Purchase taxes on buying in Italy … yes, please!

real-estate-technical-key-welchomeAn inspiring article on main purchase taxes on buying in Italy … wowowow, the fun never ends here at Welchome’s 😊

I try to keep this brief and accurate but this is no substitute for ad hoc advise that asks for specific data varying from property to property. I remain at your service for any further questions and let’s get the basics right!

When the specific details of any real estate and its end use for buyers are known, calculations are accurate and you do not meet unexpected costs since specific property details form the base of any calculations for taxes on real estate over here, and these are

  • the assessed cadastral value (rendita catastale) of the edifices,
  • the end use of the property for the buyers (uso ultimo della proprieta’)

So, you are thinking about buying in Italy, have done some research, possibly already initiated with viewings hopefully on properties selected for you by professionals like that start by asking abut you, your needs and preferences, and wish to get a clearer idea of relevant costs hence taxes which are a good part of these costs.

I concentrate on two main scenarios here and look forward to getting your questionssince it will make this a conversation more interesting to me too! and what’s more important helps me help you.

  • 1) On the first envisaged scenario, you are second home buyers (ie keeping your residence elsewhere), wishing to buy (a casale and possibly some land but the same applies to apartments of course) from a private owner (companies and all that asks for different evaluations on vat which I do not tackle here).

Since 2005, as per the provisions of Article 1 paragraph 497 of Law n, 266 of 23rd December 2005 and art. 52 paragraphs 4 and 5 of Decree of the President of the (Italian) Republic (DPR) n. 131 of 1986 that buy privately, ie not from companies!, upon request to notary which is recorded in the notarized deed of sale/purchase, pay taxes on ‘prezzo valore’ ie a reduced amount of taxes and here’s why!

Purchase taxes on second homes (dwellings where you do not reside) equal 9%.

When buying privately you pay that 9% on ‘prezzo valore’ hence NOT on the full price you pay to the seller and this is great news! See how it works by having a look at this example.

‘PREZZO VALORE’ results from a 6% increase of the assessed cadastral value of the edifice (s) (rendite catastali) which gets multiplied by 120. This total is the base for calculating purchase taxes on houses (in fact on edifices for habitation and main garage and annex) and yards.

By a way of example: on a cadastral assessed value of 1,000 euros, that gets multiplied by 126 (so as to have the 6% increase we need and the 120 fixed index on second homes) the resulting main taxes will be {(126,000/100)*9} = 11,340 euros where the purchase price you pay is likely to be much higher, ie , 250,000, 300,000, 400,000 … but this is totally irrelevant as for this part of costs. What counts here is the cadastral assessed value (rendita catastale) of the edifices and the older the edifice the lower the cadastral assessed value!

 you see how helpful this 2005’s law on ‘prezzo valore’ is ALSO in doing away with the illegal habit of making false declarations re sale/purchase prices when taxes where calculated on the full sale/purchase price of any property.

  • 2) On the second envisaged scenario things go from remarkably good to excellent as for taxesIn this scenario you are first home buyers (ie intend taking up residence at the house you buy within 18 months and make a statement re this that stays on record) buying privately. Vat in this scenario is reduced too but as with vats you pay them on the full price.

Purchase taxes on first homes (ie main residences) equal 2% of prezzo valore!!! And indexes are slightly lower from the one sin the previous scenario since they stand, to cut the long story short, at 115 (vs 126)

If we go back to our little example under i) for comparison, on a cadastral assessed value of 1,000 euros, that gets in this scenario multiplied by 115, the amount on which you pay 2% main purchase tax is 115,000, hence taxes would equal 2,300 euros!!!

IT IS NOT TOO GOOD TO BE TRUE and, for once, Italian laws on taxes help buyers!.

The final amount of taxes will inevitably include stamp duties but these add up to, normally, to few hundred euros! When land is involved and you are NOT a farmer in Italy! you pay 15% of the price but normally prices range from 5,000 eur /10,000 sqm ie an hectare to 30k or 40k for hectare of farmland with pipelines for water…. Vineyards and so on can cost a lot in wine producing farms but this is a niche of a niche!

Feel free to send me your questions or indicate topics that interest you and I will get back to you directly or through the news section in my web…

Hopefully you are still awake and ready to fire questions which I will be happy to answer. 😊

The right time for your Italian home in Umbria is now and Welchome makes it happen, for you and with you, easily, safely and happily with an eye on paying the lowest possible taxes too! A stitch in time…


Linda Cesari