A Guide to Buying Property in Italy
Located in the middle of the Mediterranean, Italy is a stunning location filled with rolling hills, brilliant mountains, picturesque coastlines, and culture-rich cities.
Known for its artists, architecture, wines, food, and beaches, Italy is the fifth most visited country in the world. With a diverse climate, living in Italy brings its residents all the joy of a mild temperate zone, coupled with the wonders of mountainous snow seasons and brilliant sun-soaked beaches.
Following the Mediterranean climate pattern, however, there are stark differences depending on whether you live from the north to the south. While northern regions are subject to colder weather in the winter, with temperatures dropping below freezing and intense snow, the south remains hot for most of the year. That said, there is less of a difference in the summer, as the temperatures rise all over Italy to around 75 – 80 degrees Fahrenheit.
If you’re looking for a location with diversity and versatility, Italy has everything you can imagine. From snowbirds to sunbathers to hill hikers and wine tasters and art lovers, Italy is dripping in historical beauty that can be found from the foods to the buildings, from the high fashion to the motorcar design.
What This Guide Covers
What You Need to Know About Italy
Key Info for Foreigners Buying Property in Italy
- Types of Property for Sale
- Property Ownership
- Buying Process
- Financing Options
- Potential Property Buying Problems
What You Need to Know About Italy
Italy has a capitalist mixed economy, which is the biggest in the Eurozone and eighth biggest in the world. Despite its appearance of strength, there is a vast discrepancy between the north and south of the country.
While the north has a focus on city life, industry, and business, the south is left to offer agricultural products, while the depleting fertility of the land makes this harder each year. This economic divide has a huge impact on the overall strength of the whole country’s economy.
Overall, Italy has a pretty diverse economy. While the country is peppered with large multinational corporations, small to medium enterprises make up the backbone of the Italian economy.
The economy gets its strength from mining and industry mostly, with tourism helping to bolster this. Mines are located all over the country that extracts and export various natural resources, particularly focused on secondary materials – like sand, marble, pyrites, and iron ore. There are also limited natural gas reserves in Italy, which have recently become one of the most valuable sources for the Italian economy.
Italy is also the second biggest manufacturer in Europe outside of Germany. The northwest of Italian is known as ‘The Industrial Triangle’ – from Milan to Turin, to Genoa – due to intense machinery, aerospace, naval, and automotive production in this area. This is where most large multinational companies are housed, with factories to produce cars, machinery, steel and iron, textiles, and ceramics. Industry contributes just over 25% to the country’s economy.
Interestingly, Italy is one of the leading producers of renewable energy which helps to boost its economy while improving its carbon footprint.
Italy is the 6th largest manufacturing economy in the world and the second largest in Europe. With a broad range of manufacturing in the country, Italy is well known for its cars as the 7th largest automaker in the world – think Lamborghini, Maserati, Fiat, Alfa Romeo.
Aside from this, Italy also manufactures steels and machinery, exporting it worldwide for industrial applications, while their clothes, leather goods, and ceramics are exported globally for retail and commercial purposes.
Mining is another huge trade for Italy. There are mines scattered throughout Italy extracting pyrites, salt, sand, asbestos, marble, copper, mercury, iron ore, lignite, and other natural resources and secondary materials. These are exported worldwide.
It’s also not surprising that wine plays a big role in Italy’s trade, with the country being the biggest wine producer in the world. These wine regions also bring a large number of tourists to the country.
Though agriculture only makes up 2% of the Italian economy, they’re still one of the largest fruit and vegetable producers in the world, exporting sugar, beets, rice, corn, meats and dairy products from the north, and citrus fruits and wheat from the south. Italy is also, of course, a significant global producer of olives.
Italy is a unitary parliamentary republic with a multi-party system, whereby executive power is in the hands of the Council of Ministers led by the Prime Minister. The current Prime Minister is Giuseppe Conte. When it comes to law making, this process happens across two houses of parliament – Chamber of Deputies and Senate of the Republic – and then secondarily in the Council of Ministers.
Italy also has a President, Sergio Mattarella, who is the head of state. He presides over the High Council of Judiciary, which is an independent entity from the legislative house of parliament and the executive Council of Ministers. It is often referred to as an ‘institution of constitutional importance.’
Italy’s government isn’t the most stable due to a chain of short-lived coalitions. In fact, Italy has had 61 governments since the end of World War 2! Modern Italian governance are dominated by central-left politics, with parties promising to keep communism at bay. So far this has been the case, while new electoral procedures have been brought into play since 2015 to stamp out corruption.
As the fifth most visited country in the world, getting to Italy is easy. For those arriving from Europe, you can travel in by train, bus, coach, car or plane. For those coming from further afield, it is usually best to travel to a local European airport and pick up one of the innumerable direct budget airline flights. Italy has over 80 airports scattered around the country making it easy to reach wherever you’re planning to head.
If you’re considering coming across Europe by train, you can always opt for Interrail – a cost-effective pass that lets you hop on and off trains across the continent, linking countries’ national rail systems on the mainland.
European coach travel also enables you to access Italy by coach, traversing mainland Europe. This is a stunning drive in as you wind through the jaw-dropping Alps. This is obviously a much slower way of traveling, though, and can be uncomfortable for those with injuries or families with small children.
Once you’re in the country, traveling around is no bother. Car hire is relatively affordable, with rental companies located all over the country. The road infrastructure is excellent, making the drive pleasant and hassle-free.
Those considering traveling about via public transport will have no problem inside Italy. The train service, run by Trenitalia, is easy to use and affordable, operating both first and second class services. Travel by coach is also straightforward, however, the journeys are long and can be somewhat uncomfortable. Coach travel is cheaper than train travel though!
For tourists visiting Italy, the list of activities is endless. Tourists arrive to enjoy art, culture, architecture, beaches, wine and food, motor racing, and high fashion, along with the stunning landscapes and glorious weather.
10% of Italy’s economy is supported by tourism thanks to it being one of the 5 most visited countries in the world. The capital city of Rome is the third most visited city in Europe and the 12th most visited city in the world; while Milan, Venice, and Florence all creep into the top 100 destinations on the globe.
With 54 World Heritage Sites, Italy is chock full of culture. From the archaeological areas of Pompeii, Agrigento, and Aquileia to the historical centers of Naples, Florence, and Siena to the architectural and artistic wonders of Pisa, the Basilica of San Francesco, and Convent of Santa Maria delle Grazie (with “The Last Supper” by Leonardo da Vinci), Italy has centuries of creative artifacts to keep tourists coming from all corners of the world.
For holidaymakers, the Mediterranean beaches offer sparkling blue waters and glistening sands, with breezy, hot sunny days in the summer. The Amalfi coast, Capri, Italian Riviera, and Tremiti Islands are all popular beach destinations.
On top of this, snowbirds flock to Italy to enjoy the winter seasons thanks to the awe-inspiring Alpine mountain range that offers all manner of winter sports. Equally motor racing fans and high fashion followers join the seasonal brigade of tourists coming to see some of Italy’s top events.
Key Info for Foreigners Buying Property in Italy
The property market in Italy tends to be relatively stable over time as Italian culture leads to housing prices staying roughly the same. That said, the long delays in forming the new Italian government did rock the property market in 2017. Since then, however, the housing market seems to have recovered nicely.
For property buyers looking to come into Italy, now is a better time than any. Interest rates for fixed rate 10-15 year loans have dropped by 1.5-2%, making them lower than they’ve been for a long time. Furthermore, older houses are dropping in price, providing a great chance for home renovators to come in and snap up a great deal. Period houses and rural stone cottages in Italy are the perfect opportunity to negotiate on pricing as many need updating due to the old fashioned appliances and need for modernization.
That said, the sturdy build quality of such properties means that most are structurally sound enough not to cost too much in upgrade work – check this with your surveyor! Those looking to invest time and money into a renovation project can buy authentic Italian houses for as low as €25,000 and can sell as high as 5-10 times that once renovated to a more modern standard.
If you are looking for places to buy to let, Florence, Venice, and Milan are prime places, primarily due to their tourist interest. Puglia and Tuscany are also great destinations to look at, as are Italy’s breathtaking lakes (Como, Garda, and Maggiore especially). Short term rental prices are soaring on the Italian property market thanks to AirBnB and online routes to providing tourist accommodation. This has led to an increase of German, UK, and American investors flooding into these places to fill the demand.
Types of Properties for Sale
If you’re looking in urban areas, you’ll find low maintenance apartments from studios to three bedrooms, as well as stunning converted lofts for the more open plan feel.
In villages and rural areas, you’ll tend to find casettas, which are small houses, along with detached villas, semi-detached houses, and terraces. Palazzos or townhouses, are also quite common – usually very narrow and tall. You’ll often find these types of properties showcase period features, such as stone walls, terracotta floors, and beautiful original painted ceilings, however, they often need modernization and in many cases full renovation.
As you head further out to the countryside, you’ll find casales or farmhouses – again often in need of renovation. There are also country houses (casa padronale), houses with space for small farms (podere) and masserias or large country estates. If you’re looking for the rustic feel with stunning views of rolling hills, you’ll find these types of houses out in rural Italy.
Bear in mind that the region you choose will make a big difference to both the price and the feel of your house. Consider if you want it located in the mountainous regions, inland in wine country, or along the vast coastlines. The closer to a tourist hotspot it is, the more expensive it will be – but equally the higher prices you’ll receive in rental fees.
It’s pretty easy to buy a house in Italy whether you’re an EU citizen of not. However, if you’re from outside the EU, you will need to apply for a ‘permesso di soggiorno’ to reside in the property for longer than 3 months at any one time. That said, everyone, EU, non-EU, or Italian, need to apply for Italian residency if you would like to reside in your property for more than 3 months at any one time.
When you’re purchasing your property, those who already have residency pay considerably less in property tax than those who don’t. If you’re buying property to live in it, it may be worth applying for residency before making a purchase decision.
Fractional ownership is another possibility in Italy. You can split the deed legally so that you only have partial ownership of the property, stating usage terms in the contract. This is often a more viable way of owning property abroad.
You’ll need to get yourself:
- An independent lawyer
- An estate agent
- A notary
- A good surveyor (geometra in Italian)
- An insured removals company
As for the buying process, once you’ve found a property and made an offer, here’s what you’ll need to do:
- Your agent will have you sign a reservation contract, known in Italian as a Proposta irrevocabile d’acquisto. The selling agent will then take the property off the market.
- Next, you’ll be required to pay a small down-payment – this is usually 10% but can range from between €3,000 to €5,000. This is non-refundable if you change your mind, but will be refunded if there is a problem with the sale that’s out of your control.
- You arrange for a surveying to visit the property, while your lawyer investigates any legal issues that may affect your purchase.
- If all goes to plan, you’ll sign the preliminary contract – known as a Compromesso – which sets out the terms of the sale.
- Following the compromesso, you need to pay a deposit (Caperra) of usually around 30% of the property’s value. If you pull out of the sale, you’ll lose this money – but interestingly, if the seller pulls out, you’ll get double the money back.
- Full funds to pay for the property need to be arranged, either by having your lender transfer the funds, or your bank/currency exchange firm (depending on your payment method).
- Within 3 months of signing your compromesso, you’ll need to go to the notary with your lawyer to sign the ‘rogito’ to complete the sale. This is when you sign the deeds. If you can’t get to Italy to do it, you can appoint a power of attorney.
- To finalize everything, once the deeds are signed and funds are paid, your notary will register you as the new owner to the local land registry. You’ll also need to ensure all fees and taxes associated with the property purchase are paid
If you’ve got the funds, you can pay for a property straight out in Italy.
However, if you need a mortgage, you can do this through a provider in your home country. Alternatively, you can get a mortgage from an Italian bank, but you’ll need an overseas mortgage broker to help you find the best deals.
That said, the Italian mortgage market is pretty tight, with maximum lengths of 15 years and deposits as high as 40% (some can be as low as 20%). The amount you can apply for will be determined by the location and property type. Be aware that if you’re buying a ‘fixer-upper’, you won’t get an Italian mortgage for an uninhabitable dwelling.
If you’re buying a new build (within 5 years of construction):
- VAT – 4% for residents using it as their main residence, and between 10 and 22% for non-residents or those buying second homes
- €200 stamp duty
- €200 land registry tax
- €200 cadastral tax
- €230 duties
- Land registry and cadastral fees
If it’s a resale property (older than 5 years)
- VAT – 3% if you’re a resident claiming it as your main home, and between 7 and 10% for non-residents or those buying second homes
- €50 land registry tax
- €50 cadastral tax
- Land registry and cadastral fees
Also bear in mind, you’ll need to pay fees to your lawyer, notiary, agent, and surveyor.
Potential Property Buying Problems
There are a few potential pitfalls you need to consider to make sure you don’t make mistakes of fall foul to scamming processes.
- Declaring Lower Sales Prices. In the past, Italians used to declare lower sales prices and make up the full amount in cash to avoid taxes. This is very illegal but still happens frequently – if offered this deal, don’t take it. Not only does it potentially get you in trouble, unless you do the same process when you come to sell the house, you’ll have inflated capital gains and will have to pay higher Capital Gains Tax.
- Have your surveyor check the physical site while the lawyer checks what is registered with the Land Registration, otherwise you may be buying buildings that weren’t built with the correction permissions. It’s not hard to get this problem rectified but may be expensive later if you’re fined for not having the correct registration.
- Inheritance scams are a big issue in Italy. Parents die leaving their properties to a number of children. One of these children decides to sell the property without the permission of the others. This can cause the sale to fall through or stall the process. Have your lawyer check the registered owners carefully.
- In Italy, there are preemptive rights in some areas where neighbors get first dibs on the property if it goes up for sale. If this process hasn’t happened and the neighbors want the property, you could be forced to sell it to them within the first year of purchase – and for a lower price!
- While it’s important to remember to add on the finances to cover the taxes and fees on the property, mortgage processes also have extra taxes. Make sure to add on 2% in your budget to cover your mortgage tax if you’re taking out a loan in Italy.
- Italy is not a place where house prices fluctuate too much. Speculating on property is a dangerous game. If you’re renovating, take into account the true cost of all the work that needs doing. Equally, if you’re buying to let, make sure it’s located in a tourist destination to really capitalize on gains. But do not expect to be making serious cash from flipping houses in Italy.
If you plan to stay for longer than 3 months in Italy, you need to apply for residency within 8 days of your arrival. It costs €70.46 for residency application.
- Apply for a codice fiscale – This is a unique identification code based on your name and date of birth. You can get this done at your local Italian embassy in your country – it takes about 10 minutes.
- When you’re in Italy, you need to make a residency appointment for a ‘change of residence’ at the local Anagrafe office – usually located in the town hall. If you do this in a large city, such a Pisa or Florence, you can book your appointment online (https://www.tupassi.it/), which saves considerable waiting time.
- You’ll need your EU passport, registered housing contract, work contract (if you have one) or a proof of health insurance and a proof of income if you’re self-employed, and a complete Dichiarazione de Residenza form. Bring photocopies of all these things too.
- Within 45 days, an official will come to check you actually live in the residence you claim to live in. If you’re not there, they leave a card for you to come to the office in person to prove you live there.
- Once all this is done, you go back to the anagrafe to get your residency certificate.
- You need health coverage to apply for residency if you’re from outside the EU. If you don’t have health coverage, you can apply to the Italian National Health Service. You do this at the Post Office, and it costs €149.77. If you already have health coverage, you’ll need to check if it’s valid when you head to the registry office.
- Apply for an codice fiscale, or an Italian tax code. You can do this in your country’s Italian embassy before you arrive or you can bring you passport (plus one copy) to the Agenzia delle Entrate (Revenue Agency).
- Get an appointment at a registry office – it’s best to call ahead. To look up your local registry office, Google ‘richiesta di residenza [insert city name]’.
- Bring your passport and a copy, your codice fiscale, a marca da bollo (available at any tobacco shop for €16,00, your health insurance, your house contract, your permesso di soggiorno (mentioned above).
- Within 45 days, you’ll have a visit to check you live in the house you say you do. After that, you can collect your residency or ‘permesso di soggiorno’ from the registry office.