The main stages of Property Purchase (Compravendità) in Italy are the initial purchase offer (Proposta d’Acquisto), the preliminary contract of sale (Compromesso), and the notarized final act of sale (Rogito Notarile). This article explains how the process works.
1. PURCHASE OFFER (Proposta d’Acquisto)
The first step after finding your ideal house is to make a purchase offer. Initially, this is usually done verbally. We discuss your offer price with the seller and after a bit of negotiation, hopefully your offer will be accepted. Then, we complete the appropriate written offer document, incorporating all your conditions relating to the sale, which we ask you to sign. If you have already returned home, it is not a problem, as this stage can be carried out by email. Once the seller has also signed the document, we ask you to pay a small deposit, usually around 5% of the purchase price, which can be paid by bank transfer.
If the seller accepts your conditions (written acceptance), the parties will be bound to complete the sale as it has been established in the proposal. The seller receives your money, and this becomes your deposit on the property.
- If you pull out of the sale after your offer has been accepted, you will lose your deposit. If the seller pulls out of the sale, he must refund your deposit.
- When you make your offer to the seller, you must also decide on the dates by when you would like to sign the preliminary and final contracts. These dates are seen as deadlines, but you can sign anytime beforehand, as long as it is agreed by the seller.
2. PRELIMINARY CONTRACT OF SALE (Compromesso)
The compromesso is an agreement where both parties promise to conclude a future contract (notarial deed) and in which they record and expand upon all the terms of the proposed purchase.
In the compromesso the following information must be clearly stated - the identities of both parties, the features and cadastral data of the property, the cost and method of payments, and the date by which both parties agree to sign the final act (when the property officially becomes your own).
It must also be stated that the house will be sold without any outstanding debts, encumbrances or mortgages and is completely in order with town planning regulations.
A further payment (caparra) is made to the seller, usually around 20% of the total purchase price (including the deposit already paid).
- By this stage, you need an Italian tax code (codice fiscale) which can be obtained from any tax office in Italy or from your Italian Embassy. We can apply for your tax code, on your behalf.
- If the seller pulls out of the sale after this stage, he must refund your money and pay you the same amount again, as a penalty.
- The estate agency fee is due to be paid when the compromesso has been signed. The estate agent fee is usually around 3% of the purchase price + VAT.
- It is a good idea to open an Italian bank account at this stage, in preparation for the final act. We will help you with this.
- This stage can be carried out via email.
3. NOTARIAL DEED (Rogito Notarile)
The notarial deed is the FINAL ACT of the sale and is signed before a public notary (notaio) and the interested parties (seller and buyer).
Before the signing, the notary performs all the relevant checks on the property (land registry searches, legal and mortgage checks, etc.) He draws up the act which is signed in his presence and then he lodges the necessary taxes and registers the title deeds with the land registry, making the property officially yours.
If you are taking out a mortgage, you will sign a separate act for the mortgage at this time, and the notary will record your bank as your mortgage lender.
At the time of the signing, you also pay the balance on the price of the property, the notary fee and the related taxes.
Notary fees vary, usually it is around 1.5% - 2% of the purchase price, but it is always advisable to request a quote. However, as an example, for a house costing €100,000, you can expect to pay around €1,500 - €2,000 (including VAT) to the notary. If you are taking out a mortgage, you have to sign 2 separate documents, so the cost will be around double.
Below is a table of taxes currently payable on the purchase of a property:
|Seller||Tax||Primary Residence||Secondary Residence|
a private seller
|Registration Tax||2% of cadastral value *||9% of cadastral value|
a developer or
5 years of
|VAT||4% of purchase price||
10% of purchase
* there is a minimum fee of €1,000 when paying the 2% tax on a primary residence. If the property is classed as a 'luxury home', the tax is 9%, not 2%.
** if the property is classed a 'luxury home', the tax is 20%, not 10%.
The notary is chosen by the buyer, however he is an impartial public official. He cannot act in the interest of one party, to the detriment of the other. Having one official, rather than 2 opposing solicitors, makes the process simpler than in other countries and also saves money. The notary ensures the validity and effectiveness of the act. He checks that the property is legally owned by the seller, that there are no outstanding debts and he carries out all the safeguards to protect the interests of both parties. He calculates and collects the purchase taxes. His work is guaranteed, so if he makes an error, he must reimburse you for any losses that you incur.
- If the contract is between 2 private individuals, the law states that the deeds must state the actual price paid for the property. However, for tax puposes, the figures can by calculated using the cadastral value (valore catastale), which is a figure decided by the land registration office and is usually a lot lower than the purchase price.
- If the buyer is unable to read Italian, the documents must be translated into your language, or a trusted person can be given Power of Attorney (Procura) to sign on your behalf. The fee for the translation (usually around 500 euros) is paid for by the buyer.
- In order to buy a property as your primary residence, to qualify for the lower tax value, you must obtain Italian residency within 18 months of signing the final act.
- On 1/7/2009, a new law came into force requiring an energy performance certificate (ACE) to be attached to the notarial deed. It is issued by a qualified technician, and it is the seller's responsibility to organise this.
A NOTE FROM US
Buying a house in Italy may seem very complicated and bureaucratic, but it is usually straightforward and can be relatively swift. The process also has certain safety nets for the buyer, which aren’t present in the English system. We will help you at each stage and ensure that you are ready to proceed to the next step.