Buying Property in Italy-What to Consider

You may have been influenced by "Under the Tuscan Sun", or you may have been inspired by pictures of Clooney's house on Como. With such a diverse landscape, Italy has lots of charming villas, luxury apartments and rural farmhouses for purchase. Whatever your reason for choosing to invest in the Italian real estate market, you have made a great decision to retreat to the land of La Dolce Vita.

Italian culture and the quality of life in Italy don't need praises sung here, and the housing market in Italy hasn't slowed down as much as some other parts of Europe, and should pick up in the future. But as a foreign, perhaps ex-expatriate home investor, you need to understand the property purchase process before buying a home in Italy or any other overseas property.

DO'S

*Do research the Italian property market first and make a trip to Italy first. Visit all the regions, as Italy has many areas outside tourist zones that are literally undiscovered gems. Speak to many, many Italian real estate agents an study home listings in Italian publications to learn about the Italian real estate market in general.

*Do consider buying a house in Southern Italy, where affordable villas and luxury homes generally cost less than the centre-north. A luxury two bedroom apartment in Calabria and Sicily are more affordable than high-demand properties in Tuscany or Liguria, which can be quite expensive. The price per square metre there is lower, as is the cost of living. Finding pre-foreclosures and foreclosures in these areas is also possible, so check out a variety of sources. English speaking realtors at agenzie immobiliari can assist you in this process.

*Do talk to independent lawyers in your own country as well as Italian ones to understand the legal and tax implications of purchasing an Italian home. Get financial and tax advice from both an Italian commercialista (accountant) and your own to understand the tax obligations involved. Italy has income tax, capital gains tax (even for repatriated gains), inheritance tax and value added tax. If you plan to rent your Italian dream house for a period, talk to a commercialista about deductible rental expenses. And keep in mind that f you reside in Italy for more than 183 days per year, you are considered a resident and additional income tax obligations might apply.

*Do budget significant closing costs to the purchase price. 10-17% of closing costs should be added to the property price. Extra additions include: IVA (VAT) if property is purchased from company), state tax, (if purchased privately), notary fees, registration fees, estate agent fee's, land registry fees, property transfer tax. Some closing costs can be as high as 20%.

*Do research the basics of Italian property law and the property process. Purchasing property involves arranging a booking with the real estate agent and leaving a small refundable deposit, preparing a preliminary contract legally binding on the buyer, then ratifying the compromesso (final agreement.)

To learn about the property purchase process and detailed roles of the notaio, (notary), avvocato (lawyer), and geometra (surveyor), click here.

*Do check future developments and plans. If the area around your house has a development plan for the near future, you should know what they are. and how that will affect your property values.

*Do look into residency requirements. If you don't have EU citizenship, you will have to find out the necessary requirements to ask for an elective residency visa, if you plan to reside there for a long period.

DONT'S

*Don't pick a seismic area. Avoid purchasing a holiday home set directly on a hilltop or near a volcano (like Etna or Stromboli), or in an earthquake zone. Technically Italian homes are constructed seismic proof, but the recent 2009 earthquake in Aquila seems to demonstrate the opposite.

*Don't assume restoring a home is as cheap as buying a refurbished one. You may see a charming rural farmhouse and fall in love with the property's potential. Many cheap homes in Italy have been left on the wayside , but property restorations in Italy are generally attached to many random fees aside from the actual restoration, so buying refurbished is often cheaper in the long run.

*Don't agree to a procedure called sottodichiarazione, if your seller asks for it. Sottodichiarazione is the rampant and illegal practice of officially declaring a reduced purchase price, normally 50-70%, in order to save taxes.

*Don't automatically accept Italian financing options. Interest rates on mutui, Italian mortgages are significantly higher in Italy than in North America.

*Don't sign documents that have not been formally translated from Italian into English, even the most seemingly insignificant piece of paper. I once read that a woman signed an outrageous ten year home insurance policy with no right of cancellation simply because she did not know what she signed, and trusted the agent's verbal translation of the document's contents.

Congratulations on your decision to buy a home in Mediterranean Italy! Now that you are still interested and armed with information, If you are still looking for your dream vacation villa or apartment in Italy at affordable prices, check out Italian Home Source.