Real estate - Taxes / Law
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The following information has been extensively researched for you by us, yet it serves only informational purposes and offers no legal advice. Therefore no liability can be assumed for the provided information.
For the transfer of property the “property acquisition tax” is 7% of the declared purchase price. In addition what is known as a mortgage- (2%) and cadastral tax (1%) incurs, so that one has to calculate with generally 10 %.
A tax advantage is given to what is known as primary residences (prima casa), whereupon the registration tax is reduced to only 3 % of the declared purchase price and the mortgage- and cadastral tax are reduced to each 129,11 Euro. Only if the former primary residence in Germany is given up completely and transferred to Italy and the buyer has no real estate assets in Italy thus far, use of this privilege can and should be made. The consequence of such action is obvious: full tax liability of the buyer for his worldwide income in Italy. This also applied to the gift tax and inheritance tax until it was recently abolished.
In view of the declared purchase price, the revenue authority is not authorized to make a subsequent stipulation, as long as a minimum amount calculated from the cadastral value is specified in the contract (for apartments the currently applied coefficient is 105). In the context of purchasing real estate, other expenses that are independent of the purchase price, such as adhesive stamps and other charges (bollo, tassa archivio, diritti catastali ed ipotecari) that amount to approx. 500,00 Euro , are to be considered. Last but not least you need to keep in mind the VAT of currently 20 %, especially when purchasing from a property developer.
What is known as the increment value tax (INVIM) is no longer relevant. Up to its abolition in Italy on 01.01.2002, this indirect tax that concerned the seller was applied to the profit resulting from the former purchase price and the current sale price.
The most important difference of current taxation in Italy is the income tax liability (IRE for individuals and IRES for corporate income tax) for real estate, even if it is not a rental property. Hence in principle everyone, also an owner of real estate located in Italy who lives abroad, has to submit a yearly income tax statement (known as unico) to the responsible tax office. There are only a few exceptions, e.g. when falling below a rather low limit or, ever since the assessment period 2000, principal residences are not targeted anymore by this provision. A double taxation in Germany is impossible since real estate assets as such are not subject to the income tax in Germany.
The real estate tax in Italy (formerly known as land tax Italy ICI) was abolished by Berlusconi in 2008 for the main residence (“prima casa”). Yet in 2012 in the context of the program “Salva Italia” Mario Monti reintroduced the Italian real estate tax IMU. IMU = Imposta Municipale Unica, tassa sulla casa = new ICI. The real estate tax in Italy depends on: • Cadastral value „valore catastale“ • Number of children • Main residence 0,4 % / secondary residence 0,76 % • Commune „Comune“ (+/- 0,2% adaption possible)
Calculation of the real estate tax: For a main residence with a living area of 100 m² and a “rendita catastale” (cadastral return) of 992 EUR (=”valore catastale” / cadastral value 158.778) the real estate tax IMU amounts to about 335 EUR per year. Per child (under 26 years) one receives a tax reduction “detrazione” of 50 EUR.
All listed information serves as advance information only and does not make an individual consultation with a tax expert superfluous. Since Italimmo does not engage in tax consulting we recommend you to always seek up to date and detailed counsel from a specialized tax consultant.
Il Compromesso ( the promise of purchase): Contrary to German law, which makes an effectual purchase of a real estate only possible when a notary is present, the Italian law includes the Compromesso, what is known as a promise of purchase (promettere = promise). This is a preliminary contract that makes the purchase of the property legal. The seller assures you to sell the property to a certain price, you promise to buy the property as is within a certain period of time. Normally the Compromesso includes the agreed advance payment that equally serves as the contract penalty. That means if you don’t purchase the property, you will lose your advance payment or if the seller can’t or won’t sell anymore he has to not only return your advance payment, but also add the same amount as contract penalty.
L’ato (notarized contract): After completing the Compromesso the notary prepares all necessary documents for the registration in the cadaster (register of real estate). Here potential legal obstacles to the transfer of property are reviewed. These for example can be: Mortgages, preemptive rights of property leaseholder (this is a law in Italy), preemptive rights of the city or community, monument conservation provisions, or other rights registered in the cadastral. Moreover the basic value/ assessed value of the property is determined and limitations of use etc. are inquired about at the municipality. At the appointment with the notary you either confirm that your Italian language skills are sufficient, which the notary has to evaluate, or an interpreter is present who translates accordingly. Moreover according to Italian law two witnesses have to be present.
Payment: Contrary to German procedures, the purchase price is due directly at the appointment with the notary. Since 04.07.2006 the purchase price has to be paid compulsory with a bank check from an Italian bank. The notary fees and the property acquisition taxes also have to be paid at the appointment with the notary. The check number is included in the contract of purchase. In Germany payment is usually due after the registration of the priority notice of conveyance, yet according to Italian law you are the owner of the property once you have the notarized contract and not after the registration in the real estate cadaster.
All listed information serves as advance information only and does not make an individual consultation with a lawyer superfluous. Since Italimmo does not engage in legal counseling, we recommend you to always seek up to date and detailed counsel from a specialized lawyer concerning these issues.
Related links real estate Tuscany, real estate Umbria and real estate Marche
Real estate Tuscany | Real estate Umbria | Real estate Marche