The first step in the process of purchasing a property in Italy is obtaining a tax code. This unique identification code is calculated based on your personal details, including your name, place, and date of birth. It is issued by the Revenue Agency and is required for any interaction with Italian authorities.

Opening an Italian bank account is essential, not only to transfer funds for the purchase of the property, but also for the automatic payment of utilities. Typically, the payment of the balance of the purchase price for the property is made by bank transfer. You can also opt to transfer the funds to an escrow account for added security.

Once you have visited the property and decided to purchase it, the negotiation begins with a formal purchase offer. The offer must be in writing and accompanied by a bank transfer or check as a down payment. The seller can communicate his acceptance verbally. Once the offer is accepted, the seller agrees not to sell the property to third parties until a specific date to protect the buyer's opportunity.

Before proceeding further, it is advisable to investigate the title of the property at the Office of the local City Register (“Conservatoria e Catasto”) and obtain a copy of the title report. The report outlines ownership, vesting, encumbrances and other details the buyer should know about the property before proceeding with the purchase. It is, therefore, essential to be able to properly understand the meaning of all the information contained in the title report. Before proceeding with the purchase, it is important to carry out a sort of due diligence, which includes documentation
on the origin of the property, planning permissions and certificates, condominium
regulations, other administrative and technical aspects, and environmental compliance.

Linares Associates offers assistance to foreign citizens in relation to the procedures for opening an Italian bank account, formal purchase offers, cadastral checks, and support with notarial procedures.

For high-value transactions (over €1 million), the seller may request “proof of funds”. This document demonstrates that the buyer has legitimate and obtainable funds for the transaction.

Without this letter, the seller may not accept the offer, even if it is otherwise compliant.
The “Compromesso” (Purchase and Sale Agreement) is a legally binding document that specifies the sale price, the closing date (“Rogito”), and information and rights regarding the property.

The “Rogito” is usually signed 1 to 3 months after the “Compromesso.” The final contract, also known as the “atto notarile,” is signed after the “Compromesso.” This
occurs when all the necessary documentation is available. Both parties sign the deed, and ownership is officially transferred. The notary issues a certified copy of the deed and registers it with the Land Registry.

The notary's rogito is essential not only for the guarantees that the parties have undertaken to fulfill (the most important of which are the payment of the price and the transfer of ownership to the buyer) and which the notary seals, but also for a series of obligations following the signing. In fact, as a public official, he must transcribe the sale and transfer all related documentation to the Land Registry and Real Estate Registers for transcription.

Only in this way can the transfer of ownership from A to B be truly acknowledged vis-à-vis third parties. If the foreigner acting as buyer does not know the Italian language, it is obviously necessary to take this into account and, in the presence of the notary and witnesses (if no one knows the foreign language), to call in an interpreter/translator appointed in accordance with notarial law.

In addition, the Italian notarial deed must be accompanied by a translation into a foreign language certified by an official translator (this may also be the notary himself, if he knows the language), which must be consistent with the Italian text. Notarial law is very precise in establishing that, in the case of a foreigner, it is necessary to verify whether the parties and the notary know the foreign language.

If the notary does not know the foreign language spoken by the party, the parties to the contract themselves decide who will be the interpreter. The latter must then take care of the translation of the notarial deed and must also sign the deed of sale, together with the two witnesses, the parties, and the notary.

Their function is precisely to facilitate communication between the parties and with the notary. Before proceeding with the translation, the interpreter must swear before the notary to perform their duties faithfully, and this must be mentioned in the notarial deed. In order to participate in the notarial deed, the interpreter must meet the same requirements as the witnesses. This is stated in the notarial law.

Therefore, they must be of legal age, an Italian citizen, and not involved in the deed. A foreigner may also act as an interpreter but must be resident in Italy. Relatives and relatives by marriage of the notary and the parties to the degrees indicated in Article 28, the spouse of one or the other, and those who do not know how to or cannot sign are not eligible. It is important that the notary checks the requirements of notarial law.

Only one of the witnesses needs to know the foreign language if all the parties know how to sign with their first and last names. If, on the other hand, the parties do not know how to sign, both witnesses must know the foreign language. Obviously, the witnesses must always know the Italian language.

Another alternative, again in the event that the foreign buyer does not understand the Italian language, is for the foreign citizen to sign a power of attorney to purchase, appointing a third party who understands both languages perfectly. At this point, this person will purchase on their behalf by signing the notarial deed of sale. It may happen that the person interested in concluding the purchase agreement is unable to actually participate in the signing.

In this case, the impediment can be overcome by resorting to a power of attorney, a document that gives others the power to perform a legal or material act on behalf of the person who is prevented from doing so. Thanks to the power of attorney, they
will still be able to purchase the property.

The taxes payable in Italy depend on the property purchased, the assets, and the seller. The taxes related to the purchase are registration, mortgage, and cadastral taxes. Those related to property taxation are IMU and TASI. If the seller is a private individual, the Consolidated Law on Registration Tax provides for the payment, by the buyer, of registration, cadastral, and mortgage taxes.

These are applied at a fixed rate if the sales are subject to VAT or proportionally at 9% if
exempt from VAT. A reduced rate (proportional to 2%) will apply if the purchase falls within the so-called “first home benefits.” Otherwise, if the seller is a company, the sale will be subject to VAT, as established by Presidential Decree 633/1972. As mentioned in the previous paragraph, if the property being sold is a “first home,” i.e., a home intended as a primary residence, a reduced tax will be paid, the amount of which varies depending on whether the purchase was made through a private individual, a construction company, or a non-construction company:

• if you buy from a private individual or a company more than four years after completion of the work, the registration tax is 2% calculated on the cadastral value
• if, on the other hand, you buy from a construction company within four years of
  completion of the work, you pay VAT calculated at 4%. Registration, mortgage, and cadastral taxes are fixed

In order to apply the tax breaks provided for by the legislator, several requirements must be met, not only by the buyer but also by the object of the sale. The properties benefiting from the concessions must meet certain requirements:

1. they must be classified as “residential” and fall within categories A/1 and A/11;
2. they must not be luxury properties (within the meaning of Ministerial Decree
   218/1969);
3. they must be located in the municipality where the buyer resides or intends to move to.

For this reason, the buyer must establish their new residence in the municipality where the property is located within 18 months of the date of purchase, if they have not already done so. Furthermore, they must not be the sole owner or co-owner of other property rights, bare ownership, life tenancy, or residence on another house purchased by them (or their spouse, if applicable).

The right to purchase property in Italy is generally available to most foreigners, with different procedures depending on nationality. For citizens of the European Union and the European Economic Area, the same procedures apply as for Italian citizens.

For other nationalities, the possibility of purchasing property depends on agreements
between Italy and each individual country. In the case of foreigners who have been legally resident for less than three years, together with their family members, a valid residence permit or residence card is required.

In the case of foreigners who are not legally resident, there must be an international agreement allowing such a purchase or the so-called condition of reciprocity, i.e., Italian citizens must also be allowed to buy a house in the foreigner's country of origin.

Navigating the Italian real estate market can be particularly stressful for a foreign citizen, especially in light of the difficulties associated with understanding a different language, and dealing with new legal regulations, and local practices. It is, therefore, extremely important to rely on experienced professionals who can assist the client through the purchasing process, understanding their needs and expectations.

At Linares Associates, we can provide our clients a preliminary legal due diligence, which is aimed at:

• Verifying the legal ownership and the seller’s right to sell;
• Reviewing the title deed (Rogito Notarile) and building department records;
• Identifying liens, encumbrances, mortgages, or third-party rights;
• Reviewing offering plan and amendments, condominium minutes, financial statements, house rules and building application (if applicable);
• Assessing preemptive rights (e.g. agricultural or tenant claims);
• Chamber of Commerce checks on the seller (in case of a company), including financial well-being and insolvency issues.