Before you buy
The legal side of a purchase
The italian notary
The property buying process
Taxes on real estates in Italy
The running costs of a house
The property ownership issues
The italian property market
Restoring an italian property
ICI 2007 - General Guide
ICI 2007 - Town of Gaeta
ICI 2007 - Town of Formia
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Italian real estate and property ownership issues :
At this point you are going to decide what the best way to deal with your future new property and whose name should go on the deeds? Would it be better to buy the property with your partner, friends or family? What the tax and inheritance advantages and what are
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the potential problems? In Italy there are a number of options of registering ownership of the property. Each way presents advantages and disadvantages, mainly depending on your financial status, profession and whether or not you are retired. In some cases may even be advantageous not registering your property in Italy under your name. Here there are some of the options explained:
Whose name on the deeds ?
Registering your new Italian property ownership in the ideal way for you can make the difference to what happens when the property is managed, used or disposed of. Getting this important point right now can save you from many potential quarrels (legal and not) later on. In fact, under Italian law, anyone with a share of a willed property can insist on receiving their share should the property be rented or sold.
A clear example may arise if you buy an Italian property with 50 per cent share with your partner. In the unfortunate event of their death their share goes to your stepson who has a different idea of how disposing of the property. There may be pressures on selling up to get his half with you losing your dream home in Italy. This situation it’s not unusual.
Sole or joint ownership ?
Unpleasant stories about mortgages in one of the partners name with the other one contributes financially for years but is then left with no claim on the property when the other partner dies are common here too.
In Italy there are different ways of structuring your new property purchase. For instance, legally married couples have to decide whether they wish to be either:
 Joint owners (regime di comunione dei beni) or
Buying the property separately (regime di separazione dei beni).
The important point to remember is that UK, US and other countries laws are different from Italian laws and you should not assume or attempt to base your decision on what you know about buying property at home.
Italian real estate , sharing ownership with partner and/or relatives .
So you decide for shared ownership, but what about the example mentioned above with somebody inheriting the property from you partner and with differing ideas on what to do with it? One option may be could be giving your children a share of the property in a way that nobody has an absolute control of the property shares.
The situation to consider in this case is: “Will in the future your son/daughter have also your same view about how to use the property? This decision has to be made and is left completely to you.
However , you must take into consideration that the other two ‘shareholders’ can always team up to support their authority leaving you with less control of the property.
There may be different ways to structure your ownership to minimise the impact of tax. Adding your children to the title deeds when you buy your property in Italy is all about safeguarding your investment from the taxman. Many UK property owners are determined to make sure that their new property abroad isn’t going to be a new source of revenue for the British tax system.
Example: if you buy a villa in Lazio and split the shares lets say 20 per cent for you and 20 per cent for each of your children each of them will be liable for taxation only on the on the €200,000 you owned if, at the time of your death the property is valued at €1,000,000. The potential downside to this may be your tax arrangement becoming liable for gift tax in Italy. In addition, you’re giving someone else not only ownership but also control over your property in Italy.
Italian property law can make things much complex regarding this aspect.
Arguments with your children can be painful enough but things could be much worse if they decide forcing you to sell your loved property and give them their share of the profit. That could be a disaster for your family relationships. Under Italian law your children’s wife or children or stepchildren have a share and as you can imagine the situation can get very messy if you don’t have ownership organised and structured correctly. Our advice? Make sure you’ve all the details on paper correctly arranged with your personal lawyer.
Italian property , buying with friends .
Buying your dream villa or apartment in Italy with your best friends can also have similar consequences as underlined above. Of course, there are many initial advantages (mainly financial) in buying jointly with your ‘good, old mates’. But property management, use and several unpaid bills may introduce to a different reality. Friendships often change but your common property remains and so bills, mortgages and all the rest. The personal advice here is getting everything clearly written down and clearly understood before you buy your home in Italy. This is valid for bills, property management and use. You will be then enjoying your property with peace of mind whatever the situation may be in the future. Here there some (but not all) of the main points to consider discussing with an Italian property specialist, as your lawyer for example. We actually advice you to cover this points even before you start looking for your dream home:
Your and the other joint owners overall contribution to the final purchase price of your new Italian property;
Yours and anybody else share of all the various purchasing fees;
Specification of any type of work (with related expenses) you have done on the house since day one;
Clearest possible specification of the shares of any rents you gain from letting out your Italian property;
What happens if one of the co-owners get separated, married, divorced, dies, have children or becomes mentally unable or ill;
What is the profits’ share should any one of you decide to sell up his share to somebody else (new co-owner) and what and how the new joint owner will contribute to all of the above mentioned points;
Also state clearly what happen if you want to see your share to the other co-owners and decide if they buy at the original price or get an update valuation paying you for the increased value of your Italian home;
Clarify as much as possible about the new Italian property use. For example if any of you spend more time there so should make a greater or lesser contribution accordingly;
In other words , the aim is to cover everything or at least, as much as you can at this stage. You will never regret all the time spent deciding the best options for you and translating them on paper. You will be then getting the necessary peace of mind to enjoy even more your new Italian dream home!
Italy real estate , different ownerships , tax liability and implications .
Tax liability is a worthy of note point to be considered when buying a home in Italy. Most people prefer to leave things simple by paying their property tax in Italy. However, for some of you owning a small or medium-size company there may be other options available.
A good tax-friendly option may be to buy your home in Italy and then leave it under your children name as a family gift, making sure to reserve for yourself a ‘lifelong use of the property’ legally registered at the time of signing the final contract. In simple words this means that the property it’s yours for as long as you live leaving to you the right to ‘enjoy the property. This right can be legally extended to your wife, husband or partner should you die first. Once you’re both history, the house passes to the children, of course tax free. The only downside is that you don’t own your own house anymore. There are few variants of this option but, the best is to discuss and check the property status, share and legal use with a lawyer back in your home country or with a legal specialist in Italian property and legislation.
For the business people another tax-friendly option include putting your property under the ownership of a limited company. You could buy a home in Italy via a company registered in your country, via an Italian company, or even through a company registered abroad (offshore). Here there are advantages and disadvantages. Unless you have already done something similar your first appointment should be to an expert of Italian taxation either in your own country or to a local registered accountant (commercialista) who will advise you according to your needs, highlighting risks and advantages of this operation which, if done properly and legally may be a very effective way to reduce your taxation on the new property.
Buying via a company registered in your home country may present the advantage of minimising profits in the home country company by using them against your purchase and thus reducing or avoiding tax. Again, your UK or US solicitor or lawyer will be able to guide you in through this option.
Finally, you can decide to use your offshore company and register the property under its umbrella. At the moment this is still a good option to avoid taxation. Nevertheless, you may become eligible under your own country legislation as a company director and be taxed as a result. In fact, the UK taxman could decide that you have to pay a higher rate tax of 40% or at the least a corporation tax on your property. In addition, property legislation is in constant change due the fast international property market transformation. For instance both France and Spain have already adapted their regulations denying the tax benefits for offshore ownerships and with harmonisation of EU legislations, the same could soon happen in Italy too.
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