Cavendish Brooke covers many areas of Italy but we specialise in sourcing luxury properties in Tuscany and Umbria. We have many years of experience in these regions and have chosen to specialise here as these are the areas of Italy that we know best and those that our clients most frequently ask us for.
As property finders we are not tax or legal specialists, but here is a brief outline of the buying process in Italy and things to budget for when thinking about purchasing your property here:
Some interesting facts about Italy
- One of the 6 Founder Members of the European Union (EEC) in 1951
- Capital = Rome
- 83% Roman Catholic, remainder Jewish and Protestant with a growing Muslim community
- Italian is the main language, however German is spoken in the South Tyrol, French in the Valle d'Aosta region on the Swiss/French border and Slovene in the Trieste/Gorizia area on the Slovene border
- Many parts of Italy lie on a fault line, earthquakes and minor tremors are common
- Italy's major industry is tourism
- Currency = Euro (EUR)
- Time = GMT + 1
Climate and Healthcare
The climate is typically Mediterranean in the south with hot dry summers and mild wet winters. The north is Alpine with more severe winters. Central Italy is temperate.
Italian healthcare rivals that of any country with well trained doctors operating to a very high standard. However, waiting lists on the national health system are long and thus private care is often preferred.
UK citizens qualify for emergency medical treatment on the same terms as Italian nationals via the European Health Insurance Card (EHIC) which replaced the E111 form in January 2006. You should obtain a European Health Insurance Card (EHIC) before leaving the UK. The EHIC is available free of charge through most United Kingdom post offices or through the UK Department of Health via their website at: www.dh.gov.uk or by telephoning 0800 555 7777. You will not be covered for medical repatriation, on-going medical treatment or treatment of a non-urgent nature. It is thus advisable to have travel insurance.
Visas and Documentation
As UK citizens, only a valid passport is required to enter Italy and stay for up to 3 months. If staying longer, you will need to register with the local police and obtain a residents permit from them.
UK driving licences are accepted. Please note that it is obligatory to use dipped headlights during daylight when travelling on motorways.
The Buying Process
The buying process in Italy can vary from region to region, but the sequence below will help you gain an insight as to how the process usually works:
1 - Appoint a solicitor to conduct the necessary searches and ensure that all the legal requirements are met. Unless you speak fluent Italian, you are best advised to use a solicitor who speaks English and can translate and explain the legal documents. We can recommend several UK based law firms who can assist you.
2 - Obtain your Codice Fiscale - this is your tax identification number and is a legal requirement before entering into any transaction that could incur tax implications, i.e. buying a property. It's easily obtained by visiting the local tax office.
3 - Arrange your mortgage, or alternative finance, if you haven't already. We can help you with this. If you require a mortgage, there is a range of UK and Italian lenders who would offer terms and as in the UK, a lender will require a survey and will insist on instructing the valuation from their own approved panel of surveyors/valuers. We would always recommend that you obtain an independent survey, even if you are not using a mortgage to purchase the property.
4 - Pay a deposit to secure the property and for it to be taken off the market - although this is not mandatory for every sale. Once paid, the deposit is usually non-refundable if you change your mind. The deposit will usually be 10% of the purchase price.
5 - Check and sign the preliminary sale contract ('compromesso di vendita'). Your solicitor will guide you through this. It is usually at this stage that the deposit becomes payable and both sides are committed to the transaction. If you wish, you can include a withdrawal clause in the contract allowing either you or the vendor to pull out of the sale. If you withdraw, you lose your 10% deposit; if the vendor withdraws, he has to pay you double the amount of the deposit as a penalty.
6 - Calculate all the costs involved including estate agents fees, taxes, valuation, notary, administration and legal fees.
7 - Wait for your solicitor to complete legal investigations such as checking that the owner has the authority to sell, whether there's any outstanding debt on the property and if it has the full and correct title deeds.
8 - Arrange a date for completion and signing in front of the notary. Both parties will sign the contract, the 'rogito' in front of the notary. It is important to note that the notary is a public official who is there simply to verify that the sale/purchase has been signed in his presence. The notary does not represent you or in any way negate the need for a solicitor.
9 - Pay for the property and applicable taxes. With the signing o contracts, the final purchase payment is due along with all taxes. It is a safe guide to assume an additional 15% in fees to cover purchase costs, stamp duty, etc.
10 - Title will be registered at the Land Registry by the notary.
Tax and Legal
We at Cavendish Brooke International are not tax experts, however, we will be happy to introduce you to professionals who will be delighted to assist you and answer any questions you may have on this subject. The information below is offered merely as helpful notes and we strongly recommend you employ the services of professional tax advisers.
The taxes that will be due are:
- Income Tax – Imposto sul Reddito delle Persone Fisiche (IRPEF). A non resident of Italy must still make an annual declaration of any Italian income.
- Rental Income will be taxed on (usually) 85% of the rental received.
- Notional Income Tax will be charged if you do NOT rent your property. This is based on the official rendita catastrale (rateable value). This is normally small in value.
- Capital gains made on disposal of Italian property are taxable as income (see above) unless the property has been owned by the individual for more than 5 years.
- Inheritance tax was reinstated after having been abolished in October 2001. Non-residents will pay tax on their Italian sited assets and residents on their worldwide assets.
- Wealth Tax – there is no Wealth Tax in Italy.
- Municipality Tax.
- Local Taxes.
The Italian legal system is very different to the English system. However, provided that you make the necessary enquiries and checks you should have no concerns about buying in Italy. To avoid complications and pitfalls, we strongly recommend that you employ Independent legal advice. We will be very happy to put you in contact with a panel of lawyers who are totally independent of any agents or developers.