Buying property in Italy isn’t quite a straightforward process. There are quite a few useful things you need to know to ensure the process goes as smoothly as possible, and insights from a local property expert can prove invaluable.
This guide is written by Daniel Shillito, co-founder of D&G Property Advice, a consultancy that helps foreign buyers successfully purchase their dream property in Italy.
Daniel knows the process inside out and understands how to avoid possible pitfalls and prevent disappointment. We are sure you will find his insights very helpful.
Owning a property in Italy and residency
Italy currently provides no residency or citizenship rights based on property purchase.
Buying property won’t provide approval for any visa to stay in Italy. However, it will provide you with an Italian address, which is a necessary step in applying for residency.
If you are a citizen of a country that has a bilateral visa waiver agreement with the EU, you can come and stay in Italy for 90 days without any visa. This includes citizens of Canada, the USA, the UK, Australia, New Zealand, and others. You can view the complete list here.
If your country of citizenship is not on the list, you have to apply for a Schengen visa in your country of residence to be able to visit Italy. The Schengen visa will give you the same 90 days of stay in the country. It’s more than enough for property viewings and location research.
To stay longer, non-EU citizens need to apply for a non-tourist visa, which needs to be converted into residency once they are in the country.
You will find more information about your residency options in Italy in our Living In Italy guide, section ‘Residency in Italy for non-EU citizens.’
Italian consulates issue non-tourist visas in your home country. You can get a visa for work, study, and for retirement or non-working purposes.
Once you enter Italy with a non-tourist visa, you are required to apply immediately for a Permesso di Soggiorno (permit to stay) based upon the visa in your possession.
European citizens can stay indefinitely. However, they do need to register at the local Comune (council office) and meet minimum residency administration requirements.
If gaining full EU residence is an important goal, see our new EU Golden Visa Guide to see what options could be right for you.
Buying a house in Italy as a foreigner
Most foreign citizens can buy a house in Italy, although there are some restrictions for citizens of certain countries who are non-residents in Italy.
All EU citizens are free to buy property in Italy. The same goes for citizens of the countries that have bilateral agreements with Italy concerning property purchases.
If there’s no agreement, Italy uses the reciprocity rule to allow foreign purchases.
The reciprocity rule states that if an Italian can buy in your country according to its own rules about foreign property ownership, then you can buy in Italy.
US, UK, Chinese citizens, among others, have no restrictions on buying a house in Italy.
If you are a Swiss national not resident in Italy, there will be certain restrictions for you in the same way as Switzerland restricts Italian citizens when they purchase property in Switzerland. The same goes for Canadian citizens.
For Brazilian citizens, not residents in Italy, there are restrictions on buying rural properties.
There are no restrictions if you become a legal resident in Italy before buying a property.
Costs of buying property in Italy
Property purchase in Italy is quite costly.
A rule of thumb to consider is that around 15% of the purchase price is what you can expect to pay in purchase taxes, Notaio fees, selling agent fees, survey or site inspection costs, legal fees, and government taxes.
Ideally, your adviser on the ground in Italy should be able to provide you with a summary of estimated costs and when you can expect to be required to pay them.
The long buying process
Compared to many countries, especially Western developed nations, the buying process is not particularly straightforward in Italy. To many, it will seem a long, unwieldy, and complicated process.
The Bank of Italy notes that statistically, the average timeframe to complete a residential purchase in Italy is nine months.
The buyer resources you need to assemble are not necessarily easy to identify or source in Italy, and you may be dissuaded from using other professionals by the seller or their agents.
This is why having a trusted property consultant to help you through the buying process can be invaluable.
Buying property in Italy: pitfalls and how to avoid them
Being prepared will reap many rewards and protect you from a poor outcome or a delayed purchase timeframe.
1. Make sure your estate agent is properly licensed and registered
Recently, the head of the Italian property portal, Cercacasa, highlighted that 40% of real estate transactions in Italy occur without a certified agent and through private owners or unauthorized individuals.
If you follow this path, it exposes you as a buyer to significant risks.
Unauthorized agents do not have any legal or insurance protections in place. They very often use duplicated or fake property listings to attract buyers and sometimes even charge fees to introduce buyers to owners.
Also, only registered property agents can guarantee the registration of a property purchase contract, which takes us to the next important point.
2. Make sure your purchase contract is registered with the local tax office
When you, as a buyer, sign a formal purchase contract and transfer the deposit, your agent should register the contract at the local tax office.
It is advisable registering the PPC with the Land Registry (Conservatoria registry). This establishes a significant guarantee in the buyer’s favor against possible Seller’s creditors.
3. Sometimes, it pays to ask for a second opinion
An overwhelming number of agents in Italy represent the seller, not the buyer. As a buyer, you need to think carefully (for yourself) about their advice before simply taking it at face value.
4. Different culture – different thinking
When it comes to selling agents and owners, it pays to adapt your thinking to learn about the local culture!
Local agents are used to dealing predominantly with local Italians who have grown up knowing them and knowing what to expect.
Here, again, a property consultant with local knowledge can be of great help in navigating you through the cultural intricacies of the buying process.
5. Have an independent professional inspect the property before you sign the contract
Another potential trap for new buyers in Italy is managing the technical inspection process of the property and considering unregulated property renovations.
The Italian market allows sellers to make their property available for sale and promise that any property irregularities will be fixed or ‘made right’ by the date of the proposed closing, or Rogito.
Now, this approach can appear safe or even an attractive proposition. In reality, however, it’s not so.
This approach can easily mask the nature and extent of required physical changes or paperwork changes and the costs involved, for example, retrospective planning permissions, local council approvals for recent or current works, or potential demolition.
Discovering these issues too late will impact the sale timing and costs required to ensure the property is in order for a legal title transfer.
Ensuring you appoint independent professionals to inspect the property and advise on both the technical and legal aspects will help you avoid these pitfalls. It can either steer you away from the property or help you identify any immediate property fixes required to be done by the seller.
Buying property in Italy for €1
The 1 euro home schemes in Italy are attracting a lot of interest.
These schemes are in operation in 30-40 small Italian towns to help resolve problems of dwindling populations and local economies.
This situation has arisen thanks to the departure of successive generations of Italians, leaving many homes abandoned and, over time, in disrepair.
The scheme conditions actually vary across these towns as there is no coordination or regulation that requires town mayors to operate their scheme like other towns. Hence, there is wide variation in how homes are made available and how the schemes are administered.
Perhaps the greatest area in which this scheme has potential is where foreign investment can not only rescue dilapidated homes through renovation and redevelopment but also support increased participation in the many small, local communities that form the social fabric of these towns.
It is these local communities and their traditional ways of life that make the small villages what they are. New investment is also critical to building and maintaining social programs and charitable enterprises.
More than ever before, ‘new locals’ in many small medieval towns and borghi are the new creators, injecting fresh energy into old homes and spaces and creating new opportunities for themselves and others.
This movement might just be attracting a new type of resident – and not based on the asking price of the available homes.
What you’re going to find in the €1 towns are homes that are not currently habitable and are expected to be seriously renovated. Many towns require commitments by new buyers to renovate within a certain period of time.
The essential element when considering a purchase of a home within a 1€ scheme is this: where is your construction crew?
Be prepared to take time, slow down from the pace of living from where you’re coming from, and try not to treat your new project like a renovation makeover requiring a record turnaround time.
Your budget should reflect the costs that it will take to complete a renovation project, including the researched costs of all local professionals and the costs of managing the project.
Buying to renovate and renovations incentives in Italy
Are you planning to buy a dilapidated house or a property needing TLC and renovate it to create your perfect home? Right now, it’s a perfect time to do so because you can get significant tax deductions for renovations.
The purpose of these renovation tax-credit schemes is to encourage investment into upgrading and improving the energy efficiency and sustainability of Italian property.
At least five schemes available could help you save money on renovating property in Italy.
The schemes include the Refurbishment Bonus, the Eco-Bonus, the Facade Bonus, the Seismic Bonus, and the Eco Superbonus.
Tax deductions offered by the schemes range from 50% deductions for the refurbishment bonus right on to 110% for the Eco Superbonus.
The Eco Superbonus has gained a lot of attention and led to more than 8 billion euros in claims for qualifying renovations up until September 2021.
It has recently been extended beyond December 2021. Government ministers are discussing how the claiming eligibility rules might change for renovations in 2022 and 2023.
Claims can be made whether you live in Italy or not since a mechanism exists to exchange tax credits for reduced renovation costs with a financier or qualified building company in Italy.
Considering the current demand stimulated by these incentives, renovations must be carefully planned and managed by trusted professionals in Italy.
Understanding the legal elements when buying property in Italy
Every purchase transaction in Italy requires a notary public (Notaio) to be involved. This figure represents the Italian State and is a neutral party in the transaction.
A notary also collects the government’s purchase taxes on the settlement or closing date.
Sometimes, a notary is involved or appointed only late in the purchase process, a few weeks before the Rogito (closing), when all of the parties believe the property and all its supporting documents are in order and the property is ready to be legally transferred to the buyer.
In other cases, you can engage a notary early in the transaction, even at the time of the first offer, if you want to check the offer document and introduce any special conditions.
Either way, one thing is for sure: you, as a buyer, have the legal right to select and appoint a notary according to your own needs and preferences. This may not seem at first to be an important point. However, it can be more important than you may realize.
When you choose who will be your notary, look at the following:
- Make sure the cost of the services is reasonable. You can get quotes from several notaries to choose the most suitable.
- If you don’t speak Italian, make sure your notary speaks your language. This will make it easier for you to understand and discuss purchase process issues.
Hiring a solicitor in Italy
It is not a legal requirement to hire a solicitor when buying a property in Italy. Most Italians conduct a house purchase using only an estate agent and a notary.
However, there are many cases when hiring a lawyer can be very useful, especially for more significant transactions and when the purchase is particularly complex with several different titles or complex selling arrangements.
It’s also useful when there are particular considerations regarding estate planning.
A bilingual solicitor will act solely in your interest as opposed to the notaio who represents the Italian State.
Getting a mortgage in Italy to buy property
One question we’re often asked is, can I obtain a mortgage in Italy from an Italian bank?
If you are looking for a mortgage, it’s best to start discussions with a bank or broker before you enter into a property sale contract (Proposta or Preliminare). This way, you can obtain some confidence about likely loan approval for your particular circumstances.
A bank or mortgage broker can assess your overall situation before you start negotiating.
Italian banks don’t usually provide pre-approved finance. However, you don’t want to become committed to a property purchase and then find out the bank will not support you. This is why you should engage with your bank or mortgage adviser, or broker early in your property search.
Three main factors will drive your eligibility for a mortgage in Italy:
- The current bank lending policy & European directives
- The bank’s loan serviceability requirements
- The quality and type of property you have chosen and its readiness to be legally transferred to you
Bank serviceability (or affordability) measures are quite conservative. Affordability calculations take into account all your existing mortgages worldwide, and they won’t necessarily treat investment property lending anything as they do in other countries.
It pays, therefore, to have your specific situation reviewed before buying with a mortgage.
Make sure that the need for a mortgage is clearly communicated in any offer letters or contracts. This way, there will be no misunderstandings, and the sellers of the property will be prepared to work with you as you arrange bank finance for the final closing or settlement day.
Your mortgage arrangement is likely to include a bank’s arrangement fee (typically 1% of the loan amount), brokerage fees, the cost of a technical survey of the property, and mortgage registration tax.
You should also be aware that the notaio’s fees will be higher when a mortgage is involved, as they are required to draw up the mortgage deed on the bank’s behalf in Italy.
Buying property in Italy as an investment
They say that good investing is a lot about buying at the right price.
If you can buy anything (including real estate) when prices are depressed or after a major shock has reduced value, then you will be in a much better position to benefit when prices rise again.
Right now, Italy is showing relatively lower prices when compared to similar properties in other European countries and at a time when global housing markets are booming.
As more capital finds its way to Italy, more buyers compete for similar properties, and this could naturally create upward pressure on property prices based on simple economic principles of supply and demand.
Tax-related factors that contribute to the value of investing in Italy include:
- A favorable capital gains tax regime for personal buyers. There is no capital gains tax once a property is held for at least five years.
- Relatively low inheritance taxes compared to many other countries. Property passed down from Italian residents (for example, expats retiring to enjoy la dolce vita) is not subject to the same inheritance tax rates as you will find, for example, in France or in the UK.
The fact Italy currently provides tax incentives to renovate property, which are available to non-Italian residents, adds to the attraction of investing in Italian property.
All property investors know that value can be added through smart renovations – and in the case of Italy’s tax bonus schemes, potentially significant renovation costs are currently being partly funded by the government.
Italy has many small villages in rural areas, and where there is no strong local demand, prices are unlikely to rise or fall dramatically. Hence, investors need to be aware of the particular location they want to invest in.
Historically, buyers coming to Italy have often arrived with multiple aims, so good investment returns have not always been the main objective.
Investment return is often considered secondary or at least together with other desires, like reconnecting to Italian ancestry, moving to Italy as a part of retirement plans, or simply a wish to spend regular time enjoying Italy’s envious lifestyle.
Whether you are buying a permanent home, holiday home, or an investment property in Italy, this guide will improve your buying journey, enabling you to be much better prepared and, therefore, much more likely to succeed.
D&G Property Advice is not a real estate agent or a law firm, and the above information does not represent legal or financial advice. You should seek out advice that is particular to your own specific circumstances, and in this way, be assured that the advice you follow is relevant and appropriate for you.
You might find useful:
- Living In Italy – The Expats’ Essential Guide
- The Best Places To Live In Italy For Expats
- The Pros And Cons Of Buying Property In Sicily
- Didn’t find what you were looking for or need further advice? Comment below with your question, and we will do our best to help
Helpful external links:
- Building renovations and tax deductions – www.agenziaentrate.gov.it
11 comments
Ros
Would be very grateful for any advice or comments on our situation.
We have signed a compromesso and it has been registered with the tax authorities, according to our agent. We paid the deposit to the vendor and the commission to the agent, as was agreed. However, it seems that no further progress is being made. Architects we know checked on things with the commune and everything seems to be in order. Yet I am still waiting for confirmation that both parties have received our payment ( I know it is with both banks and has been for over a week) and it seems to me that these are delaying tactics for whatever reason. There have been weak excuses as to why the vendor cannot confirm payment. We will be paying the balance into an escrow account – for sure. Am I correct in assuming that directly after payment of deposit the matter should be passed to a notary. I see your statement above confirms that the choice of a notary is ours.
Matteo Spadafora
Hello Ros, that is correct, as the buyer you have the choice of notary. You can show proof of payment to the notary public. Your agent should liaise with the notary and provide him with all of the documentation pertaining to the property and the respective parties, per his fiduciary responsibilities. I work as a real estate agent in Italy, let me know if you need a suggestion for a good notary.
Ros
Thank you for your reply, Matteo. My concern is that the transaction is not being passed to the notary. Was told that the agent would contact the notary after a receipt has been issued for payments received. Yet this doesn’t seem to have happened yet. Almost two weeks later.
The agent told us that they always use a particular notary, who is nearby, because he speaks English. Which seems a reasonable point. However, I wonder how neutral the notary is. And above all, when he will be contacted. However, you have confirmed that choice of notary is ours. So we need to do some homework. But could we approach a notary independently with proof of transactions? And if this is ok, would it be such a good idea as we might antagonise the other parties?
Matteo Spadafora
You could kindly say a friend recommended an English speaking notary in Milan and you’re evaluating the quote for his services, which you will compare with the estimate your agent’s notary gives. This way you may encourage things to speed along. Two weeks should be enough time to confirm receipt of payment. It never hurts to do your own research. In my opinion, a large part of the agent’s job is to represent the parties impartially and to address any concerns straightaway so you remain confident in your purchase. Feel free to send me an email to info@investinitaly.eu for the contact info.
Larissa
Please update your site. As of January 2023 Canadians can no longer freely purchase in Italy due to a new ban in Canada on foreign property purchase.
Melissa
@Larissa, actually that’s incorrect. The law passed in January 2023 here in Canada is banning foreigners from buying property IN Canada if they are not living here in Order to help with the housing shortage. Canadians are still able to buy outside Canada dependent on that country’s regulations.
Ola Williamson
Thank you, Larissa, updated.
Dean Hauser
Daniel, thank you so much for this information. My wife and I would like to purchase a small apartment in Sicily and have a pretty good list after much research. Your step by step advice made us feel it is possible. My question to you: many of properties we are interested in are under $75,000. Banks don’t seem to offer a mortgage under $50,000. Most sites expect %30 down. I assume that means we need to finance at least $50,000 and come up with at least $30,000 for any offer to be successful? Thank you!
Matteo Spadafora
That’s correct, however, keep in mind that these terms apply only to people fiscally residing in Italy. If you live, and/or earn your income abroad, or just moved to Italy but haven’t filed your first tax return yet, Italian banks will consider you a non-resident and therefore the terms will be a bit different i.e.: lower LTV (typically 60%), minimum property appraised value 100-120K, maximum loan duration 25 years.
Daniel Shillito
Hello Mohsin, Thank you for your comment. For specific enquiries about how mortgages and property could work for you, please fill in our form on the website, it’s designed for specific enquiries, here: https://dandgpropertyadvice.com/contact-us/
Mohsin Sadiq
Hi Mr Daniel your post: “Buying Property In Italy – The Foreign Buyers’ Guide” was extremely helpful. Actually my Boss is interested in buying a property like a country house in rural Italy and she has asked me, to find out if we can have a property on mortgage, she is a Qatari citizen residing in Qatar. What assistance can you provide me Sir?