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: €200.00;
- Fixed “imposta ipotecaria”: €200.00;
- Fixed cadastral fee: €200.00.
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”: €50.00;
- fixed cadastral fee: €50.00.
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 €1,000.00. 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)||REGISTRATION||9% (€1,000.00 minimum)|
|Company (selling with VAT)||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
About 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 of 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 €900.00 is paid €200,000.00.
With the price-value system, the taxable amount on which the registration tax of 9% is charged is: 900 x 1, 05 x 120 = €113,400.00.
So the registration fee due is €10,206.00 (113.400 x 9%)
If the price-value rule is not applied, the tax would be calculated on the agreed value (€200,000.00) and would be €18,000.00 (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 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, 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.
|KIND OF TRANSFER||TAXABLE VALUE|
|With VAT||PRICE OF THE TRANSFER|
|Without VAT||POSSIBILITY TO REQUEST THE “PRICE-VALUE”
(Taxation on the cadastral value)
Cadastral Value = cadastral income (“rendita catastale”) x 1, 05 x 120
l. Price-value system: conditions and benefits
|Applicable if||Benefits for the buyer|
|- The buyer is a private; - It is a residential building; - The buyer specifically asks to apply the price-value in the purchase deed; - The parties indicate the agreed price in the deed.|| - Limit to the Agenzie delle Entrate’s power of investigation;
- Reduction of 30% on the notarial fees.
4. The self declaration
In the purchase of a real estate, even if subject to VAT, the parties have to include in the notary deed an official self-declaration (“dichiarazione sostitutiva”) to the declarations about the price-value system and the “first home” benefits.
This self-declaration has to contain the following information:
- Analytical description of the payment (allowance, bank transfers etc…);
- The participation of a real state agent and, if so, his complete identity data if he is a natural person. Or, if the real estate agent is not a natural person, company’s name and the identity data of the company’s legal representative or the data belonging to the real estate agent being not the company’s legal representative and taking part in the operation in its place, his VAT registration number, his Italian “codice fiscale”, his registration in the “Repertorio Economico Amministrativo ” (R. E. A) of the “Camera di Commercio”;
- Fees paid for the real estate brokerage service and terms of payment.
The notary has to advise the “Agenzia delle Entrate” about the real estate agents who are not registered in the register called “Affari in Mediazione”.
In case of omitted, incomplete or false description of the data declared in the self-declaration, it is applied an administrative penalty from €500.00 up to €10,000.00 (added to the criminal penalty for false declarations).
Furthermore, the purchase is subject to prior checking on the value, even if the parties required the taxation on the cadastral value for the registration fee.
To avoid the purchase of urban real estates being not in order with the cadastral rules (buildings not registered in the “catasto” or subject to renovations or variations being not registered), it is mandatory to declare the cadastral data and the plans’ reference registered at the “catasto” in the notarial deed, under penalty of nullity. Furthermore, the holder has to declare that the state of the property is in compliance with the cadastral and the plans' data in the notary deed (this declaration can be substituted with an attestation of conformity released by an authorized expert, who can update the cadastral data). Before you sign the deed, the notary must identify the cadastral holders and verify the conformity with the real estate data registered.
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