Italian taxation

TAXATION OF PROPERTIES | TAXES TO BE APPLIED IN CASE OF PURCHASE

In case of purchase of a property, registration tax or VAT alternatively (depending on the seller) and mortgage and cadastral taxes are applied. When the seller is a VAT subject operating in the construction sector (for example, a construction company), the following must be paid on the purchase price indicated in the deed of sale:

- 10% VAT (4% if it is a first home)
- Registration tax in a fixed amount: € 168
- Fixed mortgage tax: € 168
- Fixed cadastral tax: € 168

In the other cases (for example, when purchasing from a private individual) the taxes to be paid are:

- Register, 7% (3% in the case of a first home)
- Mortgage, 2% (fixed in the case of a first home)
- Cadastral, 1% (fixed in the case of a first home).

For the purchase and sale of building and agricultural land, the registration tax rates are due respectively to the extent of 8% and 15%.

The tax base for the purposes of registration tax and VAT

The tax base for the application of the proportional registration tax is given by the value of the property declared in the deed. Taxes (registry, mortgage and cadastral taxes) are paid by the notary at the time of registration.

If the office considers that the market value of the transferred assets is higher than that indicated in the deed, it will rectify and settle the higher tax due (as well as penalties and interest) and notify the taxpayer, within two years of payment of the proportional tax, a specific notice. However, in the event that the taxpayer has actually declared a value not lower than that determined on a cadastral basis, the office cannot proceed with the value adjustment. For sales subject to VAT, the tax base is constituted by the consideration agreed between the parties. If the taxpayer has declared in the deed of sale of the building a consideration not lower than that determined on the basis of the cadastral parameters, the Office does not proceed with the correction, unless other deeds and documents indicate a higher consideration.

The cadastral value is determined by multiplying the revalued cadastral income by 5% by the following coefficients:

• 110, for buildings belonging to cadastral groups A, B, C (excluding categories A / 10 and C / 1);
• 55, for buildings in categories A / 10 (offices and private studios) and D;
• 37.4, for buildings in categories C / 1 (shops and shops) and E.

For land that cannot be built on, the cadastral value is determined by multiplying the cadastral income revalued by 25% by 75.

Buying your first home

The purchase of the first home enjoys particular benefits:

• both the registration tax and, alternatively, VAT are paid at reduced rates;
• mortgage and land registry taxes are due on a fixed basis.

The concessions are provided for those acts that involve the purchase of property, bare ownership, right of residence, use or usufruct. Seller operating in the construction sector VAT is paid at the reduced rate of 4%. The registration tax and the mortgage and land registry taxes are paid in the fixed amount of 168 euros each.

In the other hypotheses
The registration tax is paid at the rate of 3% instead of 7%.
Mortgage and cadastral taxes are each paid in a fixed amount of € 168.

THE ADVANTAGES OF THE FIRST HOME

SET FIRST HOME OTHER

Purchase from a private individual
LOG 3% 7%
MORTGAGE 168 euro 1%
CADASTAL 168.11 euro 1%

Purchase from a construction company
VAT 4% 10% (*)
REGISTER 168 euros 168 euros
MORTGAGE 168 euros 168 euros
CADASTAL 168 euros 168 euros
(*) 20% when buying from a resale property

Benefit Requirements

The necessary requirements to take advantage of the first home benefits are:

• the house must not have the luxury characteristics indicated by the Ministerial Decree 2.8.69 (see Official Gazette no. 218 of 08.27.69)
• the property must be located in the municipality in which the buyer has his residence or in which he intends to establish it within 18 months of signing it, or in the municipality in which he carries out his business; if the buyer has been transferred abroad for work reasons, the property must be located in the municipality where the employer is based or carries out the activity; for citizens residing abroad (registered with AIRE) it must be a first home owned on the Italian territory.

Causes: the buyer forfeits benefits when:

• the declarations required by law in the purchase deed are false;
• does not transfer residence to the Municipality where the property is located within 18 months of purchase;
• sells or donates the home before the 5-year term has elapsed from the date of purchase, unless;
• that within one year does not proceed with the repurchase of another property to be used as his main residence.

The tax credit for the repurchase of the first home

The current legislation provides for a tax credit for people who have sold the home purchased at the time, benefiting from the benefits provided for the first home for the purposes of registration tax and VAT, and within one year of the sale purchase a other non-luxury home constituting a first home.
The tax credit is due to taxpayers who have not forfeited the first home benefit, and is equal to the amount of the registration tax, or VAT, paid in relation to the first subsidized purchase; in any case it cannot be higher than the registration tax or the VAT due in relation to the second purchase.
The tax credit is also due to those who purchased the house with a deed subject to VAT before May 22, 1993 (and who therefore did not formally take advantage of the so-called first home benefits) - but not before the entry into force of the Law. 168/82 - if the buyer was in possession of the requisites required by current legislation on the purchase of the cd "first house".

The tax credit can be used:

• as a reduction of the registration tax due in relation to the new purchase;
• reduction of registration, mortgage, land registry taxes due on deeds and reports presented after the date of acquisition of the credit;
• as a decrease in the personal income tax due on the basis of the return to be presented after the new purchase;
• in compensation with other taxes and contributions due in the case of unit payments with the F24 form.

Source: Ministry of Finance - Taxpayer Information Office

All information is purely informative and does not lead to a contractual obligation.

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