Italy and other countries such as the United States. Notaries are not allowed to draft any forms of property buying contracts involving citizens from “non-reciprocity” countries. The Ministry of Foreign affairs stipulates that reciprocity is not required under the following conditions: • If the foreigner is an EU citizen; • A “resident alien” in Italy; • If there is a treaty between Italy and the foreigner’s country such as Canada that allows mutually requested activities including purchases, companies and so on.
2. Foreigners residing in Italy legally,their family members who are in good standing, and stateless persons who have lived in Italy for no less than 3 years are eligible to buy property in the country without the need for verification of a condition of reciprocity if they have a residence permit for: • Employment or self employment. • Sole proprietorship • Family reasons • Humanitarian reasons • Study • And if they have a long-term EC residence card. 3. There are no special requirements for citizens of EU countries, EEA countries such as Iceland, Liechtenstein, and Norway, and stateless persons or refugees who have resided in Italy for more than 3 years seeking to buy property in Italy.
1- Choose an expert Italian realtor licensee (like me!). Italian real estate has many 'particularities' that only an expert Italian agent can handle for you to be secure in your purchase.
2- Obtain an Italian tax code (codice fiscale) issued by the Italian tax authority (Agenzie delle Entrate), which is required to purchase a property. You can also request the codice fiscale from the Italian Consulate for your area, via e-mail.
3- Open a current account with an Italian bank, which is an option to use for the payments. If the seller lives in Italy, I suggest this option, and doing it before the signing of the definitive sales document (rogito).
4- Drawing up of the preliminary sale contract (compromesso or preliminare di vendita), in two languages if necessary, by your trusted realtor or a lawyer. I can manage this in Italian and English.
5- Screen of the property with the land registries and fiscal authorities to ensure that there are no impediments to the sale (and that there is no reason why the property might be seized by law enforcement agencies). It would probably be best if a surveyor checks out the property structurally too to make sure that it is sound or at least as described. I can definitely help in this. 6- Find a notary (notaio – a public official legally able to represent the state) to transcribe and register, as per legal requirements, the definitive contract (rogito) in order to take effective ownership of the property. I can suggest a recommended Notaio for that area.
7- (Optional) Ask for an estimate of remodel costs if the property that you are buying needs some updates or a total restoration. This is something you might want to do before buying. I can recommend trustworthy companies in Italy. For full renovation or substantial remodel is desired, I also work with a company with Italian architects based in the USA, who specialize in this.
To buy a home in Italy is not easy, but if you work with the right professionals, the process can be transparent and secure. In general, it takes longer than buying, for example, in the USA, but it is well worth it. You finish with the home of your dreams in Italy, and in the current economic climate, you obtain tremendous value for your money.
You do not need rocket science to buy property in Italy, but you do need to understand how the money “works”. In other words, can non-residents open bank accounts and secure mortgages in Italy? The answer is “yes”. Are there special banking requirements and/or restrictions that foreigners need to consider? Again, “yes”. Are there resources available to help navigate an unfamiliar bureaucracy? Once more, the answer is “yes”.
Foreigners can open a “conto estero“, or non-resident account, at most Italian banks. Necessary documentation includes: passport, residence card or proof of employment, a recent utility bill (proof of residence), and a tax code (“codice fiscale”). Tourists typically do not open bank accounts in Italy, instead relying on cash, traveler”s cheques, etc., but non-residents with second homes in Italy will usually find itmore convenient and less expensive to do their banking with an Italian financial institution. Note, however, that deposits must be made either in imported euros or foreign currency. On the “plus” side, you will not be subject to withholding tax on interest earned with a non-resident account, as opposed to a resident account. Additionally, non-resident accounts earn interest at a greater rate than do resident accounts.
Bank rates, services and fees vary considerably; shop around before opening any accounts. You can open accounts via correspondence, if necessary, but the general recommendation is to do so in-person, which will help you to establish a personal working relationship with your bank-of-choice, which can be beneficial if you will need a mortgage loan in order to purchase property. Once you have completed preliminary purchase steps and you are ready to apply for a mortgage there are a number of items to keep in mind. Know beforehand that the application process is often time-consuming and heavy on paper-work; diligence and patience will be rewarded. On a positive note, the considerable red-tape also serves to protect both buyer and seller.
Currency transfers to and from Italy
Buying a property in Italy,if you are outside the Euro zone, means you’ll need to send euros to Italy, not only to pay for your new home there, but also to cover ongoing running costs, such as utility bills. When you begin your hunt for an Italian property, all your money is likely to be in your local currency, for example US Dollars, so at some point you’ll likely need to exchange your funds into Euros and have them transferred to a Euro account in Italy. You have two main options for managing your money. You can ask your local bank to arrange your Euro transfers, or send money through a specialist currency firm, which could be a cheaper option in many cases.
Probably you will know better the first way, which is the most traditional one. But what are currency specialists exactly? And why they could be better for transfers?
• They usuallyoffer exchange rates that are 2-4 per cent better than the rate your bank would typically offer you. If so, for an American buyer for example this could mean a saving of around $2,000 by using such companies instead of a bank to transfer €100,000 to an Italian bank account. The benefits work the other way too, so when you are exchanging euros into another currency for repatriating to your native country.
• Currency specialists also could save clients money by charging no commission, or only applying it to lower value transfers, and often by absorbing banks’ sending and receiving charges. They could also complement their competitive exchange rates with one-to-one customer service, a fast transfer time and clever ways of helping you to secure the best exchange rates. • They will buy euros, or other currency, on the spot for you, but one of the most useful ways they can assist property-buyers is with a forward contract. By paying a small deposit, a forward contract allows you to secure an exchange rate for a future transfer, typically made within a year. It’s a very useful way of helping you to budget when buying a home in Italy – once you have had an offer accepted on a property, forward buying euros to pay for it means the cost to you in your local currency, e.g. US dollars, won’t change with the exchange rate fluctuation before you come to complete.
• Currency specialists can also help clients who make regular transfers between Italy and another country, whether its transferring a pension to Italy, or sending money to Italy to cover bills.
• As a final benefit, using a regulated currency specialist could be as safe as using your bank to send money to Italy.
Once you have identified your dream home, viewed it, and decided it is the one for you, it will be imperative to first understand the legal process of buying property in Italy before you finally close the deal. The following short guide will be quite helpful in unraveling some of the legal terms and requirements involved in the process.
• The first step before you proceed with anything is to get a ‘codice fiscale’ which is basically a personal code provided by Italian Tax Office. The code is a mandatory requirement for all types of investments, contracts, or legal proceedings in the country. The code is also issued at an Italian embassy or consulate.
• You will also be required to open an account at an Italian bank.
• Once done, you and your agent can then proceed to create a formal offer or ‘proposta d’acquisto’ for the property. It confirms your interest to pay for the property. As a matter of fact, as soon as the seller accepts your offer the formal offer turns into a legal-binding contract, and you will also be required to pay a deposit known as ‘caparra’, usually 10% of the property’s price. That deposit is legally non-refundable if you back out of the deal. But if it is the seller to back out, he will pay back to you the deposit plus an amount of money which is equal to the deposit itself.
• The deposit seals a contract known as preliminary agreement of sale (‘compromesso’ or ‘contratto preliminare di vendita’ in Italian). It is also called the ‘promessa di vendita’ which is actually a major contract setting out all the full conditions of the sale including all the necessary registry information. The signed contract must be registered within 20 days, at a cost of about € 200 Euros + 0.5% of the deposit (caparra), and a € 16 stamp (duty) that makes it a legally binding document (for each copy registered). Anyway, the preliminary agreement is not mandatory and the ”final contract” can be immediate.
• The next step will be to officially get the property’s title deed known as the ‘atto di compravendita’ or simply the ‘rogito’ (final contract) using the services of a notary, locally known as the ‘notaio’. He or she will validate the contracts dealing with transfer of property ownership, draft a new deed citing you as the new legal owner, and witness the closing of the deal as you hand over the final payment and receive the property’s keys from the seller. Notary fees vary from town to town and also depends on the purchase price of the property. His or her services are quite essential in closing the purchase convivially. There are usually many variations to the property buying process but most sales usually follow this pattern in most parts of Italy. The information provided here should shed some light on what to expect as you set off to purchase your desired property in Italy.
Taxation and closing costs
The following analysis may hopefully clarify the property taxation system in Italy at the moment. There are basically 2 categories of levies that everyone, resident or otherwise, must pay after purchasing a home in Italy:
1)Levies dealing with transfer of property such as stamp duty (imposta di registro), land registry tax (imposta ipotecaria), cadastral tax (imposta catastale) and VAT (IVA). VAT is generally levied on the purchase for property bought from a renovation company or a developer within 5 years after completion of work on the property. The other three taxes (stamp duty, land registry and cadastral tax) are usually based on the property’s “cadastral declared value” of the deed of sale called the “Rogito.” Notably, the cadastral value is lower than the property’s market price since it is based on appraisals which in most cases were done several years back. If one buys his or her principal home, also called prima casa, from a company or a private seller without applying VAT, whereby you can move into the property within 18 months after signing the final contract, live in the property for more than 6 months a year and if the home is not categorized asluxury property, then the registration tax, also known as ‘imposta di registro’, drops from the previously paid 3% to 2% of the property’s cadastral value. This comes with a minimum payment due of 1000 Euros. The cadastral tax (imposta catastale) and the land registry tax (imposta ipotecaria) also reduces from the previous 168 Euros to € 50 in each case. For second homes (seconda casa) the stamp duty is 9% and is applied on the cadastral value in case the buyer is a private entity, or on the purchase price if is a business entity. Land registry and cadastral taxes are € 50 in each case.
2) Ownership taxes: IUC (Imposta Comunale Unica). This is a set of taxes groups including IMU (tax on the ownership of the property), TARI (waste collection taxes) and TASI which are local services levies for amenities such as street lighting, etc. The IUC payment is split into 2 tranches.
Only owners of primary residences are exempted from Imu and Tasi for properties that are not classified as luxury homes. However, they will have to pay TARI according to the house’s square metres. On the contrary if you are buying a second home, you will be required to pay Imu, as well as Tasi and Tari. Anyway, we recommend you to check thoroughly the exact amount of the taxes you have to pay for your property in Italy since the situation can change from town to town and depending on political events.
When purchasing a home in Italy using a realtor, keep in mind that you will be paying the agent commission. In Italy, commission is due from both buyer and seller, and it is typically 3% of the sale price.
At the closing, you will be paying the Notaio's fees. Also, if you don't speak Italian, add in the costs of an official translator for the translation of the final contract at the Notaio (approximately 500 euro).
There are a number of legal technicalities that you have to take care of before you come to Italy either on holiday or for permanent relocation purposes. The first is definitely acquiringofficial permission to enter the country: 1) Ensure that your passport is up to date. 2) If you don’t carry a European Union passport, make arrangements to process and acquire the appropriate visa.
More importantly, carry along several photocopies of your passport and visa separately from the original documentsjust in case you lose the originals and need back-up evidence to identify yourself. The Italian law categorizes each foreigner entering the country as either a resident or a tourist: 1) A tourist is defined as anyone visiting the country for not more than 3 months including students and business travellers. 2) A resident on the other hand is anyone staying in the country for more than 3 months.
If you are from a non-EU country, you are required to get a ‘Permesso di Soggiorno’ permit or a ‘Permesso di Soggiorno per Soggiornanti di Lungo Periodo’ if you intend to stay longer than 5 years. Besides the permits, there are a few other documents that you will require before you travel:
• You will need one form or another of health and travel insurance. Notably, Italy has one of the best state provided healthcare systems in the world which citizens of EU countries with a free EHIC card use to access free or low cost medical treatment. Other non-EU citizens however do not qualify for full coverage. If your travel insurance policy does not cover emergency medical treatment and critical issues such as evacuation, then get a policy with extra health insurance. Just like other important documents, make sure to pack photocopies of all your insurance documents in a separate pack from the originals as back-up. You may be on prescription medicine, or travelling with someone with such prescriptions so ensure that you have packed extra quantities of the medicine just in case the medicine is not readily available in Italy.
• For those moving to Italy, it is advisable to get international personal property insurance for added protection of your stuff from point of departure to its destination. You can also look into different types of relocation and expatriate insurance policies sold by some insurance providers. Take time to plan everything including shipment of your belongings way in advance by contacting and comparing different international moving and shipping firms to get the best, and most affordable, quotes.
• Naturally, you will need to notify your bank before moving to Italy and preferably consider international online banking options.
• You will also need to either convert your currentdriving license to the Italian version or acquire an international driving permit if you do not have an EU country license. • Other important considerations include organizing yourtax payments and forwarding your postal mail to your new Italian address.
Retiring in a dream home abroad is considered by many as the perfect reward for a lifetime of hard word work and dedication to your previous job. Italy presents one of the best places to live your retirement days primarily because of the country’s great weather, beautiful scenery, a vibrant Italian lifestyle, improved living standards, comparatively lower taxation, and availability of affordable property. However, before you move to your dream home in Italy, here are a few things you need to consider. Like other retires elsewhere, your healthcare should be your primary concern. Take time to understand the country’s healthcare system, especially what is considered as standard cover so you can make arrangements for any supplementary private insurance that you may require. Plan well to avoid accumulating medical bills despite living in a country with an efficient health care system.
• It is also important to stay updated with the currency exchange rates in your new country. Remember your retirement income will not be as much as you were earning during your active working life so make sure to observe keenly the rate of exchange between your pension or investment and the currency of your new location. Moving to Italy from, for example, the UK gives you the advantage of living in a country with a lower cost of living where your retirement income can sufficiently sustain your budget.
• Most retires moving abroad often look for a country where they can easily integrate with the local community. Moving to a place with an already established expat community presents great opportunities to make friends and expand your network with ease. It also makes the unavoidable task of learning the foreign language less cumbersome without undue pressure. However, you should always strive to embrace the local culture as early as possible in order to fully integrate with your new community.
• If you are planning to purchase a home or property abroad, make sure the new home has easy access to all your primary needs such as shopping, medical facilities, and means of transport among others. Being close to public transport locations such as trains, buses, and airports is just as important as having the much coveted mountain views from your house’s balcony. • Don’t forget your taxes. Some countries may give you a reprieve from taxing your retirement income or levying very low taxation but it is important to seek advice from experts in financial matters before you settle in to avoid tax related problems.