This chapter is devoted to every fiscal aspect related to the purchase of a home in Italy, the description of every possible benefit and every outstanding fee. Non-Italian clients can consult this simple guide to clarify every possible doubt about an Italian mortgage request.
PURCHASE OF A HOME: FEES
Fees to pay when you buy a home are determined by different elements. They change on type of seller (natural person or company) and presence of “prima casa” (first home) benefits.
1. The seller is a building company
Transfer of buildings for residential use from building companies generally is subject to VAT.
The VAT tax is applied on:
- Disposals of real estate by building companies or companies renovating buildings within 5 years from the completion of the works or the renovation, or after 5 years if the seller decides to subject the operation to VAT (the decision must be written in the purchase deed or in the purchase preliminary contract).
- Disposals of residential real estates for social housing, for which the seller decides to subject the operation to VAT (the decision must be written in the purchase deed or in the preliminary contract).
In these cases the buyer has to pay:
- VAT 10% for disposals of living home (in process of building too) classified or classifiable in cadastral categories others than A/1, A/8 and A/9 in absence of the requisites for the “Prima Casa” benefits, or VAT 22% for disposals of real estates classified or classifiable in the categories A/1, A/8, A/9
- Fixed registration fee: 200 Euros
- Fixed “imposta ipotecaria”: 200 euros
- Fixed cadastral fee: 200 Euros
2. The seller is a natural person
If the seller is a natural person, the buyer has to pay:
- registration fee proportionally of 9%
- fixed “imposta ipotecaria”: 50 Euros
- fixed cadastral fee: 50 Euros
In every case (purchase from a company or natural person), the notary transfers the sums to pay the fees (registration, “ipotecaria” and cadastral) to the”Agenzia delle Entrate” at the moment of the registration of the deed.
Whether the seller is a VAT exempt company or a natural person, the proportional registration fee due cannot be lower than 1.000 Euros. Anyway, the real amount to pay could be lower than that amount, as effect of deduction of the proportional fee deposited for the registration of the preliminary contract. Furthermore, acts which are taxable with the proportional registration fee, and every other necessary act and formality to fulfil the compliance for the “catasto” (cadastre) and the real estate registers, are exempt from stamp fee, special cadastral fee and “imposta ipotecaria”.
Fees on the purchase (no first home benefits)
|Natural Person or Company
(selling exempt from VAT)
||9% (1.000 Euros minimum)
(selling with VAT)
||10% (22% for real estates A/1, A/8 and A/9)
If the amount specified in the purchase deed (and related invoice) is different from the real amount, the buyer, even if private (not subject to VAT) must pay the seller the sum corresponding to the VAT applied on the different amount resulting from the amount specified in the purchase deed and the sum actually paid, as well as related penalties.
As result, the private buyer can regulate the violation paying the higher fee within 60 days from the signature of the purchase deed. He has, also, to submit the proof of payment and regularised invoices to “Agenzia delle Entrate”.
3. The Price-Value system
With reference to the sale of residential properties (and related annexes), in case of particular conditions and subjective and objective requisites, the law provides for a particular system to calculate the fees (registration, “ipotecaria” and cadastral): the Price-Value system. Applying these criteria (introduced in 2006) the buyer can obtain several benefits. Its aims are to assure transparency in the real estate purchase process and equity in the related fiscal withdrawal.
The Price-Value actually permits to excise the property transfer on its cadastral value, independently from the amount agreed and specified in the selling contract.
Furthermore, this system implies a relevant protection for the buyer, because it restricts the power of value investigation by the “Agenzia delle Entrate”.
When can it be applied?
The Price-Value system is applied on the purchases subject of proportional registration taxation (purchase subject of VAT taxation are excluded), when the buyer is a natural person (not acting for commercial, artistic or professional purpose).
So this system is applicable in every purchase process, if both the parties involved are “privates”, if the buyer is a natural person and the seller is not subject to VAT (associations, foundations et simila) and even if the the buyer is a natural person and the seller is a company or a society under VAT exemption.
On which real estate can the system be applied?
The Price-Value system can generally be applied on purchase of residential real estates and related annexes (see paragraph). Furthermore, it can be applied on purchase of houses (and related annexes) even in absence of “First Home” benefits.
The buyer request
The specific request to benefit from the Price-Value system must be submitted to the notary. It has to be declared in the purchase contract and can not be declared in any other supplementary act.
Focus on the price
The parties has to declare the agreed sum in the purchase deed in every case.
If the purchase price is hidden, even partially, the fees (registration, “ipotecaria” and cadastral) will be calculated on the paid price and not on the cadastral value. Furthermore, a penalty from 50% up to 100% will be applied on the resulting difference between the tax to pay and the already applied tax.
If the cadastral value specified in the purchase deed is lower than the value resulting from the correct application of the legal coefficient, the price-value system is not applied. In this case, “Agenzia delle Entrate” does not check the value on the real estate market, but requires the higher fee resulting from the correct application of the cadastral value.
How to calculate the cadastral value
The cadastral value of a residential building (other from “First Home”) is determined multiplying the cadastral income (“rendita catastale”) revalued of 5% by the coefficient 120.
CADASTRAL VALUE= cadastral income (“rendita catastale”) x 1,05 x 120
A house having a cadastral income (“rendita catastale”) of 900 Euros is paid 200.000 euro.
With the price-value system, the taxable amount on which the registration tax of 9% is charged is: 900 x 1, 05 x 120 = 113,400 euros.
So the registration fee due is 10.206 euros (113.400 x 9%)
If the price-value rule is not applied, the tax would be calculated on the agreed value (200.000 euros) and would be 18.000 euros (200.000 x 9%).
The price-value system can be applied if:
- the building to buy is for residential use (houses only, with or without first home benefits)
- the buyer is a private not acting for commercial, artistic or professional purpose (e. g in case of purchase of a professional office the system is not allowed)
- the buyer requests the notary to apply the price-value system in the purchase deed
- the parties precise in the final deed the real agreed amount for the purchase
Price-Value system on the annexes
The price-value system is valuable in case of purchase of residential real estate annexes (with any quantitative limit and even if made with a different act), only if:
- the annexe owns its cadastral income (“rendita catastale”)
- it is possible to show clearly that the annexe is an accessory add compared with the main dwelling (which has to be a residential real estate)
- the annexe’s constraint results in the purchase deed
The advantages for the buyer
The buyer choosing to apply the price-value system, in accordance with every condition required by the law, obtains important benefits.
First of all, the power of inspection of the “Agenzia delle Entrate” is limited, for both the registration fee and for the “Irpef” (personal income tax), furthermore:
- “Agenzie delle Entrate” can not check the value to the purpose of the registration fee, except if the agreed price is completely or partially hidden
- The rules of the inspection to the purpose of the “Irpef” are not applied in case of simple presumptions.
Secondly, the law accords a reduction of 30% on the notarial fees.