Understanding the Costs of Buying and Selling a Property in Italy
When it comes to the financial aspects of acquiring or selling a property in Italy, it’s essential to break down the costs associated with both the purchase and mortgage agreement.
Purchase Costs
From Private Sellers:
- Notary Fee: Variable, typically ranging from €1,600 to €2,000.
- Mortgage Tax: €50
- Cadastral Tax: €50
- Registration Tax: Variable, either 2% or 9%, depending on whether it’s the first property. It cannot go below €1,000.
From Builders:
- Registration Tax: €200
- Cadastral Tax: €200
- Mortgage Tax: €200
- VAT: 4% for the first home, 10% for the second home, and 22% for luxury homes.
- Notary Fee: Variable, typically ranging from €1,600 to €2,000.
Mortgage-Related Fees
Substitute Tax:
The substitute tax replaces various other taxes when securing a mortgage for property acquisition. It is calculated at 0.25% for the purchase, renovation, or construction of the first home or liquidity loans. For second homes, the rate increases to 2%. This tax is paid only at the time of mortgage agreement, often withheld by the bank and then forwarded to the Revenue Office on behalf of the client.
Notarial Expenses
The mortgage must be formalized through a notarial deed, a requirement under Article 2699 of the Civil Code. This contract needs to be signed in the presence of a notary, who plays a crucial role in registering the mortgage on the property and giving the mortgage contract the status of an “executable title.” The notary’s fees include taxes paid to the Revenue Agency, fees for the national notary archive, an additional 22% for VAT, and reimbursement amounts. Notary expenses are borne by the client, except in the case of mortgage transfer, where the bank covers the costs directly.
Insurance Policy
The only legally mandated insurance policy safeguards the property from events such as explosions and fires. This policy, covering potential threats to the real guarantee in favor of the bank, is chosen and paid for by the client, with the policy being pledged to the financing bank.
Processing Fees
The processing fee charged by the bank for handling the mortgage application typically ranges from 0.50% to 1% of the loan amount. In some cases, fixed fees with increasing brackets proportional to the loan amount may be applied. In the case of a mortgage transfer, these fees are exempt by law.
Property Appraisal
Before disbursing a mortgage, the bank assesses whether the property’s value aligns with the loan amount. This evaluation is done through a property appraisal, examining various aspects and determining the property’s value. While costs may vary based on the property’s complexity, for an average-sized apartment, the appraisal typically ranges between €200 and €350. This expense is always the client’s responsibility, except in the case of a mortgage transfer, where the bank acquiring the loan covers the appraiser’s fees directly.
Understanding these clear-cut costs associated with property transactions in Italy empowers individuals to make informed decisions and navigate the real estate market efficiently.
