About fees and taxes in property transactions in Italy
- According to the Italian code civil, immovable properties include buildings, constructions and, in general, everything that is naturally or artificially installed into the ground.
- Property taxes in Italy (considered as any tax paid on real estate) can be split into two broad categories:
sales taxes, which are paid when a property changes ownership (a majority of the sales taxes are the responsibility of the buyer, along with various other fees such as the notary’s fee):
- Registration tax (imposta di registro)
- Cadastral(imposta catastale)
- Mortgage tax (imposta ipotecaria)
- VAT (IVA) in transactions between entity applying VAT
- Capital gain taxes (charged on seller)
- Other minor taxes
and maintenance taxes, which are paid regularly by the owner or occupier:
- Property ownership tax (IMU)
- Services tax (TASI)
- Waste collection tax (TARI)
N.B. ‘cadastral declared value’ (valore catastale for more info on cadastral services) it represents the basis (base imponibile) upon which the registration tax and ‘IMU’ are applied. it is written in the deed of purchase or in the preliminary contract – or must be updated from a developer or a property renovation company within 5 years from the end of the works.
To notice is that at the moment the cadastral value of a property in Italy is still much lower than the market price.
Registration tax (stamp duty)
- This tax is paid by the buyer and it’s calculated according to the property’s cadastral value.
- Its rate is determinated with the the factors as:
- principal home/1st house (prima casa)in case the buyer take out residency at an acquired property within 18 months from the final contract signing, and spend more than 6 months a year at that address;
- second home (seconda casa)
- if buying from a private seller or a company not applying VAT.
Summary of property sale taxes
The fixed fees and a percentage fee according to cadastral value for 2018 are:
|from private owner or a company not VAT applying||VAT entity|
|principal home||second home||principal home||second home|
|Stamp duty||2 %||9 %||€ 200||€ 200|
|Cadastral tax||€ 50||€ 50||€ 200||€ 200|
|Mortage tax||€ 50||€ 50||€ 200||€ 200|
|VAT||–||–||4 %||10 % *|
|Capital gain**||20% of netto profit||20% of netto profit|
* 22% in case of a luxury home;
**Only if property has been owned for less than 5 years.
*** in case of choosing a property as principal home/1st house, the new owner if sold it before a period of 5 years without purchasing the new ‘home/1st house’, has to pay other 7% of cadastral value and the sanction determinated in 30% between the difference of the value of 2% and 9% of cadastral value.
IMU (imposta municipale unica) is a property ownership tax, payable twice a year (in June and December) to local municipality.
- The rate is determined by the cadastral value of the property plus a 5% that have to be multiplied for a coefficient that may vary from town to town and it depends on the type of property it is.
- The IMU rate is approximately 4- 0.76% of this new value, although the exact percentage can be set by the local adimistration.
- If the property is the principal home, no IMU is to be paid. The exception to this is if the property is a luxury residence.
TASI (Tassa sui servizi indivisibili)
TASI is a tax paid on ‘indivisible services’ for the local area: costs such as street lighting and maintaining roads and green spaces.
- If the property is rented out, TASI is shared between landlord and tenant, with the landlord contributing 70-90% and the tenant paying the rest.
- The exact rate is set by the municipality.
TARI (Tassa sui rifiuti)
TARI is another Italian maintenance tax, this time for waste collection.
- Unlike the maintenance taxes above, this one is the responsibility of the occupier rather than the owner – unless a tenant is there for less than 6 months.
- The rate is set by the municipality and depends on the size of the property, as well as the number of people living there.
Other fees to be considered:
The notary (notaio) is a mandatory figure in Italian property sell and purchase transactions for both parties, the buyer and the seller. He is also a subject to whom must be paid the registration, mortage and cadastral taxes.
Real estate agency fees
Both the buyer and the seller generally have to pay the agent. The fees for both are around 3% plus VAT in most cases of sale and purchase agreement.
In case of rental/lease agreement, it’s 5 % of the year’s amount if the lease/rental period is lower or equal to 12 months, if upper it corresponds to one month of rental/lease fee.
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