Procedure of the purchase of real estate in Italy
Categorically, all real estate contracts in Italy are subject to Italian law. Once you have found the “property of your dreams”, the buying procedure happens within three steps:
The offer to buy or ‘proposta d’acquisto’
Once all aspects have been clarified between the potential buyer and the seller, a letter of intent to purchase is issued. This written offer (proposta d’acquisto) is usually forwarded from the broker to the seller, together with an advance payment of approximately 2% of the negotiated purchase price.
This deposit confirms that the interested party has the intention to purchase the property and prevents the seller from further negotiations with a second party.
By signing this document, both parties undertake to sign a binding preliminary contract or purchase agreement (contratto preliminare or contratto notarile).
Concluding the ‘contratto preliminare’ (preliminary contract)
The preliminary contract is a private or notarial document that contains important contractual terms such as purchase price, size of the property, location, payment terms, etc. When signing the preliminary contract, you usually pay 20% – 30% of the purchase price. The seller guarantees in the preliminary contract that the property is free of financial and legal liabilities.
Note: The pre-contract does not necessarily have to be concluded with a notary, although we always recommend a notary to be called in.
The notary verifies that the property is not encumbered with any loans, liens, etc. and also that it is actually the property for sale. Also, the property is checked for all necessary permits of the building.
The down payment is to be considered as a security for the compliance of the contract of both parties. If you refrain from your intention to purchase, the seller has the right to keep your deposit as a contractual penalty.
If the seller wishes to withdraw from his intention to sell, he must reimburse the buyer the same amount of money in addition to the deposit.
As of January 1, 2007, every preliminary contract must be registered with the tax office within 20 days. These measures cost respectively about 180 € plus about 50-80 € for fee stamps.
The broker has fulfilled his task as soon as the preliminary contract is signed. Therefore, the broker’s commission is due when the preliminary contract is signed.
Notary contract (contratto notarile)
Within 2-4 months after signing the preliminary contract, the final contract is usually signed. A notary is consulted for this purpose. When the final contract is signed, the property is officially transferred to the buyer and the remaining purchase price is paid. The notary’s fees are paid, as well as the land transfer tax and the registration fee. This contract is deposited at the registration office.
As a buyer you should know about the costs associated with the house purchase. Upon conclusion of the notarial contract, the entire purchase sum – minus the down payment already made – is due immediately. Unlike in Germany, the direct acquisition of ownership takes place with the signing of the contract by both parties to the contract and payment.
In addition to the purchase sum, which the buyer has to pay, the following “additional costs” are incurred.
- Notary’s fees (approx. 1- 2 % of the purchase price)
- Costs for the legal translator (if necessary – approx. Euro 1.000)
- Land transfer tax on buildings (purchase as second home):
- in case of purchase from a private person: 9% of the cadastral value plus administrative costs and fees
- in case of purchase of a company: 10 % on the agreed purchase price
- Land transfer tax on buildings (purchase as primary residence):
- in case of purchase from a private person: 2% of the cadastral value plus administrative costs and fees
- in case of purchase of a company: 4 % on the agreed purchase price
- Land transfer tax on agricultural land: 15% on the declared value
- Real estate agent’s commission in Italy (due at the time of signing the preliminary contract) : 3 % plus 22 % VAT
The cadastral value is calculated from the cadastral income. This can be taken from the cadastral extract. The cadastral value of a property is usually significantly lower than the market value.
Approximately 4 weeks after signing the notary contract, the new owner can apply for/pick up a certified copy of the notary contract from the notary.
The above information is not legal advice. No liability can be accepted for its accuracy.