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Your complete guide to buying a home in Italy, part 2

5) PRELIMINARY PURCHASE AGREEMENT (Contratto Preliminare)

The buyer and the seller upon reaching agreement on the terms of a sale (sometimes without a proposta,  would enter into a preliminary purchase agreement which can be drawn up by the Real Estate Agent or by a Notary, and which sets out all details of the sale as detailed in the list below. It allows the seller time to prepare funds for the purchase. A deposit (caparra confirmatorio) is exchanged between buyer and seller, and as such seals the contract.

  1. Identification of the parties (full names, place and date of birth, passport number, nationality, tax file number - in the case of companies which are selling VAT number, and legal registration number).
  1. Indication of the location of the property in question (commune and province).
  1. Identification in the national register of lands (NCT) or urban areas ( NCEU). 
  1. Verification of the seller's title to the property.
  1. Verification of whether any limitations exist to the title, for example judiciary or bank obligations, inheritance or property rights, rights to first choice of purchase, or any other limitations that reduce or in some way or curtail the right to full title of the property. 
  1. Identification of all servitudes that might weigh on the property (roads, trails, pipelines etc that transit through the property to be purchased) and those from which the property should benefit (access to water from nearby natural sources or wells, rights of passage, and rights to access to pipelines etc)
  1. Building licenses issued after 1967.
  1. The agreed price.
  1. The date established for the completion or closing.

N.B The preliminary agreement is not mandatory and the completion or closing (as described in point 6 below) can be immediate if a formal offer is accepted.

Deposit 

At the time of signing of the Preliminary Contract of Italian real estate, a deposit ( Caparra) is required, usually 10% of the sale price of the property. depending on the timescale between Preliminary Contract and completion. This is be paid via electronic bank transfer.
Under Italian law the deposit paid is defined as "Caparra Confirmatoria", it means that in case of default in completing the sale of the Italian real estate on the agreed terms, the buyer will automatically lose the whole of the deposit paid. Conversely, if the Seller defaults, he is liable to pay the buyer back twice the sum originally received as a deposit. Both Buyer and Seller may also claim for damages.

Registration of contracts 

According to Italian law it is obligatory to register all preliminary contracts / purchase proposals, this must be carried out 20 days from the signing of each contract. 

The registration fees are the following:

€ 200.00 Fixed registration fee

€ 16.00 government stamp (1 every 4 pages on both copies )

€ 2.00 government stamp (for plans)

0.50% tax due on the confirmed deposit* (caparra confirmatorio)

3% tax due on any down payments made thereafter for purchases not subject to VAT

*This prepayment of tax is recovered when the final notarial deed is signed.


6) COMPLETION /CLOSING (Rogito)  

Following the preliminare contract, the signing of the final notarial deed takes place in the Notary’s office. The Notary is a specialist in many areas, including real estate conveyancing (purchase and sale of homes. In performing his function the notary must, by law, be independent and impartial: therefore protecting the interests of all parties in equal measure. The Notary undertakes legal searches to ensure that there are no previous mortgages, or liens or debts on the property and that the property's urban planning and land registry status is in order and is responsible for drafting and execution the final notarial deed transferring title. 

Both parties must be present when the deed is read, although both the buyer and the seller can give Special Power of Attorney for someone to act on their behalf, which can be arranged by signing in the presence of a notary (in Italy) or via an Italian Consulate or Embassy in your own country. If you do not understand Italian, an officially accredited interpreter MUST be present, or alternatively a trusted person can be given Special Power of Attorney to act on behalf of the buyer.

You will be required to provide your passport, Italian tax file number, and marriage certificate if applicable. If the buyers are married, their regime in which their distribution of property is governed (joint or separate property) should be stated; this information will be required for the transcription of the contract in the public register. 

Upon signing the final notarial deed (Rogito) in front of the Notary (the sole authority under Italian law authorised to certify the sale of real estate property), the seller pays the balance of the purchase price to the seller by bank transfer to the Notarial bank account or via banker’s draft payable to the seller (assegno circolare) issued by your Italian Bank, the notary’s fees, purchase taxes or VAT (IVA). The Notary, after the signing of the Rogito Notarile, will record the transfer of title in Land Registry and pay the other purchase taxes on the buyer’s behalf.


7) PURCHASING COSTS:

In summary, the overall costs of purchasing property in Italy depends on the purchase tax rates applicable to the property. However the costs consist primarily of property taxes, notary fees and agency fees.

Agent/Broker commission

In Italy an estate agent acts as an independent professional, whose role is to match up a willing seller and a willing buyer (unlike the UK or US system) and is remunerated by both. 

Once an offer has been accepted, thanks to the intervention of the real estate agent, according to article 1755 Civil Code, he/she is entitled to a commission from both parties (3% + VAT), and these fees are payable upon the signing of the preliminare contract.

In Italy a Real Estate Agent must be professionally qualified and licensed, registered with their local Chamber of Commerce and is required by law to have professional indemnity insurance. 

Notary Fees

A fee is paid to the Notary for the preparation of the Rogito and generally only the buyer pays for the notary expenses and taxes due on the sale.

But note that notary fees can also be requested for the preparation of the preliminary agreement of sale (and therefore not only for the deed) if the parties involved decide to have the preliminary contract prepared and transcribed into the registries. 

Fees vary, and are on a scale related to the declared value of the property, the difficulties of the deed and of the property. 

We assist clients to obtain a written estimate from the Notary detailing all fees and the taxes payable on the purchase, prior to making offers. 

More information regarding Notaries can be found on this website https://www.notariato.it/en

8) Taxes payable on the purchase: 

A) Buying from a PRIVATE PARTY or COMPANY that sells after 5 years after completion of work

1. Stamp duty 2 or 9% of cadastral value (2% for first home, 9% for second home)

2. Land registry tax: €50 (fixed rate)

3. Cadastral tax: €50 (fixed rate)

        B)     Buying from a COMPANY         

VAT which is payable directly to the seller at a rate of 4 or 10% on the purchase price agreed (4% for first home, 10% for second home, 22% for luxury)

                In the case of purchases subject to VAT, the following taxes will be also paid to the notary who will then pay the Tax Office:

Stamp duty: €200 (fixed rate) (Imposta di registro)

Land registry tax: €200 (fixed rate) (Imposta ipotecaria)

Cadastral tax: €200 (fixed rate) (Imposta catastale)


• Other fees: These may include translation fees, or mortgage arrangement fees.