On this page, you will find some basic information regarding the regulations and tax aspects related to real estate buying and selling. For any clarification, we are at your disposal.
THE PURCHASE PROPOSAL
The purchase proposal is a written document by the buyer addressed to the seller in order to establish the sale price. The proposal is accompanied by a deposit (e.g. a non-transferable check made out to the seller) which, in case of acceptance, will become a down payment. Generally, the amount of the check is lower than the down payment used for the preliminary contract and will be cashed by the seller only if accepted, otherwise, it will be returned to the buyer. In case of acceptance, the proposal will become a real preliminary contract.
THE PRELIMINARY CONTRACT (COMPROMISE)
The preliminary sales contract, or "compromise", is the contract by which the seller and the buyer undertake to conclude a sale, establishing the terms and conditions, accompanied by the payment of a deposit as a down payment. The compromise must clearly indicate the personal details of the parties, the characteristics, the cadastral data and the urban regularity of the property, the cost and payment terms, and the date of the deed of sale with the delivery of the property. Both the proposal and the compromise may be subject to the approval of the buyer's mortgage request
THE NOTARIAL DEED
The notarial deed is the final act of the sale, where the buyer and the seller sign the sales contract in front of a Notary, who, after carrying out all the checks on the property, proceeds with its registration, payment of taxes, transcription at the land registry, and finally carries out the cadastral transfer. Generally, the Notary is chosen by the buyer, who is responsible for paying the fees, unless otherwise agreed with the seller.
THE MORTGAGE DEED
The mortgage deed is drawn up in front of a Notary, between the bank and the applicant for the mortgage loan (the buyer), and is signed simultaneously with the sales contract. The Notary proceeds with the registration of the mortgage, while the bank disburses the capital required for the purchase of the property.
The taxes to be paid when buying a house depend on various factors and vary depending on whether the seller is a "private" or a company and whether the purchase is made with or without the benefits of "first home".
For the purchase as a SECOND HOME:
a) from a company subject to VAT, you will pay 10% (22% for A1, A8, A9 properties) of the sale price + €200 registration tax + €200 cadastral tax + €200 mortgage tax
b) from a private individual or VAT-exempt company, you will pay 9% (minimum €1,000) of the cadastral value + €50 cadastral tax + €50 mortgage tax
For the purchase as a FIRST HOME:
c) from a company subject to VAT, you will pay 4% of the sale price + €200 registration tax + €200 cadastral tax + €200 mortgage tax
d) from a private individual or VAT-exempt company, you will pay 2% (minimum €1,000) of the cadastral value + €50 cadastral tax + €50 mortgage tax.
In addition to the purchase taxes, the Notary's fee for the sale, the agency commission for the service provided (to be paid at the time of the deed), and in the case of a mortgage loan, the Notarial expenses for the mortgage deed and the registration of the mortgage must be added.
THE TRANSFER PRICE AND THE CATASTAL VALUE
The transfer price corresponds to the actual price paid for the sale, while the cadastral value is calculated based on the cadastral income multiplied by specific coefficients. For the transfer of residential properties (and related appurtenances), under certain conditions it is possible to use the "price-value" system in order to determine the taxable base for registration, mortgage and cadastral taxes. This system allows taxation based on their cadastral value, regardless of the transfer price actually paid and indicated in the deed. The "price-value" protects the buyer, as it limits the power of assessment by the Revenue Agency.
REQUIREMENTS FOR FIRST HOME
To purchase a house using the "first home" benefits, the following requirements must be met:
- the building being purchased must belong to certain cadastral categories: A/2 (civilian housing); A/3 (economic housing); A/4 (popular housing); A/5 (ultra-popular housing); A/6 (rural housing); A/7 (villas); A/11 (typical housing and lodgings of places). However, first home benefits are not allowed for the purchase of a property belonging to cadastral categories A/1 (luxury housing), A/8 (villas) and A/9 (castles and buildings of eminent artistic and historical value).
- the building must be located in the municipality where the buyer resides (or intends to establish residency within 18 months) or carries out their business;
- the buyer meets certain requirements (not being the owner of another property in the same municipality and not being the owner on the entire national territory of rights of ownership, use, usufruct, habitation or naked ownership, on another property purchased, even by the spouse, using the benefits for the purchase of the first home). From January 1st, 2016, tax benefits are also granted to buyers who are already owners of a property purchased using the benefits, provided that the already owned property is sold within one year of the new purchase.
URBAN AND CATASTAL REGULARITYALE
Urban regularity occurs when the actual state of a property is authorized and coincides with the projects deposited in the municipality with the corresponding urban planning authorizations (Building Permit, SCIA, CILA, Building License, DIA, etc...). In case of non-compliance, in some cases it is possible to withdraw authorizations in regularization.
Cadastral regularity occurs when the actual state coincides with the cadastral data (Extract of map, cadastral plan, inspection, etc.). Cadastral data is not probative (does not prove ownership) and does not legitimize the property in urban planning terms, but has only a "fiscal" function for the payment of taxes. However, for the deed of sale, it is mandatory that the cadastral plans correspond to the actual state of the property.
APE (ENERGY PERFORMANCE CERTIFICATE)
The Energy Performance Certificate is a certificate that attests to the performance and energy class of a property indicating the most convenient improvement interventions. It lasts 10 years, provided that the checks on the thermal systems required by current legislation are carried out. It is mandatory both for deeds of sale and for lease contracts.
DEPOSIT OF PRICE
The deposit of the price with the Notary is required by current legislation and is a guarantee instrument for the parties. Payment is not made directly to the seller but is deposited with the Notary on a dedicated account, which will transfer such amount to the seller after the deed is transcribed. This tool can be useful in order to avoid possible seizures, or in the presence of mortgages, debts, lack of habitability, occupied house, etc...