Property conveyancing in Italy: how much does it cost

The property deed is a very important document. It is the document that formalises the transfer of ownership of the property, a process which is often known as conveyancing. But what is the cost of the deed for the purchase of a house? To understand what are the elements to be considered, idealista/news has asked, Alessandra Mascellaro, from the board of notaries in Italy. Here is what she explained about the cost of conveyancing in Italy.

Cost of the deed for main residences and second homes in Italy 

What extra costs are there when buying a house in Italy?

"In addition to the property price, the costs of any renovation or modernisation of the property and any mediation costs must be considered. If the buyer is considering applying for a loan from the bank, there will also be additional mortgage costs".

The experts also add that when applying for mortgage, that they suggest considering, "in addition to the interest rate, the additional costs, which may be expressed later during the preparation of the purchase. These are may include insurance, preliminary investigation costs and brokerage services".

It is then necessary to assess whether the loan is for the purchase of a main residence or a second home as this will also affect how much you have to pay. The substitute tax on the loan is 0.25% of the loan amount in the case of a loan for the purchase of a main residence and 2% in the case of a loan taken out for the purchase of a second or holiday home.

"On top of mortgage costs, you will also need to consider registry taxes at the rate of 50 euros (a total of 100 euros) in the case of sale between private individuals and 200 euros each (a total of 600 euros including the registration tax at a fixed amount) in the case of sale by a company".

When buying a property in Italy, it is also necessary to distinguish whether the sale is between private individuals or through a company. When you buy from a company, the tax you pay is VAT, which is 4% for a main residence and 10% for a second home. VAT is paid on the price indicated in the deed.

On the other hand, in the case of a sale between private individuals, the registration tax is paid on the cadastral value. Therefore, in the case of sale between private individuals of a house and its annexes, registration tax is the tax to be applied on the cadastral value of the property".

The cadastral value of a property

What is the cadastral value of a property and what does it mean when buying property in Italy?

The cadastral Value is a recorded taxable value which is set by the Land Registry Office and in Italy it depends on a wide range of factors like location, construction year, type of property and the size of the property.

When buying property in Italy, you must remember that the rate of registration tax, i.e. stamp duty, is 2% in case of purchase of a main residence and 9% in case of a second home. The so-called price-value clause is applied in the deed, which means that in the case of a sale between private individuals, the price is indicated, but the taxes are levied on the cadastral value, at the rates mentioned before: 2% in the case of a main residence and 9% in the case of a second home.

In simpler terms, if you buy a property in Italy from a private owner, then he taxes in this case won't be based on the property price but on the Cadastral value. In many cases, this is a great advantage, given that the Cadastral value is generally quite low. Buying a main residence from a private owner, your taxation will be just the 2% on Cadastral Value, as mentioned above, and 9% if you buy a second home.

Notary costs

The notary's fees are need to be included in the cost of the deed. How much are notary fees in Italy?

When it comes to notaries in Italy, "the cost varies in relation to the complexity of the case, the assessments that the notary has to make and the checks that have to be carried out".

A notary's fee, therefore, varies in relation to the need, practice, controls and the complexity of your specific case. Fees include the contact with the client, the reception of applications, all the checks and inspections to be carried out to verify that the property is in order from the point of view of the mortgage provider and land registry,  and of course the signing of the notarial deed itself and the ensuing formalities. 

Finally, it is also important to remember that the notary is paid the taxes mentioned above, which are then paid to Inland Revenue within the terms of the law, meaning that the total amount of the fees may appear higher than the pure fee for the notarial service at first glance.

Buying a house for residents and non-residents in Italy

One last thing to keep in mind concerns whether you are a resident in Italy or not. Residents, those who live permanently in Italy and pay taxes there. When it comes to the taxes on buying and selling property in Italy, residents and non-residents are treated in the same way and will pay the same taxes with one exception. When buying a property, if you declare that you will become resident within 18 months of the property purchase, but you fail to do so, you will have to pay the difference in the 2% and 9% tax, plus a penalty fee of 20% of this amount.