Purchase and ongoing costs Italy

Purchase and ongoing costs

The “buyer’s fees” (also known as “notary fees”) generally include the total costs due in taxes and notary fees. These costs are twofold: one part the costs related to the purchase of the property and the second part related to the notarization of the mortgage. The transfer tax for a second home is 9% of the cadastral value of house. Total notary fees are usually about 1% of the cadastral value with a maximum of €3,500.

Transfer tax is payable when buying existing construction. For vacation homes the transfer tax is 9% for main residences it is 3%. This percentage is applied to the cadastral value, which is usually much lower than the purchase price. On top of that, notary fees are due and charges for Geometra‘s services. VAT(IVA) is payable on their fees.

It is highly advisable to hire legal counsel to assist you during the buying process. Good legal counsel more than recoups their fees. We can put you in touch with a good Dutch-speaking legal advisor.

In Italy, brokerage commissions of 3% of the sale are common with a minimum of €6,000.

In addition to the cost of the buyer, there are often other costs involved such as costs for an architectural inspection, the appraisal, translations, legal, tax and financial advice.

Once you own the house, you will owe annual local taxes(imposta municipal unica, IMU). The basis for taxes is the cadastral value+5%. On this – depending on a number of factors and location of the property – an annual tax is levied from 0.40% to 0.76%.

The gain on sale tax is a tax meant to discourage property speculation and is due when you sell the house at a profit. Will the Italian home be sold at a profit within 5 years? Then 20% income tax is due on the sale profit.

On equity put into an Italian house, it is agreed in the tax treaty between the Netherlands and Italy that Italy may in principle levy taxes on that. Specifically, the house does have to be declared in the Netherlands in the tax return, but a “double taxation avoidance” is applied that makes the net value of the house not included in the box 3 calculation. Italy has no wealth tax like the Dutch box 3 levy. Rental income is taxed progressively within Italian income tax (23% – 43%), a lump-sum deduction is deductible as an expense (up to a maximum of 30% of rental income).

You can find detailed information on Italian tax rules in English on the website of the Italian tax authorities: https://www.agenziaentrate.gov.it/portale/web/english/nse/individuals