General country information
Italy, a founder member of the EU and the third largest eurozone economy, is a relatively young country which was only unified as a nation in 1861. It has land borders with Austria, France, San Marino, Slovenia, and Switzerland while the Vatican City is a separate state within Rome.
In 2013 the economy is still in recession, although both unemployment and inflation are slightly down on 2012.
Italy’s house price index fell by 4.64% in 2012, according to Eurostat (-6.94% after inflation). This follows almost four years of house price falls, but shows a slowing of the negative trend of the previous 4 years which averaged 8.6% (-14.3% inflation-adjusted) implying that the market could be bottoming out.
Most Italian property is sold as freehold although Italian property law recognises various other property rights and tenures. Usufruct is a right to use the property of another for a fixed period but not to change its nature. Leasehold rights, which may be for a fixed period of 20 years or more or in perpetuity, allow the lessor to use the property as if he or she were the owner, subject to a requirement to improve the land and pay a rent. Building rights entitle the holder to construct a building on land belonging to a third party, or maintain a building standing on land belonging to a third party. Building rights may be for a limited or unlimited period of time, but if for a fixed period, ownership of the building reverts to the owner of the land on their expiry.
Italian property transfer process begins with a formal and nominally binding offer to purchase arranged through an estate agent. If accepted during the set period of the offer, this is followed by a preliminary contract signed by both parties (at which point a deposit will be paid). Finally comes formal completion.
The notary, in front of whom the completion documents must be signed, will verify that the documentation is correct, that the property is free from registered encumbrances and checks the identities of the parties involved. Searches beyond what is included in the registry are unlikely to be exhaustive.
Property purchase costs range from 8.80% – 22.50% of the property value. Registration tax is 3% for main homes and 7% for second homes. Non-resident buyers pay a fixed registration tax of 7%. The real estate agent’s commission is between 3% and 8% plus 20% VAT; typically split between buyer and seller.
Non-residents are taxed on rental income earned in Italy. The rates range from 23% to 43%. Personal allowances for spouse and family are not available to non-residents, but certain deductions may be granted. Capital gains are not taxed if the property was held for more than five years. Otherwise capital gains are considered as ordinary income and taxed at progressive rates.
Both residents and non-resident property owners are subject to Italian inheritance law and tax levied at 4% to 8%, depending on the relationship between the deceased and the beneficiary, with non-taxable threshold amounts.
Italy remains popular for property purchase with its eclectic mix of cities, countryside, lakes, mountains and coastal resorts.
Area: 301,338 sq km
Principal cities: Rome, Venice, Turin, Milan
Median age of population: total: 41.4 years, male: 39.8 years, female: 43 years (2004 est.)
Language: Italian (official)
Flying time from UK: Rome – 2hrs
Currency: 1 Euro = 100 Cents
Time difference from UK: UTC/GMT +2 hour
Rate of inflation: 3.2% (2013 est.)
International dialling code: +39
Average income per person: $36,116
Climate: Predominantly Mediterranean; Alpine in far north; hot, dry in south