Guide to Property in Italy

Italy welcomes some 21 million visitors each year and since EU integration, it has transformed into a booming property destination for investors wishing to purchase enchanting property within a healthy tourist economy. 

Flying to Italy has never been easier due to budget airline competition, so wherever your investment, your property should be easily accessible.  The country’s sound transport infrastructure and modern systems make it a natural option for shrewd investors seeking a solid market with growth rates of up to 25% in some areas.

As a rule of thumb, property prices are lower the further south you go, while an interesting mini emerging market of hidden investment hotspots is currently spawning around areas such as Calabria.  Northern Italy boasts pricier locations near ski resorts in the Alps, while buy-to-lets in this region are ever popular.  Meanwhile city pied-à-terres such as Rome, Turin, Milan, Venice and Florence are great centers on which to base your carefully selected investment in cultural tourism.  Real estate in Italy offers a wide spectrum of property types, whether you seek a country residence with land, a city or holiday resort apartment, or even a townhouse or villa on an off-plan development.

With no capital gains tax due on Italian property, high capital growth and a strong tourist market, many investors are discovering that Italy provides a healthy arena in which to employ their particular investment strategies.

Use the form below to search through our online collection of quality property in Italy. You may enter as much or as little information as you like but entering more information will help you better locate your ideal property.

Propertyshowrooms.com and Property in Italy

We believe our clients will be seeing some encouraging results from their early purchases in developments in Italy and we are able to offer you expertly vetted developments at unbeatable prices.

Italy is known to be a solid political and economic arena, while being located only 2 hours and 15 minutes budget flight from the UK. We are confident that Italy will continue to grow from strength to strength as a popular property investment location.

Italian politics runs on a democratic republic system and as a member of the G8 industrialized nations, Italy ranks among the world’s economic leaders. Property in Italy is widely regarded a solid investment with good capital growth forecasts, making it an ideal investment climate for those who buy now, while prices remain low.

The Italian quality of life and warm climate continue to draw investors and holiday makers to Italy each year, while brash mass tourism is kept to a minimum.  A rich and diverse culture, including ancient and contemporary art and music, along with the famous Italian flair for fashion are added attractions that make Italy a firm favourite among art and style enthusiasts.

Can Foreign Nationals Own Property in Italy?

Yes, Italy is open to investment from foreign nationals. The majority of investors are from fellow EU states and property transactions are generally straightforward and do not openly penalize overseas residents. However it is worth noting that as a resident of Italy your purchase costs can be halved.

Why Should I Choose Italy?

The Italian property investment opportunity is huge and the best thing is that most people do not know about it.

If you seek high quality property in stunningly beautiful rural locations, Italy is a good choice. Today this industry is growing fast and investors are finding many previously undiscovered, though highly desirable rural retreats tucked away in idyllic surroundings. Tourism and property investment today is generally concentrated in the rural areas and today certain grants are available from the government to reform rural properties. Healthy returns of 10-20% are achievable in carefully selected locations.

Meanwhile properties within the favourite cultural cities of Rome, Florence or Venice are also attractive to those willing to invest at much higher prices.

Italy is at the very hub of the low cost flights revolution and is easily accessed by air from all major airports. Added to this a consistently warm and sunny climate year-round and an easy lifestyle, is a constant draw for visitors.

What is the Economic and Political Situation?

The Italian economy has changed dramatically since the end of World War II from an agriculturally based to an industrial country. Despite an economic crisis in 2004, Italy has today recovered as a strong economy and is ranked as the fifth largest economy in terms of USD exchange rates and belongs to the Group of Eight (G8) industrialized nations. It has close trade ties with other EU member countries.

Italy was a founder member of the EU and is a strong supporter in NATO. The Italian Government seeks to obtain agreements with other European countries on various defense and security issues within the EU as well as NATO. European integration and the development of common defense and security policies continue to be a main objective of Italy’s political agenda.

How do we Travel to Italy?

You can fly to any of Italy’s major airports at; Milan, Rome, Florence, Pisa, Venice, Naples, Palermo (Sicily), Alghero or Olbia (Sardinia).

The North: You can reach Milan, Bologne and Venice through Ryanair and EasyJet where currently a budget return ticket will cost around £200. Ryanair flies direct to Pisa in Florence from Stansted, Liverpool or Glasgow.

Central Italy: Budget flights to Rome are easily available from most airports. However central Umbria is less accessible and at £ 300 you may have to pay a little more than to Rome using British Airways or Alitalia. EasyJet direct flights to Olbia in Sardinia start at around £200 return.

The South: Ryanair offer direct daily return flights from Stansted to Brindisi and Bari airports in southern Puglia for around £200. You may also fly direct from Stansted to Palermo in Sicily using Ryanair. EasyJet operates return flights to Naples from Stansted for approximately £190.

Is a Visa Required to Enter Italy?

No visa is required to enter Italy. For stays over 90 days, however, you will need to apply for a residence permit (permesso di Soggiorno).

What is the Direct Flying Time from UK to Italy?

Direct flying time to Italy from London is approximately 2 hours and 15 minutes.

Property Buying Process in Italy

Buying property in Italy is a fairly straightforward operation provided you have the correct help and advice. As a fellow member of the European Union, Italy poses no real restrictions to foreign nationals buying real estate. The purchase of property in Italy is not a complex procedure and for the most part, a foreign national has the same rights in the buying process as any Italian citizen. However there is one exception; foreign nationals must pay an 11% purchase registration tax, while an Italian only pays a 4% purchase registration tax.

Using an Agent

Using an agent who has local knowledge and can guide you through any difficulties you may come across is essential. A good agent will know lawyers and other professionals who may be needed to ensure the decision you make is the right one.

The Initial Agreement (Compromesso di Vendita)

Once you have researched and found the property you wish to purchase, an initial agreement between yourself and the vendor will need to be signed and executed. This documents the agreed price of the property and deposit paid. You will need to pay a deposit of 10% of the total purchase price, however in Italy it is not uncommon for this deposit to run as high as 50% of the purchase price. Generally, the deposit is non-refundable, except in the event that the clear title to the property cannot be obtained within the time specified in the initial agreement.

During the period of the initial agreement, you may well then need to obtain finance while the vendor will need to ensure that the title to the property is free and clear of any debts. As the real estate purchase process can take more than six months to complete in Italy, unlike in most other countries of the world, it is quite normal for purchasers to move into residential properties after the signing of the initial agreement before taking possession of the property at final agreement.

The Preliminary Contract

The next step is the preliminary contract. This contract is usually conditional to all searches being clear. It is advisable that you have the right to pull out of the sale and the return of all deposits written into the contract. This is usual practice and protects you in case searches on the property are unsatisfactory or you are unable to get a mortgage. Be warned, however, you won’t be able to pull out at this point just because you have changed your mind.

The Notary

Real estate purchase is overseen to a large extent by a notary. The notary performs more duties than normally associated with notaries in other countries. In Italy they are responsible for legal title searches and checking the property is free of any defects or debts.

Appointing a Lawyer

In Italy the notary acts for both sides, so it is essential to have your own lawyer who will look after your interests. This is particularly important, as there is a law of “subrogation” which means that debts such as utility bills, community dues, local taxes etc., remain with the property. Your lawyer will ensure the property is clear of all liabilities. He will also check ownership rights and that the relevant building licences have been approved by the local town hall. The lawyer will also keep his eye on the notary and ensure that he is completing all the necessary searches.

The Geometra

At this stage, it is important to get the building inspected or surveyed. No self-respecting Italian would put in an offer without this and we advise that you do the same, particularly in the case of older Italian properties. The Geometra will survey the boundaries of the property for sale and make sure it fits with the legal description laid out in the contract of sale.

However an architect would be more suitable to check a modern building, provided he isn’t the designer, of course. Some purchasers use a geometra, a surveyor and official valuer.

Completion

The final step is the transfer deed. All fees are paid at this point and the notary lodges the deeds with the land registry office

Costs

You will need to build into your budget at least 10% of the purchase price to cover professional fees. A further 10% is needed for property VAT, plus 5% to cover utility connection fees.

Documentation

Documentation is uncomplicated. You will need your passport and an Italian tax number. You can apply for this at the Italian consulate or embassy in you home country. If you are a married woman, you will need your birth certificate or marriage certificate, as the deeds are put in your maiden name in Italy.

Mortgages in Italy

Mortgages for property in Italy are normally available for up to 80% of the purchase price. This means you’ll need to find a 20% deposit. The loan is based on the bank’s valuation of the property (cost around 300 euros) and should the valuation be higher than the asking price, a slight increase in 80% lending can be achieved.

The process of securing a mortgage (mutuo ipotecario) in Italy is not unlike most things in Italy: it can take quite some time and a significant amount of form filling.   Therefore it is wise to begin proceedings as soon as you have signed the preliminary contract to purchase.  At this stage you are required to make a deposit but this is protected by law in the unlikely event that you fail to secure finance the deposit will be returned to you in full.  Some lenders will allow you to arrange a mortgage in advance, with the terms of the loan offer being guaranteed for up to 3 or 4 months.  If you have a property in mind you can then go ahead and try to secure your mortgage even before you have signed contracts to purchase.

Most mortgages in Italy are repayment mortgages where the borrower pays a combination of capital and interest back each month.  Fees are usually clear and up-front and they will include a 1% arrangement fee, a 1% administration fee and a 2% registrations tax.  Some lenders also charge an additional one-off set sum of around 100 euros.

Proof of income is always required by lenders and self certification mortgages in Italy are not normally available.  Lenders will not normally take into account rental income when calculating your level of borrowing. Loans are typically based on 30% of your monthly (joint) income.

To help you prepare for the mortgage application, the following checklist of paperwork will need to be submitted with your application:

All Applicants Details

• Photocopy of your passport(s)
• Photocopy of birth & marriage certificate(s)
• Proof of residence in the UK. ie. driving license or Council Tax forms
• Six months' personal bank statements illustrating income & outgoings.

Outgoings & Liabilities

Most recent annual mortgage statement and written proof of the current monthly repayments

• Copy of tenancy agreement if renting
• Copy of any loan agreement(s) in place
• Copy of most recent credit card statement
• Copy of Decree Nisi or any such documents confirming maintenance commitment

The Property

• Copy of the Sales Agreement
• Photographs of the property if available
• Estimates if applying for renovation work - please note these must be from native builders and be in the native language
• Architect's plans for construction

For Employed Applicants

• Confirmation of employment, i.e. contract or reference from your employer(s) stating your income, position and start date of employment
• Three most recent pay slips and last 2 P60's

For Self-Employed Applicants

• Last three years' audited accounts
• A letter from a chartered accountant confirming the figures and personal drawings
• Last two years' tax returns

Other Sources of income

• Last two years' tax returns
• Copy of tenancy agreement if rental revenue is to be included
• Annual statement of pension or retirement payment details
• Additional Requirements:
• Proof of availability of deposit funds

Types of Mortgage & General Requirements

Mortgages can be obtained in Italy for the purchase of brand new or existing properties, also for properties on leaseback schemes.  Finance for the purchase of many residential properties on a large scale is considered on a case by case basis. 

A variety of products are available, ranging from interest-only to repayment mortgages on a variable or fixed rate basis, or even a combination of both.  Terms can be from 5 to 30 years, however loans must be repaid by 75 years of age.  When shopping around for your mortgage, be aware that sometimes banks in Italy will require repayment of your mortgage within 10 or 15 years and the age stipulations can vary from 65 to 75 years of age.

It is important that the property is registered at the Land Registry as a habitable dwelling.  Italian local authorities set strict criteria as to what is considered ‘habitable’ and unless the property has been granted with this certificate, mortgage finance cannot be obtained. 

For renovation and construction loans, estimates must be provided at the time of application for your mortgage, along with proof of all the necessary authorisations.  In the case of construction loans, more detailed information will be required. Funds are released by the lender following the submission of invoices.  Again, the renovation property must be classified as “habitable” at the Land Registry before a lender will consider an application for a renovation loan.

Banking in Italy

Italy has a traditionally localised system of banking system and small popular banks account for 40% of the banking market. This is set to change while the government is encouraging banks to amalgamate and create larger, modern institutions. In August 2006, two of Italy’s medium sized banks, Banca Intesa and Sanpaolo, announced a merger and the resulting institution could easily become the Euro zone’s fourth largest bank.

The best rate of exchange you will get in Italy is from the banks. However, the easiest way of making transactions is probably by using credit or debit cards. These, together with your personal identification number (PIN), give you access to cash dispensers (or Bancomat in Italian). All major cards are accepted and ATMs to be found all over Italy, even in small towns. Cards can also be used for cash advances over the counter in banks and for payment in most hotels, restaurants, petrol stations and some shops.  For all these transactions you will pay a fee of 1.5%.

You will usually, though not always, pay a small commission when you exchange money using travelers' cheques - around 1% of the amount changed. It is worth knowing that Thomas Cook offices do not charge for cashing their own cheques, while American Express offices do not make any charge for cheques.

Opening a Bank Account in Italy

We always advise you to check charges and rates before opening a bank account in any country.

To open a bank account in Italy you must be aged at least 18 and provide proof of identity, for example a passport and your address in Italy (a utility bill is usually enough).

If you are a non-resident, you may only open a non-resident account (conto estero). Only foreign currency or imported euros can be paid into this type of account, which pays higher interest rates than resident accounts.

A Bank Deposit Insurance Fund (Fondo Interbancario di Tutela dei Depositi) covers most deposits in Italian banks guaranteeing the safety of your money.

Many of the smaller banks have Internet banking facilities and the larger banks are very aware of the benefits of e-commerce.

Banking Hours

Banking hours are normally Monday to Friday mornings from 8.30 hrs – 13.00 hrs and for an hour in the afternoon (usually 15.00 – 16.00 hrs).

There are local variations on this and banks are usually open only in the morning on the day before a public holiday.

Banks in Italy

• National Banking Chains:
  • Banca Nazionale del Lavoro
  • Crédito Italiano
  • Cassa di Risparmio
  • Banca Intesa
  • Sanpaolo
  • Unicredito Italiano
• Regional Banking Chains:
  • Banca di Roma
  • Banco di Napoli
  • Banco di Sicilia
• International Banking Chains:
  • Chase
  • Citibank
  • Bank of America
  • HSBC

Tax Liability

Initial taxes on the purchase of your property are as follows:

• Registration tax (imposta di registro) is the main tax on property and is levied at between 0 and 10 % of the declared value.
• Land registry First home resident buyers of new or resale properties pay a fixed fee of €129.11. Buyers of second homes and non-residents pay 11% of the declared price.
• The basic property tax in Italy is known as “IMU” (Imposta Municipale Unica). Everyone who owns a land or a property in Italy, whether they are resident or non-resident, must pay this tax which is usually between 0,2% and 0.76% on the total declared value of the property. The amount depends on the local authority and the size, location and category of property you purchase. If the property is passed as uninhabitable or being restored, the tax is reduced by 50%.
  The IMU is paid in two installments - 90% by the 30th of June each year and 10% between the 1st and 20th December. If the tax is not paid on time, a surcharge of up to 200% can be levied.

Income Tax

Whether or not you are resident in Italy, as a property owner you must still make a tax declaration. The Italian authorities are only interested in any income you may have accrued in the country, for example you may have money on deposit in a bank that is receiving interest. They have no interest in any holdings you may have outside of Italy.

Tax on Rent Received

If you rent out the property you must declare the income you receive. Against this you can deduct expenses you have had in maintaining the property. The tax is usually between 19% and 46%.

Notional Income Tax

You will also be taxed on the rental value of your house, even if you don't rent it out. This tax is based on the rateable value of the property and is usually very small.

Garbage Collection Tax

In some towns, an additional tax is raised to deal with services the town hall supplies. These could include rubbish collection, street and beach cleaning. In some municipalities you will be charged for use of a car in the area, but not in all. These taxes vary between €200 and €250 per year.

Capital Gains Tax (CGT) for Individuals

Please note that the CGT payable by individuals, not carrying out a business activity from the purchase and resale of real estate units is subject to Italian income tax, whether they are tax resident in Italy or abroad.

Therefore the profit will be considered as an annual income and will be taxed based on the following scale :

0 - 15.000 EUR	23%
15.001 - 28.000 EUR	27%
28.001 - 55.000 EUR	38%
55.001 - 75.000 EUR	41%
Above 75,000 EUR	43%

Please note as well, that no CGT is due in Italy if the property is owned for more than 5 years, unless the Real Estate premises is land on which a unit was built. In this case the sale will be considered as commercial activity and will be subject to CGT even if the vendor is not a professional.

CGT for an Italian Company

Once again the profit will be taxed as an annual benefit made by the company and will be subject to corporate tax. Therefore the profit made by an Italian company from the sale of a resale unit will be subject to a 27.5 % rate to which another 3.9 % will be added, corresponding to local corporate tax.

CGT for an Overseas Company

The tax rate applicable to the resale of any Real Estate unit owned by an overseas company is 33 % of the net profit. Once again if the property was purchased more than 5 years prior to the sale, no CGT is due.

Wealth Tax

While in many other European countries you may be liable for wealth tax, in Italy there is no such tax.

Inheritance Tax

Even as a non-resident your estate will pay inheritance tax. The amount will vary according to closeness of the relationship of the heirs to the deceased. We advise you to seek professional information on how to best deal with this tax.

UK-Italy Tax Treaty

There is a double tax treaty between Italy and the UK and this protects the investor from paying tax on his Italian assets in both countries.