Buying Property

Once your mind is made up and the price agreed you will be required to sign a Contratto Preliminare (preliminary private contract) and pay the statutory deposit. This agreement between buyer and seller states the price, the date for completion, what is being bought and sold, and also includes various guarantees from the vendor that he owns what he is selling and that the property can be sold to you as described.

For example, if he states that there are no rights of way across the property then he must be able to transfer the property without any rights of way; if he cannot do so then he is in breach of the agreement and, if you are unwilling to accept the right of way, he must return double your deposit. However, for this penalty to be applicable it is essential that the deposit is described as 'caparra confirmatoria'.

With the passing of Law 296/2006 (Finanziaria 2007) certain modifications to the purchase procedure came into force as of 1st January 2007. Briefly these are:

Preliminary Contract (correctly called 'Contratto Preliminare di Compravendita' - referred to by some as the 'compromesso'). The parties (buyer and seller) are legally obliged to register the contract at the Agenzie delle Entrate (tax office) within twenty days of the date of signing. The official Italian estate agency is equally held responsible (responsabile in solido) for the registration and the payment of the appropriate fees and tax. What does this mean? Firstly, the preliminary contract must be drawn up in four original copies and signed by buyer and seller; one copy each for the parties and the other two for the registration. Within twenty days of this date there is a two part registration to carry out. The estate agent may accept the task of doing this, receiving payment for expenses, and for clarity will undersign the four copies of the contract. The registration involves a visit to any bank and to any office of the Agenzia delle Entrate.

An amount is payable at the bank comprising a fixed, non-refundable, one-off sum of Euro 168 as registration fee (Imposta di Registro) and a variable amount equal to 0.50% of the deposit (caparra confirmatoria) or 3% of any other type of deposit paid before the completion (Atto notarile). This 3% also applies to any interim payments made between the preliminary contract and the completion - such as stage payments to a building company. However, the variable fee paid at this stage is deducted from the final tax bill at the completion. F23 is the official form (modulo) to be used for this part of the registration.

The original F23 stamped by the bank is to be taken to the Agenzia delle Entrate together with an original preliminary contract. Official stamps (bolli) with a value of Euro 14.62 each, are to be affixed applying to following rules: one stamp per four sides of the contract and an additional stamp for every one hundred lines over and above an original hundred. The bollo must be applied if the contract is less than four sides and an additional bollo if the lines exceed one hundred even if there are fewer than four sides. Each attachment must also carry a bollo. You may want to read this a few times! The Agenzie delle Entrate will issue a receipt which is to be presented to the notary.

It is very, very unusual for a deal to fall through after the preliminare has been signed because the deposit is relatively hefty, for a normal house 30% of the purchase price has been fairly standard. With the new requirement for the 0.5% advanced tax payment this habit may change. This means that the purchaser does not go into the contract stage lightly, nor does the vendor. If the purchaser withdraws through no fault of the vendor, the deposit is forfeit and, as shown above, if the vendor cannot meet the terms of the preliminare contract - or simply withdraws - then double the deposit must be returned to the purchaser. Estate agency fees are also payable with the signing of the preliminare. Where the estate agency is also registering the contract they must be paid the sum required by the authorities plus their reasonable expenses. This payment is to be made by the purchaser and the time scale needs to be noted.In the event that the contract is not fulfilled it is the defaulting party who is responsible for all costs.

Completion takes place before a Public Notary (Il Notaio) and his (or her) involvement is indispensible. Basically a government official, the Notaio witnesses the transfer of title from one party to another and collects the taxes due on the transaction. Contrary to popular belief the Notaio does not act for both parties; he acts for neither party, being - as stated - a witness. With all parties present he will identify them, one by one, and then read through the completion document (Il Rogito) in detail making sure that everyone understands what is being bought and sold. He will need proof that taxes and dues have been paid and he has to have 'visure ipotecarie' to prove what, if any, mortgages or debts burden the property. With all in agreement he will ask each party to sign and the Notaio will sign and stamp the document. It is at completion that you, as the buyer, must pay the remaining balance of the price of the property, plus the taxes (reduced by the amount advanced at the time of registering the preliminary contract) and notaio fees. The vendor must also pay his taxes if there are any due. If the parties have used the services of an Italian agent they will be asked to declare in the atto the name of the agent, fiscal code, registration number at the Chamber of Commerce, the amount of the invoice and the manner in which payment was effected. Where the notary finds that the sale has been transacted by an irregular Italian estate agent (one who is not registered at the chamber of commerce as 'agente di affari in mediazione') he must inform the authorities.

Since 22 April 2006 the money laundering rules (antiriciclaggio) have obliged various professionals including estate agents and notaries to maintain a register of transactions for ten years. The register must show the parties, fiscal codes, profession, powers of attorney, property and price. In addition, in order to perform the atto, the notary must have copies of transfers/cheques to prove where the money has come from and where it went.

Once the transaction has been completed the Notaio will register the new title within twenty-one days. If you have taken a mortgage he will also register the mortgage deed. It may be some weeks, therefore, before you actually receive your copy of the registered title deed.

As with all property transactions anywhere in the world, there are additional costs to be paid when buying property in Italy. For the purchaser there are three main items; tax, notary's fee and estate agent's fee. For the vendor there are two main items, the tax and the estate agent's fee. Whilst there is no Capital Gains Tax after five years of ownership a vendor is liable to pay CGT if the property is sold earlier. If the vendor is a private individual the CGT is levied at 20% on a normal house. Also worth remembering that the vendor is responsible for producing the required documentation on the property for the sale to take place; so any missing documents have to be procured at the vendor's expense.

Brian French & Associates have helped hundreds of individuals, organisations and companies to purchase property in Italy over period of thirty-five years. No one does more to help you through the procedure.

If you would like a Buyer's Information Pack, please contact Louise Talbot