How to buy a home in Italy

AlMare, CC BY-SA 2.5 <https://creativecommons.org/licenses/by-sa/2.5>, via Wikimedia Commons
AlMare, CC BY-SA 2.5 , via Wikimedia Commons

The almost definitive guide to buying a home in Italy.

Oh, Italy is right enough. The best country in the world to live in.
— Mark Twain, in the New York Times, 10 April 1904

So you're considering buying a home in Italy, congratulations! You'll want to understand how the process works. You'll want to avoid traps along the way. No doubt you have plenty of questions. On the surface the purchase process is fairly straightforward and in most cases the purchase process goes smoothly... with home ownership in Italy just shy of 80%, things cannot be too hard! Yet you're right not to just assume everything will fall into place by itself.

By the end of this guide you should feel much more prepared. Buying a home in a foreign country is a major undertaking, so this text is a bit lengthy, yet the goal is to inform you, not deter you! For the TL;DR folk, use the table of contents to jump around to consult the bits you need as you need them or feel free to contact us should you wish professional assistance or to meet in person for coffee!

Where is the best place in Italy to buy a home?

For many people the decision as where to buy property in Italy is made based on family connections or work requirements. For others there is a definite lure of lakes, mountains, or the sea. At 301,338 km², Italy offers something for everyone. If you don't already have a specific place in mind, see the best places to live in Italy for a consideration of the pros and cons of different areas.

Finding a home in Italy

Online meets fragmentation reality

In the internet age it seems intuitive that the first place to look for a home is online. Yet soon an Italian reality sets in. The Italian property market is frustratingly fragmented. There isn't one "go to" website such as Rightmove in the UK, Zillow.com in the USA or Immobilienscout24 in Germany, there are many. Soon you find yourself performing the same search 5 different ways on 5 different sites. The search results on any particular site may include the same property listed 4 times – with 2 or more prices! Other homes might not be listed on any of the sites except one, not so good if you don't check the "right" place. Some upscale properties are not publicly listed anywhere due to an owner's desire for complete discretion.

There is no comprehensive Italian "MLS" despite claims to the contrary.

Classified ads

In some places there are still local classified ads to peruse, only adding to the fragmentation.

Strolling around

Another approach is to walk around a neighborhood looking high and low to sight vendesi signs. Yet not all properties are visible from the street. Nor do all available properties have signs posted as the owner may want a modicum of discretion.

Put a reputable real estate broker to work for you

With lots of perseverance you might be able to find your ideal home in Italy on your own. Yet a reputable real estate broker may be just the partner you need.

Their knowledge and assistance can save you both time and money. They can help you navigate through the intricacies of the purchase process, including a due diligence evaluation of a property well before closing / completion time so problems don't emerge at the last minute.

Current Italian law requires real estate brokers to be trained in tax, legal and technical areas, certified (only 20% of candidates pass on average), licensed and they must carry professional liability insurance. A reputable realtor is thus truly prepared to guide you through every step of the property purchase process.

Among the benefits you can expect as a buyer when you use a professional realtor:

Real estate agent commission

A real estate agent is required by law to be impartial, works by default on behalf of both the buyer and seller, and thus their commission is normally paid by both buyer and seller. Each agent determines their own rates. A buyer will generally pay 3-5% + VAT on the sale price. 4% + VAT is fairly common these days, especially when the buyer is a foreigner (foreigners require significantly more assistance than locals); 5% is typical among franchises (just 10%, roughly, of Italian agencies) as they have royalties to pay for their brand - a dubious value for their clients. A minimum commission instead of a percentage will normally apply for low value properties, i.e. those selling for less than € 150,000 or so. 19% of the commission on the purchase of a primary home may be deducted from Italian income tax, for a maximum possibile € 1000 of commission (subject to change).

Using the listing agent – seller's agent

Should a buyer discover a specific property of interest through the work of a real estate agent who has worked with a seller (the listing agent) to get the word out on the property's availability by default the buyer will work directly with the listing agent, who by law must work impartially on behalf of both the buyer and seller.

Using a property finder – buyer's agent

The alternative to using the listing (seller's) agent is for the buyer to choose their own preferred real estate agent, the buyer's agent, sometimes also known as a property finder or as an exclusive buyer agent (EBA).

The buyer's agent, a.k.a. property finder, is a real estate agent licensed in Italy who is engaged by the buyer to work on the buyer's behalf rather than working for the buyer and seller (the default case in Italy) or just the seller.

Note: the property finder must be a certified and licensed real estate agent in Italy; anyone else does so illegally. In particular "agencies" registered in the UK or otherwise outside Italy are working illegally, as are self-proclaimed "guru experts". Alas mention in English language publications is not a guarantee someone is working legally.

A buyer using a buyer's agent should engage their agent early in the purchase process. The buyer must let their agent establish first contact with listing (seller's) agent in order to avoid incurring extra commission costs.

In practice the buyer's agent will be working in collaboration with the listing agent; the two will agree to a fee split arrangement.

A buyer's agent is able to offer almost any property on the market, they are not limited to properties in their own portfolio. Use of a buyer's agent is becoming more common in Italy, although there is some resistance particularly in the active markets of Milan and Rome as the listing agent's effective commission is reduced. In the province of Rome listing agents typically expect a kickback (storno) from the buyer's agent.

Looking for a licensed buyer's agent / property finder? Contact us today for information on how we can be of assistance.

A few notes should you use an agent

Making an offer once you've found your ideal home

You've found the home of your dreams, congratulations! Typically the aspiring buyer makes a proposal to the seller. It may be an informal verbal offer or it might be in the form of a written purchase contract which becomes binding upon notification of acceptance by the seller. Should the offer be verbal, the parties may choose to complete a written sales agreement if they wish to delay the actual property transfer (closing / completion). The final step is the signing of the formal property transfer document, the rogito, akin to the deed in common law jurisdictions, and the updating of public records registries.

1. Offer negotiation / proposal → 2. Preliminary sales agreement → 3. Closing / completion (rogito)

Note: only the 3rd step, the Closing / completion (rogito), is strictly required.

1. The offer proposal

In the offer proposal, the prospective buyer states what they are willing to pay and under what terms. A verbal offer is often useful to see if a seller would accept your terms without significantly committing yourself but has very little practical value (by law the actual sales agreement must be in writing). A common alternative is to present a preliminary sales agreement to the seller with an acceptance deadline, usually 15 days or so. Such a proposal, if correctly drawn up, becomes binding on the parties once accepted by the seller.

Warning: some proposal contracts are simply a promise to stipulate a future contract which in turn promises to complete the public deed agreement. This type of contract has been ruled invalid by the Italian supreme court, i.e. worthless.

Tip: Before making an offer, make sure you completely understand what you'd be buying; see the due diligence section.

2. The preliminary sales agreement (il contratto preliminare, a.k.a. "compromesso")

In most cases the parties will choose to enter into a preliminary sales agreement, colloquially called the compromesso (compromise) which, properly drafted, is a legally binding written contract committing them to the property sale transfer which will be concluded at a future date. This is useful when either party requires a few months before they are ready to finalize the formal property transfer, e.g. such as when the buyer still needs to obtain a mortgage and / or when the seller isn't yet ready to leave the property.

The written agreement can take one of three legal forms, a private signed agreement (scrittura privata), an authenticated private agreement (scrittura privata autenticata) or public instrument (atto pubblico). An authenticated private agreement is a private agreement signed in front of a notaio. A public instrument is drawn up by the notaio who then witnesses the signatures.

See also: What is a notaio (civil law notary) and what do they do?

The sales contract can be transcribed into the public property ownership registry, an option providing significant additional protection to the buyer in the case the seller goes bankrupt before the closing or should an unscrupulous seller subsequently sell the property to another buyer. If a notaio is used to authenticate or draw up the contract, (an authenticated private act [agreement] or a public act) then it must be transcribed1.

A deposit is paid at this point; the amount, generally in the range of 5-20%, is at the discretion of the parties. The deposit can take a number of forms: caparra confirmatoria (confirmatory deposit), the most common type of deposit, caparra penitenziale (penalty deposit) or simply acconto (down payment). A caparra confirmatoria obligates the parties to complete the transaction or forfeit the deposit (if the seller is at fault, they must return the deposit and pay the same amount to the buyer; this is commonly, and erroneously, described as the seller paying the buyer double the deposit). The offending party may still be libel for additional damages and / or legally forced to honor the contract2. A caparra penitenziale gives the parties the right to back out of the contract by forfeiting (or paying the amount of) the deposit without any further liability for damages. Finally an acconto is simply a down payment toward the purchase price.

The sales contract must be registered within 20 days3; if you use an agency, the agency will register it for you (in the case of a public act, a notary-at-law (notaio, described in greater detail in a following section) will register and transcribe the act within 30 days).

Current registration fees

TaxType of deposit / penaltyAmount
Contract stamp duty (Imposta di bollo) € 16 every 4 pages or 100 lines
€ 2 every graphical page (e.g. floor plan), € 1 if signed original (total per copy)
– or –
€ 155 if a notaio is used
Contract registration tax (Imposta di registro)Base fixed fee€ 200
Confirmatory (caparra confirmatoria)0,5% of deposit
Penalty (caparra penitenziale)3% of deposit
Down payment to (acconto)individual(s)3% of deposit
business(es)€ 200 + VAT
Penalty clause (rare)3%; minimum € 200

Tip: ensure the contract specifies the purpose(s) of the down payment. By default it will be considered as a simple down payment (acconto).

By law the buyer pays the taxes on the definitive deed4 unless the parties decide otherwise. Custom dictates the buyer pays the registration fees for the preliminary contract unless the parties agree differently as the taxes on the down payment are simply an advance on what will be due for the deed transaction. There can be confusion on this point as the law states that each of the parties who benefits from the registration of a general contract (opposed to a sales contract) is responsible for the non-refundable part of the duties and registration fees.

The preliminary agreement should include the following:

Note: The tax stamps must be affixed at the time of the contract signing (they may not be issued after the contract date).

The additional costs to transcribe (e.g. when a notaio is used) the preliminary agreement are:

TaxAmount
Contract registration stamp duty (imposta di bollo)€ 155 (instead of that indicated above)
Contract registration taxas indicated in previous table
Transcription tax€ 200
Transcription fee (tasse ipotecarie)€ 35
notaio feeDetermined by notaio based on their own pricing policy which considers the transaction value.

If you use an estate agent, their fee is now due5.

Note: in the past the preliminary contract was often already a definitive contract to transfer the property title, including an obligation to repeat the contract for the purposes of the transcription in the property ownership registry. The first version of the contract would normally make reference to the real sale price; the later version of the contract would often reference a lower tax appraisal value so as to reduce the buyer's tax burden. While this practice wasn't legal, it was so common that in 2006 authorities formally introduced taxation, for transactions between private persons, on the tax assessed value (prezzo-valore) rather than the transaction value thus removing the motivation which led to this subterfuge. There are penalties for a false declaration of value.

3. Closing / completion (rogito)

The final conveyancing step, the only one which is required by law, is the definitive property transfer contract between the parties, which must be drawn up and witnessed by the notary-at-law (notaio). The payment balance is due to the seller, as is the notaio fee and transfer taxes, collected by the notaio who will also ensure the property registry for tax purposes (catasto) and the property ownership registry are correctly updated.

By law the notaio has 30 days to update the public databases. The sooner the better, so verify with your notaio when this will happen and that it has happened. If a mortgage is involved, the mortgage documents will be signed at this time too, and the notaio will register the lien against the property on the lender's behalf. If the parties did not stipulate a preliminary sales agreement (compromesso) and the services of a realtor were used, their commission is now due.

Among the buyer's obligations are to:

Among the seller's obligations are to:

Among a notaio's tasks in ensuring a successful closing / completion:

Stamp duty and taxes due on a property sale

The determination of the exact tax due is somewhat complicated as a number of variables are involved. The table below illustrates various taxes depending on the particular situation. Don't despair, your real estate agent or notaio can provide you with a prospectus of the applicable taxes based on the particular situation. For sales between private citizens (non-businesses) taxes are paid on the tax appraisal value which is usually well below the market value. There are also significant discounts if the buyer will be using the home as their primary residence6, with the exception of up-scale properties classed as A1, A8 and A9.

CaseIf purchased fromTax baseVATProperty transfer document registration fee (Imposta di registro)Property ownership registry fee (Imposta ipotecaria)Property tax registry fee (Imposta catastale)Min. document registration fee
Primary home (except property categories A1, A8, A9)individual(s)Cadastral value (rendita catastale * 100 increased by 5% & 10% (1,155)–2%€ 50€ 50€ 1000
Other homes + property, buildable lotsCadastral value (rendita catastale * 100 increased by 5% & 20% (1,26))9%
Primary homebusiness(es)Actual sales price4%€ 200€ 200€ 200–
Additional homes10%
Homes in categories A1, A8, A922%
FarmlandIf sold to a full time (60%+) entrepreneur(s)Actual sales price–€ 200€ 2001%€ 1000
If sold to non-full time entrepreneur(s)Actual sales price–15%€ 50€ 50

As you've probably noticed, Italy is very good at creating complex tax regimes!

Note: if a preliminary agreement was used, tax paid on a down payment is credited to the amount owed at the closing (rogito).

Perform due diligence before you sign a contract

Ensure appropriate due-diligence is performed on a property before you make an offer so as to avoid surprises after the fact. If you use a reputable realtor real estate broker they will assist you through the process. Other professionals can assist with specific parts of the process.

Verify the complete cost of the purchase, including taxes and title fees.

When drawing up a purchase offer contract:

What is a notaio (notary-at-law) and what do they do?

A notaio (a notary-at-law with legal training, not to be confused with the lessor notary public found in common-law jurisdictions) is a self-employed public official who acts in the general public interest, thus for both the buyer and the seller, to insure the integrity of public deeds, including property transfers, whether they be by purchase, inheritance or court ruling.

In the Italian system the Notaio performs the title search and draws up the deed agreement, conveyancing tasks a lawyer or other professional would perform in countries which use the common law system such as the US and UK.

A notaio is required by law for drafting and registration of the final sales agreement (deed). As it is the buyer who is most at risk in the property sales process, custom dictates the notaio is selected by the buyer who pays the notaio fee. While the notaio is paid for by the buyer, in an apparent contradiction they legally work on behalf of the state and are required to protect the interests of both the buyer and the seller. A notaio may not act when their action would create a conflict of interest, e.g. when one of the parties is a relative.

One area of potential misunderstanding is that a notaio does not perform a site-survey: they do not verify the true current state of a property corresponds to what is legally documented beyond taking a statement from the seller, a statement which may or may not be true.

notaio costs

Each notaio sets their own fees. The fee is usually a sliding percentage of the sales price; the lower the sales price, the higher the percentage. Fixed fees were abolished with the Bersani reforms in 2006; guidance published in 2012 suggests an average fee of 1.1% for an average sale price of 500,000 with range from 0.4 to 4.82% for sales values between € 25.000 and 1 million. The actual fee charged will depend in part on the complexity of the transaction (how many owners, how many plots is the property comprised of, how extensive will the notaio's involvement be during each conveyancing phase) and on the extent of competitive pressures in a particular geography. If a mortgage is to included, add another 60% or so to the fee as the notaio is also responsible for registering the mortgage lien. You may ask a notaio for a written estimate of their fees on a particular transaction without further obligation. Like any other profession, some notai will be more scrupulous, responsive and professional than others. Ask for a recommendation from a person you trust and go with it.

The notaio also collects taxes and fees due the state; the taxes will appear on their bill and are often mistakenly considered part of the cost of the notaio.

If one of the parties doesn't speak Italian

The official property transfer agreement will be in Italian. If a buyer (or seller) cannot read Italian, they usually engage a bilingual lawyer with a power of attorney (procura) to act on their behalf. Other scenarios are possible, e.g. if all parties (buyer, seller and the Notaio) speak the same foreign language, the contracts may be done in that language but the attachments must be translated from Italian and the agreement must still be translated into Italian, all of which can be more complicated that it may seem on the surface.

Paying for your new home in Italy: banks, financing and more!

The payment process

Should the parties choose to complete a preliminary agreement before the actual closing transaction, the buyer usually makes a down payment in the form of a personal cheque made out directly to the verified owner of the property in question.

Balance payments are usually made by a non-transferable cashier's check (a.k.a. banker's draft, assegno circolare) payable to the seller.

Have a few extra bricks of cash under your mattress? In general cash transactions must be less than € 5000 in order to comply with anti-recycling laws.

Payment escrow (deposito del prezzo)

Once the property deed transfer contract is signed with the Notaio, the Notaio must register the deed transfer contract and update the land registry and the tax database (catasto). Civil code article 2671 says this should be done as quickly as possible and in any case within 30 days. While this process normally goes off without a hitch, a buyer is at risk of prejudicial claim, such as a bank or tax lien, being placed on the property before the land registry transcription occurs.

Law 124/2017 solves this problem by introducing an escrow account (deposito del prezzo8), managed by the Notaio. The optional use of an escrow account can be requested by either party, although this will almost always be the buyer, the clear beneficiary. Neither of the parties may object to the use of the escrow facility, not even as a condition of the sale. Should the buyer wish to use the escrow account facility, they should express this desire in advance so the Notaio is able to prepare the necessary documentation and the seller isn't taken by surprise. The law allows the parties to choose the escrow option even at the time of the closing (rogito); it is difficult to imagine this in practice.

Funds collected by the Notaio (a cashier's check, aka bank draft, made out to the Notaio) will be deposited into a dedicated bank account which is legally separate from the Notaio's own patrimony. The Notaio must release the funds to the seller upon the successful transcription of the deed transfer.

A buyer may also consider using the escrow facility to place a condition on the deed transfer, e.g. the funds may be released only when an existing mortgage lien is extinguished or when condominium expenses are paid or when the property is emptied of things and/or a tenant. It isn't difficult to imagine this type of conditional use of the escrow facility by the buyer, imposed on an unwilling seller, leading to court cases.

As a Notaio will incur additional costs to administer the escrow process, it is likely they will charge for this service.

In the short term buyers can expect sellers to be unhappy with escrow account usage as the seller will have to wait a week or so for payment.

Banking in Italy

Most property purchasers will want a bank account in Italy to simplify payment of their new home and to pay future utility bills etc.

To open an account in Italy a bank will ask for personal identification and an Italian tax ID number (codice fiscale) (often poorly translated as "fiscal code"). The good news is that getting a codice fiscale is pretty easy, the tax authorities are happy to help anyone who might want to pay tax sooner or later! Your real estate agent can help get your tax ID should you need one.

Tip: Avoid online simulation tools which generate a tax id based on your name, date of birth and place of birth. These tools don't actually create the code with the tax authorities.

Note: Citizens and permanent residents of the US will find some banks won't allow them to open an account. The reason is due to ill conceived US legislation which assumes any account abroad, even in a medium or high tax jurisdiction, exists to hide money. A realtor specialized in working with US citizens can help you find a bank happy to have your business.

Obtaining a mortgage

Buyers resident in Italy should be able to obtain a mortgage for the property provided they can demonstrate sufficient income to meet payments. The value of the mortgage can not exceed 80% of the value of the property, as determined by the bank's appraiser (this value potentially may be more or less than the selling price). The mortgage lien placed on the property may be more than the actual mortgage amount as the bank wants to protect not just the amount lent but also its costs should it need to recover the debt.

If the buyer isn't resident in Italy with proof of income, then getting a mortgage in Italy is more difficult, but there are mortgage brokers who can help in some cases. Some buyers will take out a mortgage on property they already own elsewhere, sometimes known as a home equity loan. This actually has the advantage that the buyer isn't exposed to currency exchange rate swings which can easily be 25% or more over a 10-20 year time frame.

Rent to buy / rent to own

A seller may be willing to finance the buyer's purchase under the Rent to Buy (a.k.a. rent to own, affitto con riscatto) scheme introduced at the end of 2014. Due to limitations in the program, buyers and sellers alike will most likely consider Rent to Buy a financing solution of last resort.

Mortgage costs in Italy

To stipulate a mortgage in Italy, you will incur most or all of the following expenses:

Can foreigners purchase property in Italy?

You'll be pleased to know that Italy generally allows foreigners to purchase property in Italy as long as Italians are allowed to do the same in the purchaser's country of origin or if the foreigner lives ("regolarmente soggiornante") in Italy. There are no limits on EU and EFTA citizens.

Can non-EU nationals live in Italy if they buy a home?

Ownership of property in Italy doesn't provide specific rights to stay in Italy, you're still subject to normal immigration regulations, which for many allows a visa free stay in Italy for up to 90 days. It is possible to obtain a long term Elective Residence Visa if you can document that you won't need to work in Italy, e.g. you have significant income (more than € 31,160/year) such as royalties, a pension, investments from outside Italy. In general it is very difficult to obtain a work visa in Italy.

After your home purchase

Notifications

Once you've purchased your new home, you'll need to notify others of the good news! Exactly who needs to be notified will depend on the case, your estate agent can help you. A few examples:

Ongoing costs

Once you've become a new home owner, you'll have a few recurring costs:

Tip: Your real estate broker can provide a prospectus of your expected annual ownership costs.

Tax deductions

Property owners can benefit from a series of tax deductions if they file a tax return in Italy. The exact details can change from year to year.

We're here to help

If you're looking to purchase property in Italy we'd be happy to help you through the process. Let us know how we can help you. (about the author)

Note: the information contained in this guide was correct to the best of our knowledge at the time of publication. It is provided "as is" without warranty of any kind, either expressed or implied. Please do let us know if you feel there is anything else we should cover in this guide.

Further reading on this topic

Contents

Footnotes

1 L. 28-2-1997, # 30
2 art 2932 cc
3 art. 13 D.P.R. 131/86 e art. 10 della Tariffa, Parte I, D.P.R. 131/86
4 art. 1475 cc
5 art. 1755 cc
6 40 T.U. 286/98
7 D.Lgs 42/2004
8 Legge 4 agosto 2017, # 124

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The above is offered as general guidance without warranty; changes may have occurred since it was written. Do consult with appropriate qualified professionals regarding your specific situation before making any real estate purchase.

About the author

Sean Michael Carlos

Sean Michael Carlos grew up in Rhode Island, USA. He studied in the US, UK and Germany before settling in Italy where he has lived for over twenty-five years, in three different regions.

Sean is a licensed real estate agent in Italy with over 10 years experience in the sector and would love to hear from you if you are looking to buy or sell property in Italy.

Professional assistance available

Selected properties for sale

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