The classic question that foreign clients ask when they start approaching Lake Como real estate market is: what are the purchase-related costs on top of the price of the property?

These costs can be easily summarized as follows:

Transfer taxes: registry tax, land registry tax, mortgage tax
VAT (IVA)
Registration fees (stamps and registry tax)
Notary fee
Translator fee
Agency fee

Fees are all usually payable on the completion of a sale.

Let’s see in details each cost one by one.

Transfer taxes: the main taxation scheme

Two are the criteria defining the taxation scheme:

The purchase as a resident (moving your fiscal residency to the new home in Italy) OR as a non-resident (buying a second home, so without moving your residency to Italy)
From whom you are buying: a Builder (a developer or a constructor) OR a private individual

Here below you can find an overview of the scheme, with these two crucial aspects just mentioned:

Two useful definitions before working on a practical example:

Residents: these are buyers who decide to live permanently in Italy. They have up to 18 months after the purchase date to register as Italian residents. If you declare that you will become resident within 18 months of the purchase, but don’t do so, you will be liable to pay the difference in the 2% and 9% tax, plus a penalty of 20% of this amount. The tax office has 5 years in which to ask for this money, from the date of the purchase. After 5 years you can move your residency elsewhere without penalties.
Cadastral Value: this is a recorded taxable value set by the Land Registry Office. It depends on factors like location, year of construction, type of property, size (dimension of the rooms, square meters and volume). This means that the Cadastral Value will never be the same for properties on the market at the same selling price. Consider that if you buy a property and then carry out a renovation project, the value will change once the project has been completed.

In a nutshell:

if you buy from a private owner, the taxation will be based NOT ON THE PRICE, but on the Cadastral value. This is quite an advantage, as the Cadastral value is generally low. Buying from a private owner, your taxation will be just the 2% on Cadastral Value if you buy as a resident (a tax incentive, unless the property is classified as a luxury property and in this case the tax is 9%), and 9% if you buy as a non-resident (second home).

Let’s work on a practical example: you fall in love with a property - owned by a private - listed at € 270.000, you put an offer of € 250.000 and this is accepted by the seller. Cool!

The Cadastral value of the house is € 586,77.

Let’s see the taxes calculation: you will notice that the cadastral value is multiplied by a fiscal standard (set by the Government), that is 115,5 for primary homes and 126 for second homes. Bear in mind that the minimum value for a Registry Tax is € 1.000, even when the result of the calculation is equal to a lower value.

Now, take your calculator:

If you buy as primary home

Registry Tax: (586,77 x 115,5) x 2% = € 1.355,43
Mortgage Tax + Land Registry Tax (these fees are fixed, € 50 each): € 100
Tot. € 1.455,43

If you buy as second home

Registry Tax: (586,77 x 126) x 9% = € 6.653,97
Mortgage Tax + Land Registry Tax (these fees are fixed, € 50 each): € 100
Tot. € 6.753,97

Now let’s see the second example: you decide to put an offer of € 350.000 on a stunning apartment in a brand new complex under development (meaning that your seller is a company/builder). Your offer is accepted: let’s see what you’ll pay on top.

In this case you’re going to pay the VAT (IVA) on the purchase price, so:

If you buy as primary home

4% of € 350.000 = € 14.000
Registry Tax + Mortgage Tax + Land Registry (these fees are fixed, € 200 each): € 600
Tot. € 14.600

If you buy as holiday home

10% of € 350.000 = € 35.000
Registry Tax + Mortgage Tax + Land Registry (these fees are fixed, € 200 each): € 600
Tot. € 35.600

Finally, consider that if you ask for a mortgage, you have to pay the Imposta Sostitutiva, a tax that was introduced by the Dpr no 601 in 1973 for loans over 18 months in duration.

The tax will be the 0,25% (on the total amount released) if you buy as primary home, and 2% if it’s a second home for you.

Let’s assume you ask a mortgage for the above-mentioned brand new apartment for € 350.000.

In Italy international clients can get up to the 60% as loan, so let’s suggest the amount you get is right the 60%, i.e. € 210.000.

In case of primary home: 0,25% of € 210.000 = € 525
In case of second home: 2% of € 210.000 = € 4.200

Registration fees

In Italy, the registration cost of the preliminary agreement contract is charged to the buyer.

This is what you have to expect to pay:

€ 200 as Registry Tax
0,5% tax of the deposit paid
Stamps of € 16 every 100 lines of the contract (to be registered in 2 copies)
Stamps of € 2 or € 16 (it depends) on every attachment of the contract

Notary Fee

The Notary is the highest public figure in Italy.

Notary fee ranges depending on the transaction and the purchasing price. For luxury properties, the fee can be sensibly higher.

The amount includes all cadastral, legal, historic checks, including mortgage checks.

Consider that if you ask for a mortgage, there’s an extra Notary fee to be paid.

Translator fee

Translator fee is mandatory if you are not an Italian native speaker.

Its fee is around € 800 VAT included (approximately).

Agency fee

In Italy the agency fees are paid to the real estate agent by both the seller and the buyer.

It’s a percentage on final price.

Example:

Final price: € 450.000
Agency fee, 4% on price: 18.000 + VAT (22%) = tot. € 21.960

Other additional fees

You may face a range of other fees, especially at the buying stage: technical reports, surveys, additional registration fees, legal fees and many others more.

On top of these there fees, there are the so called maintenance annual taxes, that we’ve already described in our last article, i.e. the Property ownership tax (IMU), Services tax (TASI) and Waste collection tax (TARI).

Regarding utilities, you must usually pay for new contracts for electricity, gas and water connections and - if the property is new - the installation of meters.

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