Italy: Here’s how to buy a house

Rome: Italy’s government has announced that it will help young people get on the property ladder by cutting taxes and offering help with mortgages.

Purchasing a property in Italy involves no small amount of added fees and taxes – many property experts advise buyers to budget as much as ten percent of the property price to cover this.

These extra costs can no doubt block people from buying, particularly young people planning to purchase their first home.

In fact, the high upfront cost of a home purchase is often cited as one of the factors contributing to the number of people in Italy still living with their parents well into their 30s (and beyond).

Half of people under 35 in Italy still live under mum and dad’s roof, according to a new survey by European employment network EURES and the National Youth Council.

To reverse the trend and to help young people live independently, the Italian government now says it plans to eliminate VAT on taxes relating to deeds transfers and the mortgage on the purchase of a home, and help young homebuyers secure a mortgage.

In a press conference on Thursday, Prime Minister Mario Draghi pledged funds to boost the country’s economy following the coronavirus crisis, with budgets allocated to businesses, young people and healthcare services.

People under 36 – the classification for ‘young people’ in Italy – are to get a helping hand with buying their first home, as detailed in the latest draft of the so-called Support Decree (Decreto Sostegni), worth a total of €40 billion.

Would-be homebuyers under 36 will benefit from two main types of help:

Firstly, there will be a raft of reductions on the taxes paid when buying a first home.

And secondly, taking out a mortgage is set to be made more straightforward, as the state will put down the deposit for young homebuyers.

That’s been made possible thanks to new funding from a pot called the ‘First Home Loan Guarantee Fund’ (Fondo di Garanzia Mutuo Prima Casa).

For those hoping to buy their first property in Italy with state help, the bonus will run until 30th June 2022 and people under 36 years old are eligible to apply.

It’s available to those who have an ‘ISEE’ – a social-economic indicator of household income – of up to €40,000.

Young people falling into this category can benefit from certain exemptions on registration, mortgage and land registry tax.

Land registry and cadastral tax are both €50 and will be cancelled in this bonus.

VAT, or sales tax, called IVA, is added on to most sales . including those related to buying a home too.

Included in the proposals is a tax credit, which is equal to this VAT for house-buying costs. In effect, it means if the purchase of the property were to be subject to VAT, it would be reduced to zero with the first home bonus.

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Further to that, eligible candidates will also be exempt from the VAT on stamp duty, which comes in at around 2% of the cadastral value of the house. That’s if you live in Italy full time – it’s 9% if you don’t.

The tax credit can be used to deduct directly from these house-buying costs, such as registration, mortgage, land registry, inheritance and gift taxes. Or alternatively, it can be used as tax relief to deduct from the taxes on your personal income (IRPEF).

Notary fees, which are generally fixed for each part of the sale, are due to be halved. The notary checks that the property is legally registered and their fees can vary from town to town.

If buying a house through an agent, a notary does all the required checks and may be able to take care of the preliminary agreement as part of their service.

Included in the first home bonus is state help with the deposit, after a government decision to extend the First Home Loan Guarantee Fund.

It exists already and covers up to 50% of the total value of the property, but is set to be extended to 100% of the total value.

What that means for homeowners is the ability to get a mortgage with a value of up to €250,000 without a deposit – and the banks get a state guarantee.

To access the bonus, it must be your first home and you’ll need to keep in mind that not all properties can benefit from the government help, including stately homes, villas, castles and places of historical or artistic value.

The home must also be located where you work, study or currently live. And once the benefits have been used, you can’t sell the property for five years – unless you buy another house.

You also can’t access the bonus if you’ve already used it for a first home anywhere in Italy.