Overview
Death and Taxes. As we have heard in numerous films, these are two certain things in life. When are taxes due? These are an essential part whenever an asset transfer occurs. It is, however, the right of everyone to seek a reduction of the taxation to a minimum, in compliance with the law.
Govoni offers legal advice in the field of taxation and administrative sanctions and penalties, not only in real estate transactions but also in the case of flat-rate tax, utility bills, administrative sanctions, fines, taxation of donations and inheritances. Starting from the pre-Court agreements until the litigation phase.
We act at all levels, from litigation to planning and consulting, from structuring agreements and financial transactions to requesting tax refunds and fiscal benefits; from filing for binding rulings to providing tax opinions and services with respect to all taxes in the Italian legal system. Suggesting the most fitting legal structure case by case for any transaction.
Govoni tax lawyers advise clients on tax planning opportunities to minimize their state and local tax liabilities, including tax planning for income taxes, sales, and use taxes and property ownership taxes.
Tax in the Real Estate Transactions
Govoni offers tax advice for the developer, investor, landlord, private and corporate client with a real estate asset. The costs for the purchase of a property in Italy are between 10-20% of the purchase price.
• Commission for the Real Estate Agency, “Agente Immobiliare“
In the event that you buy a house through a real estate agency, the commission due to the agency is around 3% of the purchase price + 22% VAT.
Once the communication to the proposer of the acceptance of the proposal by the owner of the asset has taken place, the deal is to be considered concluded for the agency pursuant to art. 1755 Cod. Civ. with the relative right to commission.
Generally, 3% + VAT is recognized by both the seller and the buyer.
• Indirect taxes: Registration tax – Mortgage tax – Cadastral tax
The “declared cadastral value” c.d. “Price value” in the deed represents the tax base on which these three taxes are applied, usually lower than the market value of the property. But the rule of “cadastral value” is not applicable to all trades; in fact, for example, if the buyer purchases not as a “private”, but as a “company”, the tax base will be given by the commercial price of the property.
The amount of these three fees to be paid varies depending on the type of property and the “characteristics” of the buyer and seller:
A) Trading subject to proportional registration tax (ie those in which the selling party is: a private person; or a company that has neither built nor renovated the building; or a company that has built or renovated the building from over 5 years and in place does not exercise the VAT option):
1. Registration tax, “Imposta di Registro“
– first home: 2%, “prima casa” (on the cadastral value);
– second home: 9% (on the cadastral value if you buy a private one or to calculate on the declared price if a company is to buy or a natural person who buys as a sole proprietor or a professional);
>> Registration tax can never be less than € 1,000.
2. Fixed mortgage tax: 50 euros;
3. Land registry tax: 50 euros.
B) Sales subject to VAT (ie those in which the selling party is: the company that has built or renovated the building for less than 5 years; or the company that has built or renovated the building for more than 5 years and in place exercises the VAT option):
1. VAT, Italian “Partita Iva” (P.IVA)
– first home: 4% (always to be calculated on the declared price in progress);
– second home: 10% (to be always calculated on the declared price in progress);
– luxury building: 22% (to be calculated on the declared price in progress);
2. Fixed registration tax: 200 euros;
3. Fixed mortgage tax: 200 euros;
4. Fixed land registry tax: 200 euros;
5. Fixed stamp duty: 230 euros;
6. Fixed mortgage fee: 35 euros;
7. Fixed transfer fee: 55 euros.
• Notary fees
Usually about 1 – 2% of the property price.
• Other expenses
For example legal fees; surveyor or architect for property inspection; moving company.
Ownership and Property Management Costs
• IUC (single municipal tax)
It is a tax that includes 3 taxes: IMU (you do not pay on your first home unless it is a luxury home), TASI (tax on municipal services such as road maintenance, public lighting, etc.), and TARI ( waste, garbage). Who owns property in Italy, whether resident or non-resident, is subject to IUC payment, the amount of which is divided into two / three tranches.
The IMU is applied to the cadastral value of the building plus 5%. The amount must be further multiplied by the coefficient corresponding to the cadastral category. The basic rate for second homes is 0.76%, but the municipality may decide to increase or decrease it by 0.3%.
The same argument is also valid for TASI. But it must also be considered that the sum of TASI and TARI cannot exceed 10.6%.
The TARI is instead calculated on the basis of square meters.
• Utilities
Electricity, water, heating, telephone, gas usually provide for the payment of a fixed plus a part to consumption and are paid every two months.
• Condominium fees
If you buy a property that is part of a condominium, you will have to pay a condominium fee that will vary depending on the size and type of condominium area.