Are you in the “I want to sell my house in Italy” stage?
Real estate investments in Italy, a country with a large number of tourists and a significant economic impact, are a great way to make money. Entrepreneurs that are familiar with their local real estate market have the advantage of knowing when to buy and sell properties and earn a profit. However, in addition to designing a business strategy, an investor must also ensure that the authorised legal procedures for the sale of assets are properly followed.
The vendor will be expected to submit the following papers prior to the start of negotiations:
Certification of an efficient building’s energy use is called an energy rating certificate (APE – attesto di prestazione energetica). It is required by Italian law that the seller give this to the buyer. Instruments such as the kind of building, methods for providing hot water, cooling and heating systems, and energy production and installation systems are summarised in this instrument.
Vendors are required to provide a certificate of habitability, which effectively states that the structure is appropriate for human habitation, as mandated by Italian Civil Code.
After 1967, the city hall normally provides online access to a certificate of planning authorization for a structure. This certificate proves that the property was built in accordance with Italian legislation and that its registered floor plan matches the actual dimensions of the building.
Documentation of any documents of transfer of property ownership, as well as any rights or duties held by third parties, is contained in a land register certificate.
Putting your Italian home up for sale
Last year’s market trends have shown that there is no formula for determining the exact value of a property, and this is more than true. A drop of 1.3 to 4 percent in 2021/2022 is expected due to the global health and economic crises, and then a rise beginning in 2022. Italian Revenue Agency data suggests a considerable drop in 2020 home sales compared to 2019.’ There are three basic elements that may be used to determine the financial worth of real estate units:
- The expense of building
The cost of construction, or the amount of money invested to complete the property up for sale, is the most important component in determining a property’s price. According to this standard, the product’s worth is equal to the amount of the money invested in it. In other words, it assumes that the market is prepared to pay a price based on the asset’s cost, rather than its utility. The purchase price of the real estate unit, as well as the cost of any renovations made to it, would typically be included in this cost.
- The location
One of the most important factors is unquestionably the location. In areas where demand is great, the cost of property located there will be higher than in other areas. Real estate assets located near the beach, in the mountains, in the heart of a major city, or with an awe-inspiring view are all examples of this. This can have a substantial impact on the price, albeit the impact varies from 40% to 60% depending on the product.
- The comparison of physical properties
Another method for determining a selling price is to look at the prices of similar houses in the same neighbourhood. To get the proper conclusions, it is necessary to do a comprehensive investigation of the market.
What does it mean to work with a team of experts?
Licensed realtors. If you’re a foreign vendor who prefers to work with professionals, you may get started by selecting a real estate agent. You should make sure your chosen real estate broker is registered with the Chamber of Commerce and has a valid licence. Provvigione is the name given to the commission paid to real estate brokers under Italian legislation. The provvigione is a cost shared by the buyer and seller that typically ranges between 2.5% and 3.0% of the purchase price of the property in issue (provided the parties do not negotiate different terms). For selling a home, the real estate agent is in charge of marketing it. A typical terms of engagement contract will be needed of the seller, especially if he or she is not an Italian. Engagement agreements often include the fees, length, and sometimes exclusivity for the agency. It is clear that this agreement should be thoroughly analysed before signing.
a document granting specific authority (Procura Speciale). As the name suggests, a Special Power of Attorney authorises another party (often an attorney) to act on behalf of the principal. Consequently, a lawyer is hired by the client in order to manage all legal matters. As a result, the customer no longer has to be present when the various legal processes are concluded. In Italy or overseas, a Power of Attorney can be executed before a foreign notary or a commissioned attorney (for the UK, Ireland, or Australia), who is responsible for verifying the signature of the principle.
Initiation of business and closing documents
Initial agreement (Compromesso). Prior to the release of the final deed, a preliminary contract is drafted that contains all of the pertinent information on the negotiated full price of the property and the requirements that must be satisfied before the sale can be completed. It is not mandatory for the parties to sign this paper, although in fact, it is frequently done so. For both parties, the initial contact acts as a guarantee of their intents for what is to come. The Italian real estate agent in charge must also register all preliminary contracts as of January 2007; this step is normally handled by him. Deposits of between 10% and 30% of the negotiated sale price are often paid by the buyer as a down payment. Caparra Confirmatoria and Caparra Penitenziale are two kinds of deposits in Italy. Caparra Confirmatoria is the most regularly utilised deposit type. A down payment of this sort entails that if the transaction is not completed owing to the buyer’s fault, the deposit will be forfeited. In the event that the seller is to fault, he or she will have to reimburse the buyer double the amount of the deposit he or she got from the buyer. The defaulting party may be required to pay an additional sum in addition to the deposit if any damages are incurred that are greater than the deposit. However, if the Caparra Penitenziale is selected as the down payment, the party who withdraws from the agreement must provide its counterparty the amount agreed upon as a penitential deposit, and the counterparty will have no further right to exact.
The final act (Rogito). Ownership cannot be transferred under the terms of the preliminary contract. The last act is where this operation takes place. A notary public witnesses the signing of the final deed, which enshrines the conditions of the sale and purchase agreement. Typically, the buyer selects the notary. Buyer and seller must be present in the notary’s office to sign the contract, which requires both parties to be present. The deeds must be written in Italian in order to comply with the legislation. The notary deed might be prepared in two languages, Italian and a language understood by the non-Italian speaking party, if the parties indicate that they do not speak Italian. A Power of Attorney can also be used to appoint an attorney on the client’s behalf, if the client wishes to have a professional manage the process. Notaries in Italy are required to read the contract aloud to ensure that the material is valid and that both parties fully comprehend the set terms. The contract is issued in three copies and signed by both parties and the notary once it has been reviewed and confirmed. Vendors get compensated with the remainder of their sales price. The escrow account of a notary public is often preferred by purchasers when transferring funds. Using this account, the notary can keep monies received from the sale of real estate until all requirements for the transfer of payment to the seller have been met. This is known as a bonded client account.
Italy imposes a capital gains tax.
Property acquired less than five years ago and sold again in Italy will be subject to a capital gains tax, which is calculated by subtracting its selling value from its purchase price, in accordance with current Italian law. When a property is sold at a greater price than the one it was acquired for, the capital gain is realised. The capital gains tax in Italy will rise to 26% on January 1, 2020, according to the Italian Budget Law 2021. (it was 20 percent up to December 31, 2019). Only sales of private property are subject to this tax. In Italy, the Consolidated Income Tax Law (TUIR) allows for the deductibility of the property’s intrinsic costs from the capital gain calculation, which means that any expenses associated with owning the property can be deducted from the capital gain calculation. Taxes paid for the purchase, Notary fees, expenditures incurred by the real estate agent, as well as any expenses paid for modifications and repairs, as long as the same can be proven by recorded payments and relevant tax invoices are included in the expenses to be examined. In other cases, this tax does not required to be paid, such as when property is obtained as a gift or inheritance (if 5 years have passed from the purchase of the property by the contributor). Contact us to buy or sell property in Italy fast.