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The Tax on the Purchase of Real Estate in Italy

Taxes
All real estate transactions in Italy are notarized and subject to taxation. This fee is always paid by the buyer. Its amount does not depend on who is purchasing the property – whether a citizen of the country, a foreigner with residency status, or without.

Taxes for Russians, Italians, Germans, French – for everyone – are the same in Italy.

The calculation of the tax does not change depending on the location of the property. You can purchase an apartment in the center of Rome or apartments in a small town far from the coast – the percentage required by the state will be the same.
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The size of property tax in Italy depends on:

1. Whether the seller is a legal entity or an individual.

Tax on purchases from legal and physical entities is calculated differently.

If you choose a newly constructed property (new build), the owner will typically be a company. On the secondary market, however, the majority of sellers are private individuals.

Buying from a legal entity: VAT (IVA) of 10% of the amount specified in the sales contract plus a fixed registration tax of €200.

Buying from a private individual: registration tax of 9% of the cadastral value of the property. In practice, this value is often 20-40% lower than the market value.

In rare cases, the cadastral assessment may be higher than the selling price. This happens if the seller is selling the property at a significantly lower price for some reason. The registration fee will still be calculated based on the higher cadastral value, otherwise, the transaction may be closely monitored, assuming that the price is intentionally understated to evade taxes.

2. Purchasing with or without tax relief (prima casa or seconda casa).

How to reduce expenses when buying property.

In Italy, there is a legal way to reduce property taxes, which can be used by foreigns buyers as well. This is the tax relief known as Prima casa.

Buyers eligible for this relief are those purchasing property for permanent residence, both citizens and foreigners with residency.

You can only buy property with tax relief if you or your spouse do not already own property throughout Italy.

N.B. Prima Casa (First Home) has nothing to do with whether you are buying property in Italy for the first time. "First" means that you are applying for relief for a home that you will register as your permanent residence, and it will be the only property you buy under these conditions.

The relief applies exclusively to residential real estate and is not provided for other categories such as garages, separate utility rooms, buildings, etc.

With the Prima Casa relief, the property purchase tax will be:

Buying from a company: VAT of 4% of the market price.

Buying from a private individual: 2% of the cadastral value, minimum €1,000.

Buyers who intend to obtain residency in Italy but do not have it at the time of the transaction can also benefit from this relief. In this case, you inform the notary of your intention, and they calculate the taxes considering the Prima Casa relief.

You are then given 18 months to obtain residency. If you fail to do so within this period, you simply pay the difference in taxes and any accrued penalties. If you do not obtain residency and do not inform about it, you will face significant fines.

Note: Simply buying property is not enough to obtain residency.

3. Standard or luxury real estate.

Buyers of luxury real estate in Italy pay VAT of 22% of the price indicated in the sales document when purchasing on the primary market.

For a property to be classified as luxury, many parameters must be met – location, house size, plot size, presence of a swimming pool, etc. In this case, "luxury" is not just an epithet used by sellers; it is a specific classification in the Cadastre. All residential real estate falls under category A, while luxury properties belong to classes A1, A8, A9.

Important: Buyers of luxury real estate are not eligible for Prima Casa relief. You will know whether the property is considered luxury and therefore subject to higher purchase tax, even at the selection stage, before signing any documents.
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Taxes when purchasing real estate in Italy from a private individual:

Here are the current tax rates and government fees for various categories of real estate when purchasing property on the secondary market:

Registration Tax (Imposta di Registro):

Buildings and land for construction purposes:

  • Regular rate "seconda casa": 9% of the cadastral value of the property.
  • Reduced rate "prima casa": 2% of the cadastral value of the property, minimum €1,000.

Agricultural land:

  • 15% of the selling price, minimum €1,000.

In the current year, in the Abruzzo and Molise regions, the average cost of agricultural land is €1 - €2 per square meter.

Cadastral Fee (Imposta Catastale): €50

Charged for entering the property into the cadastral registry - Catasto.

Mortgage Fee (Imposta Ipotecaria): €50

Charged for making entries, registrations, annotations, or cancellations in public real estate registries - Conservatoria.

All taxes are paid to the notary, who is responsible for their payment to the treasury.
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Examples of tax calculation when purchasing on the secondary market:

You choose a house on the secondary market. The initial asking price is €105,000. After negotiations, the contract price is €99,000. The tax rate for calculating the cadastral value is €289.22. The cadastral value of the house is €36,442 without benefits and €29,000 with benefits.

State taxes and fees for "seconda casa" (without benefits):

Registration tax 9%: €3,280

Cadastral fee: €50

Mortgage fee: €50
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Total: €3,380

State taxes and fees for "prima casa" (with benefits):

Registration tax 2%: €1,000 (minimum)

Cadastral fee: €50

Mortgage fee: €50
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Total: €1,100

Taxes when purchasing real estate in Italy from a legal entity:

Here are the current tax rates and government fees for various categories of real estate:

VAT (IVA):

Buildings:

  • Seconda casa: VAT 10%
  • Prima casa: VAT 4%
  • Luxury real estate: 22%

Land for construction: 22%

Agricultural land:15%

Please note: VAT is paid to the seller, while the government fees listed below are paid to the notary.

Cadastral fee (Imposta Catastale): €200

Mortgage fee (Imposta Ipotecaria): €200

Examples of tax calculation when purchasing a new build:

You find an apartment in a new complex located 100 meters from the beach in the town of Citta Sant’Angelo (Abruzzo region). The developer is asking €145,000. You negotiate through a real estate agent and agree on a discount of €5,000.

Taxes and fees for "seconda casa" new build:

VAT 10%: €14,000

Cadastral fee: €200

Mortgage fee: €200
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Total: €14,400

Taxes and fees for "prima casa" new build:

VAT 4%: €5,800

Cadastral fee: €200

Mortgage fee: €200
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Total: €6,200

How to pay tax when buying property in Italy

The amount of taxes on property purchases and notarial expenses is known to the buyer even before signing the preliminary contract. There are two ways the buyer can transfer the money. The first is to transfer it to their own account in an Italian bank. The second is to transfer it to the notary's account, where it will be frozen until the transaction is completed.

Taxes are paid at the time of signing the contract with the notary. Before the transaction, the buyer, along with their real estate agent, goes to the bank and issues notarial checks for the final settlements with the seller and the notary. The notary's check includes the amount of taxes and their fee.

Thus, the buyer does not need to personally visit the tax office and pay the bills. This responsibility lies with the notary, who is responsible for settling accounts with the government. If the buyer does not provide the necessary amount of taxes to the notary, they simply will not sign, and the transaction will not be registered.
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