Extra costs associated with the purchase of a house in Italy
The most common question that most people ask is "What are the extra costs associated with the purchase of a home in Italy?" Unfortunately, there is not a simple answer to this question.
We usually advise clients to expect an additional cost of roughly 10% of the purchase price of a home in Italy. In most cases, the costs usually end up being between 7% and 9%. However, there are always exceptions to the rule. Some of the exceptions could come about if the property value is low (see the second calculation example at the bottom of this page) or if a big part of the property is farmland. In these cases, the costs might increase. If you require a mortgage or if the property is new construction, the costs will also be considerably higher. On the flip side, additional costs could be lower if the property value is high or if you intend to live full time in the home and register your residency in the municipality where the house is situated.
Some additional extra expenses you will encounter when purchasing a home in Italy are:
1. Agency Fees
The standard agency fee most commonly applied to the purchase of a home in Italy is 3% of the purchase price plus VAT (currently 22%). The real estate agent must register your purchase contract with a registration fee of 200,00 euro plus a registration tax of 0,5% on the warranty down payments (or deposits) and tax stamps which are minimum 32,00 euro. The registration tax will be deducted from the registration tax on the final deed.
2. Notary Fees
The notary fees are a percentage of the value of the property (minimum and/or maximum amounts may apply).
In addition, the notary is charged with the responsibility of collecting taxes related to the purchase of the property. Those taxes may include but are not limited to registration taxes, transcription taxes and land registration taxes. These taxes all differ and will depend on the type of property being purchased.
It is also possible for the buyer to request that the home be taxed on the cadastre value rather than on the purchase price. This is very common because the cadastral value is almost always lower than the purchase price. The calculation base for the cadastre value is the cadastral income of the property, and the calculation of the cadastral value is different for second homes than for residential purposes.
The chart below shows the various tax calculations for each situation.
As you can see, there are a couple of exceptions to the rule. For example, if the seller is a construction company and you are purchasing either a newly constructed home or a property that has been renovated within the last five years, VAT is applied on the purchase price and the registration tax is reduced. Lastly, if the property transfer is subject to registration tax, rather than VAT, a minimum of 1.000,00 euro registration tax is applied per purchase contract.
As a home buyer in Italy, you will incur additional charges if you need to finance the home, or if your contract needs to be translated because you do not understand Italian, or if you elect to register the purchase agreement in the land registry while waiting for the final deed to be signed (recommended in certain circumstances)
Examples of calculation of extra costs
We usually advise clients to expect an additional cost of roughly 10% of the purchase price of a home in Italy. In most cases, the costs usually end up being between 7% and 9%. However, there are always exceptions to the rule. Some of the exceptions could come about if the property value is low (see the second calculation example at the bottom of this page) or if a big part of the property is farmland. In these cases, the costs might increase. If you require a mortgage or if the property is new construction, the costs will also be considerably higher. On the flip side, additional costs could be lower if the property value is high or if you intend to live full time in the home and register your residency in the municipality where the house is situated.
Some additional extra expenses you will encounter when purchasing a home in Italy are:
1. Agency Fees
The standard agency fee most commonly applied to the purchase of a home in Italy is 3% of the purchase price plus VAT (currently 22%). The real estate agent must register your purchase contract with a registration fee of 200,00 euro plus a registration tax of 0,5% on the warranty down payments (or deposits) and tax stamps which are minimum 32,00 euro. The registration tax will be deducted from the registration tax on the final deed.
2. Notary Fees
The notary fees are a percentage of the value of the property (minimum and/or maximum amounts may apply).
In addition, the notary is charged with the responsibility of collecting taxes related to the purchase of the property. Those taxes may include but are not limited to registration taxes, transcription taxes and land registration taxes. These taxes all differ and will depend on the type of property being purchased.
It is also possible for the buyer to request that the home be taxed on the cadastre value rather than on the purchase price. This is very common because the cadastral value is almost always lower than the purchase price. The calculation base for the cadastre value is the cadastral income of the property, and the calculation of the cadastral value is different for second homes than for residential purposes.
The chart below shows the various tax calculations for each situation.
As you can see, there are a couple of exceptions to the rule. For example, if the seller is a construction company and you are purchasing either a newly constructed home or a property that has been renovated within the last five years, VAT is applied on the purchase price and the registration tax is reduced. Lastly, if the property transfer is subject to registration tax, rather than VAT, a minimum of 1.000,00 euro registration tax is applied per purchase contract.
As a home buyer in Italy, you will incur additional charges if you need to finance the home, or if your contract needs to be translated because you do not understand Italian, or if you elect to register the purchase agreement in the land registry while waiting for the final deed to be signed (recommended in certain circumstances)
Examples of calculation of extra costs
1. House
with small garden and pool
purchase price 340.000,00 euro with warranty down payment of 50.000,00 euro, cadastral income 750,00 euro; the cadastral value second home is in this case 94.500,00 euro.
• Agency Fee: 12.444,00 euro
• Registration of the purchase agreement: 232,00 + 250,00 = 482,00 euro
• Notary Fee: 3.000,00 euro
• Registration tax: 8.505,00 – 250,00 = 8.255,00 euro
• Transcription tax + land register tax: 100,00 euro
Total extra cost: 24.281,00 euro (7,14% of the purchase price)
If you would purchase the same house for residential purposes, the cadastral value will be only 86.625,00 euro and the registration tax for the final deed 1.482,50 euro (1.732,50 - 250,00). So the total cost would be 17.508,50 euro.
purchase price 340.000,00 euro with warranty down payment of 50.000,00 euro, cadastral income 750,00 euro; the cadastral value second home is in this case 94.500,00 euro.
• Agency Fee: 12.444,00 euro
• Registration of the purchase agreement: 232,00 + 250,00 = 482,00 euro
• Notary Fee: 3.000,00 euro
• Registration tax: 8.505,00 – 250,00 = 8.255,00 euro
• Transcription tax + land register tax: 100,00 euro
Total extra cost: 24.281,00 euro (7,14% of the purchase price)
If you would purchase the same house for residential purposes, the cadastral value will be only 86.625,00 euro and the registration tax for the final deed 1.482,50 euro (1.732,50 - 250,00). So the total cost would be 17.508,50 euro.
2. Small one-bedroom apartment to be renovated, with small garden
purchase price 40.000,00 euro with warranty down payment of 5.000,00 euro, cadastral income 226,19 euro; the cadastral value second home is in this case 28.500,00 euro.
• Agency Fee: 3.660,00 euro
• Registration of the purchase agreement: 232,00 + 25,00 = 257,00 euro
• Notary Fee: 1.350,00 euro
• Registration tax: 2.565,00 – 25,00 = 2.540,00 euro
• Transcription tax + land register tax: 100,00 euro
Total extra cost : 7.907,00 euro (19,77% of the purchase price)
If you would purchase this apartment for residential purposes, the cadastral value will be only 26.125,00 euro and for the registration tax the minimum of 1.000,00 euro per contract would apply (1.000,00 - 25,00 = 975,00 euro). So the total cost would be 6.342,00 euro.
purchase price 40.000,00 euro with warranty down payment of 5.000,00 euro, cadastral income 226,19 euro; the cadastral value second home is in this case 28.500,00 euro.
• Agency Fee: 3.660,00 euro
• Registration of the purchase agreement: 232,00 + 25,00 = 257,00 euro
• Notary Fee: 1.350,00 euro
• Registration tax: 2.565,00 – 25,00 = 2.540,00 euro
• Transcription tax + land register tax: 100,00 euro
Total extra cost : 7.907,00 euro (19,77% of the purchase price)
If you would purchase this apartment for residential purposes, the cadastral value will be only 26.125,00 euro and for the registration tax the minimum of 1.000,00 euro per contract would apply (1.000,00 - 25,00 = 975,00 euro). So the total cost would be 6.342,00 euro.
Besides the extra costs associated with the purchase of a home, you may also be interested to read about the ⇨ YEARLY PROPERTY COSTS IN ITALY ⇦.
