EXPLAINED: The hidden costs of buying a home in Italy

Italy’s infamous cheap property deals and building ‘bonuses’ attract international attention, but for many people, purchasing a home here remains an expensive process thanks to the fees and charges involved.

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As anyone who has gone through a home purchase in Italy will know, it isn’t as simple as snapping up a bargain – regardless of whether it’s your primary residence or a second home.

Aside from the cost of any renovations, property experts warn that the ‘hidden’ or additional costs of buying a home in Italy usually add up to around ten percent of the purchase price.

So before you make your final offer, here’s an overview of the fees and charges you may need to budget for.

Taxes

The number and variety of taxes associated with buying a home in Italy is considerable.

They may change according to the type of property and the condition you buy it in. Here’s a look at the most common charges that apply to almost all types of property in Italy.

– Stamp Duty

Stamp duty is between two and nine percent of the cadastral value of the home, with a minimum threshold of €1000 if the percentages work out as less. That’s useful to know for any cheap properties you may find, such as the one euro homes.

It’s worth noting that the cadastral value might be much lower than the market value of the property, as this gets recalculated when the property is sold – the property may have been with the previous owner for decades when the house price was much lower at its last sale. So you may end up paying more stamp duty than you first thought when the cadastral value is updated.

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If you are resident in Italy full time – which means you are in Italy more than six months of the year – and you buy from a private seller, stamp duty will be 2 percent.

If you buy from a private seller, but you intend to live there fewer than six months of the year, stamp duty is nine percent of the cadastral value.

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On the other hand, if you buy from a registered company in Italy, the tax will amount to a fixed rate of €200. This is true for both homes used as a primary residence or a second home.

There are ways to reduce the stamp duty if you buy the property as a second home. You have 18 months after the purchase to register as a resident in Italy.

If you intend to become a resident, you will only be charged two percent stamp duty at this stage. Should you not become resident within 18 months, then the government will require the outstanding seven percent.

If the house isn’t finished, such as one bought off plot or is a development project, there is no stamp duty.

– VAT

VAT, known as ‘IVA’ in Italian, is due on the purchase of property in Italy. You shouldn’t have to pay it if you’re buying from a private seller, however if you’re buying from a company, the amount you pay depends on the property.

It’s four percent if it’s your primary residence, 10 percent if it’s your second home and 22 percent if it’s categorised as a ‘luxury’ property.

– Land registry tax

Known as ‘imposta catastale‘ in Italian, this is a fixed rate of €50 for buying a property from a private seller. It rises to €200 if you buy from a registered company.

This tax is to update the owner of the property in the government’s cadastral list.

– Mortgage tax

Another fixed rate tax, ‘imposta ipotecaria‘ in Italian, will cost €50 if you buy from a private seller and again, €200 if you buy from a registered company.

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– Marca da bollo

This is a mandatory tax in the form of stamps added to contracts or invoices over the amount of €77.47. You can buy them from your corner shop or tabbachi, or post office, and attach them to the invoice.

You’ll pay this per contract over that amount. As a guideline, expect to pay €16 on any invoice for a contract that is over that amount and includes VAT (IVA), and €2 if there’s no VAT.

Notary costs

You’ll need to pay a €16 ‘bollo’ on notary documents. But that’s just the start, of course.

You’ll need a notary to validate the contract and check that the property is legally registered. This isn’t a tax – it’s a cost that is part of buying a house in Italy.

There is no fixed fee for this and it depends on the town, the type of property you buy and the purpose you intend to use it for, such as residential or commercial.

The absolute baseline would be €1,000 or one percent of the sale value, but fees vary from company to company and are known to run into the thousands even on cheap homes bought for major renovation. Notary fees are subject to IVA, which when it’s a sales tax, is 22 percent.

Agency fees

If you’re buying a house through a real estate agent, they take a percentage, usually around three percent of the purchase price from both the seller and the owner.

A general range you can expect to pay is between one and five percent of the property cost. Again, this varies from town to town and firm to firm.

Legal fees

You may choose to use a lawyer to help you navigate the process and explain the steps in English. They will charge you based on a percentage of the value of what you’re paying for the property, which again, can differ considerably. These fees are also subject to VAT.

Geometra or civil engineer’s fees

If you’re looking to renovate a property or if it’s an old building, you’re strongly advised to speak to a geometra, or civil engineer, who will inspect the property and will recommend the work that needs doing.

They can also suggest a building company to carry out these works and provide you with a quote for all the restorations needed.

Without one, it would be very hard to go through all the processes required to get building approval and understand the local rules and regulations.

As well as considering restoration costs, those buying an old house in Italy should check for hidden problems that could prove expensive down the line. Photo: Tiziana Fabi/AFP

Sometimes, you will have to use one as they may need to legally certify certain parts of the work.

The cost for these services depends on the professional you work with and the degree of the works required. It could be a few thousand euros or could be much higher if the project is extensive.

Tied in with this are other fees such as licences and registration fees – simply submitting your planning document to the local comune (town hall) can be substantial, costing upwards of €10,000.

Architect or engineering costs

For larger scale projects, you may also need to hire an architect, whose fees will also vary depending, again, on the area and company.

While they would design the spaces and analyse the functionality of the property, an engineer would deal with the strength and stability of the structure.

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You may also need the involvement of a termotecnico, or a heating engineer, who chooses the materials to be used and the type of system, according to the geographical area of your home.

All in all, these experts will cost a hefty wedge and may change your renovation budget when you get final quotes.

Energy connection

Sometimes, if you purchase an old property, you may need to pay for disconnection and connection of gas and energy supply.

This will change depending on your location, as always, but don’t be surprised if it takes the best part of €1000 to perform what you might think is a simple cut to an old supply.

Plus, you’ll then need to account for the cost of connecting up to new utilities when your property is ready.

Deposit

You’ll need to pay a deposit, or a down payment, to the seller of the property which acts as a guarantee of sale. If the buyer pulls out, the seller can keep this deposit. On the other hand, if the seller pulls out, the buyer can demand double the amount of the deposit back.

Mortgage broker fees

You may want to enlist the help of a mortgage broker when it comes to getting a mortgage on the property you buy. This professional has existing relationships with lenders, meaning that as well as negotiating a better deal than you could get on your own, they should help smooth the application process and speed things up.

They’ll also set up a good relationship with your local bank for any future loans or home purchases. They may also speak English to clearly explain what you need to do.

Again, what you’ll pay will change depending on where you are and each professional’s rates, but you can earmark around one percent of the mortgage value.

Time

As the saying goes, time is money. And you will need to allow for a whole lot of time to buy a house in Italy. Unlike the market you may be used to you in your home country, where buying and selling moves fast, be prepared for a slow process in Italy.

It can take months for just the sale to go through and renovation projects may go on for years, depending on the works and the current state of the property market.

As always, seek professional advice before you buy and check what incentives or exemptions you may be eligible for.

Please note that this list is not comprehensive, but covers most scenarios that buyers may find themselves in. See more in our articles about property in Italy on The Local.