The first step in sealing the sale is the making of the "COMPROMESSO". This is a private contract between the buyer and the seller in which all the details of the final contract are laid out, all the terms and conditions, methods of payment, what taxes and extras are to be paid, dates for the making of the final contract and any other details are discussed. We recommend that this be done with the assistance of a Public Notary. Once this is signed he will then make a title search and see that there are no loans, liens or other impediments such as rights of way on the property, that the property is the exact one that is for sale and that all permits and permission for the building are in order. In this contract the full price being paid for the property is stated.
Payments at the Compromesso.
A deposit of usually one third of the full price of the property is paid. This is not held in Escrow but goes directly to the owner of the property. If the purchaser then defaults on the contract they lose this deposit. If the seller defaults on this contract they have to refund the full amount of the deposit plus an equal amount to the purchaser. This is called a "Caparra Confirmatoria." This makes the penalty for default an equal amount for both parties.
Payment of the Real Estate Agency fee is also made at this point. For our company this is 3% plus IVA (VAT) on the full price of the property.

At the signing of this final contract the balance of the purchase price is paid to the seller. The Public Notary's fee is paid and the payments for the government purchase tax and registration fee are paid.

For an Urban Property.
If you register that the property you purchase is to be your main place of residence i.e, that you will live in this property for more than six months and one day per year, then the government purchase tax (imposta) will be 3% plus IVA (VAT) if you buy from a private individual and 4% plus IVA (VAT) if you buy from a company. If you purchase the property as a second or holiday home then the purchase tax will be 10% plus IVA (VAT). This figure is based on the declared price of the property.
If you declare that the property is your first place of residence and you resell it before a period of five years you will be penalised for the difference between the 3% purchase tax you paid and the 10% you would have paid as a second home plus a fine of 30% However if you purchase another property within one year and declare this as your place of residence this will not apply.
For an Agricultural Property.
If the property will be your place of residence and your principle activity will be agricultural, then the purchase tax will be 11%. If it will become your second home the tax will be 18%.

• A copy of the passport of the person or persons who are going to purchase the property.
• Present address and full name of the person or person who are going to purchase.
• An address in Italy (you can use ours until you have one of your own)
• A Codice Fiscale. Everyone who lives or owns a house in Italy needs to have a fiscal code number (like a social security number not a tax number). This is necessary for the signing of the notary contract and to obtain electricity, telephone and gas contracts. On receipt of a copy of your passport we will obtain this for you.

Capital Gains Tax has been abolished in Italy if you sell your property after five years of ownership. If you are not resident and you sell the property before the five years you will pay capital gains tax on the profit (if any).
You pay an annual tax IRPEF (Imposto sul Reddito della Persona Fisica).

Compared to most countries the local taxes in Italy are low.
You pay a tax called I.C.I. (Imposta Comunale Immobili) which is 0.6% approx. on the declared price of the property (this is paid in two instalments during a year).
There is a local rubbish collection tax. (Rifuti Solidi Urbani)
There are water rates if you are connected to a mains water supply.

There is the possibility for foreigners to obtain a mortgage for up to 80% of the purchase price of a property in Italy, however there are certain procedures that have to be followed as the system of ownership is different as for example in the USA or the UK.

In Italy when you purchase a property you do not receive a certificate of Title of ownership. Your documentation of ownership is your purchase contract and this is held by the public notary and is available only on the orders of a judge.
It is therefore a long process for a bank to foreclose on a property if the owner fails to meet the required mortgage repayments, (about 5 years). Because of this the banks require in depth details of income and liabilities of the applicant. This whole process for obtaining a mortgage can take 3 months before full approval is obtained.

We therefore recommend that if you are intending to buy a property in Italy and think it may be advantages to take a mortgage on the property you make a preliminary application that will give you some idea of what your particular circumstances would allow you to borrow. In this way you will have a good idea of what you can spend so you will know in which price bracket you can search for your dream home.

Sellers here will not hold a property or sign a preliminary purchase proposal that is subject to your getting loan approval, it just takes too long and they risk losing a cash buyer.

Please note that mortgages on a property in Italy have to taken out in Italy and be made in Euros and that banks will only lend on a property that is habitable. They will not lend on a ruin.

We recommend that you take advantage of this no obligation application before you start your trip to find your holiday house as it can be very disappointing to find the right place only to lose it to someone else because you did not have your finances in order.

On request we will forward you application forms and mortgage types from two banks with whom we have obtained mortgages for clients and who are used to dealing with foreign buyers.

We hope that this information has given you some introduction to the procedures and implications of buying a property here in Italy. We are here to assist you in every possible way. We assist you well after the sale and help you settle into your holiday home. You can contact us whenever you wish and we will be of service to you. We value you as a client and we would like to thank you for consulting us in your endeavour to own a property in this beautiful part of the world.

Important Notice
These particulars are prepared for the guidance only of interested parties. The information in these particulars is given without responsibility on the part of the agents or their clients and neither the agents nor their employees have any authority to make or give any representations or warranties whatever in relation to this document. Alfa Real Estate will not be liable, in negligence or otherwise for any injury or loss arising from the use of these particulars.