Most frequently asked questions when buying a house | Luxury Law
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Most frequently asked questions when buying a house

Luxury Law, though this article, has decided to answer the most common questions when buying a house. We have sintetized some of the most frequent asked questions which our clients ask us just before instructing our law firm.

  • How to buy property in Italy process?
  • How much is the cost of a lawyer for closing on a house?
  • Buying a house in Italy as a foreigner, is it possible and how?
  • How much does it cost to buy a house?
  • Property taxes in Italy, what are the annual costs?
  • Why you need a lawyer for a home purchase?

 

How to buy property in Italy, process?

Very often, we have to explain our clients that buying a property involves different moments. Before giving our answer, we always ask if our client has already negotiated the price and made an offer. The answer to this question is very important, just because a lawyer may introduce him/herself since the first approach with the vendor and/or the real estate agent.

Therefore, the first process of buying a house in Italy, starts with negoziations!

Second important step is the due diligence process, checking title deeds, possible incumbrance, illegal constructions, plan permission checks, etc. These are just few things your lawyer needs to check before making a formal offer to the vendor.

Once your lawyer has carried out an initial due diligence, you are ready to make an offer. This is another important moment, since your offer will be a binding contract such as a preliminary contract. That’s why when you make a formal offer, you need to be very carefull on what you are signing! Read this article if you wish to now more about the due diligence process.

When you make your offer, you usually pay a small percentage as a deposit (usually 10%). The deposit is usually paid to the real estate agent or any other intermediator, if not directly to the owner.

There is an important different between a deposit called “Acconto”, and a deposit called “Caparra”. Be aware of the reason why you are paying this amount to the vendor because consequences are different in case of breach of contract from one of the parties.

Once you have paid your deposit, many things might happend, this depends on the preliminary agreement signed with the vendor. Difficult to sintethize, in just one article, all circumstances which might arise during this time.

Before committing to your final purchase, you need to contact a Notary. The Notary is chosen by the buyer who will pay him/her. He/she will ask to the vendor all documents related to the property and will draft the final deed of sale/purchase.

Once the contract is ready, buyer and vendor will sign a publich deed before the Notary. Finally he/she will register the final deed of sale at the revenue office.

He/she will release you a copy of the deed usually within 1 month.

How much is the cost of a lawyer for closing on a house?

The cost of a lawyer for closing on a house can be determined by the parties – client and lawyer – in writing, and any lawyer and client can decide what value to give to this job.

However, when both parties do not agree a certain price, in Italy we refer to the parameters which are established by law.

Some of the criterias for calculating a lawyer cost, are the followings:

  • Urgency of the matter.
  • Importance of the legal work.
  • Value of the case (for a property sale this would be the property price).

In any case, a lawyer will require 15% for Overhead Expenses, and for documented expenses.

In terms of giving you a better idea of the average costs, here are the parameters set by law in case of an extra-judicial work:

  • €270,00 if the value of the case is between €0 and €1,100,00;
  • €1,215.00 if the value of the case is between €1,100.01 and €5,200.00;
  • €1.890,00 if the value of the case is between €5,200.01 and €26,000.00;
  • €2,295.00 if the value of the case is between €26,000.01 and €52,000.00;
  • €4.320,00 if the value of the case is between €52,000.01 and €260,000.00;
  • €5.870,00 if the value of the case is in between €260,000.01 and €520,000.00 euro.

If the value of the matter is higher than €520,000.00 it is usually applied a percentage in addition to the above costs.

Despite what mentiond above, a lawyer might provide you with a higher or lower estimate. The above just gives you an idea of ​​the potential attorney fees. In case you have not received a precise estimate, a lawyer is entitled to release you an invoice for the amount established by law.

Buying a house in Italy as a foreigner, is it possible and how?

A frequently asked question when buying a house is the above. Meaning that some people may thing that the process is much different for a foreigner rather than for an italian.

If you are a foreigner, the process for purchasing a house will be the same as you were an Italian, however there are certain information you need to be aware of.

Here some of the info you need to know:

If you wish to move your residency to Italy, it is convenient for you to declare it in the deed of purchase. In this case, if you do not own any other property in the Country, you will pay a less amount of taxes.

Moreover, you need to declare to the Municipality where you have bought your house, that you reside at that address. Once your residency has been formally enstablished at the new address, you will not pay taxes such as IMU and TASI.

  • If you do not speak fluent Italian, you need to have a translator who translates the final deed of sale in your language. The Translator has to be present during the completion before the Notary.The Notary has to make sure that you have understood the content of the deed. Usually our clients are happy to grant a power of attorney to our firm, so that we can sign the deed on their behalf. This is especially because a translator does not “explain” you the content of the deed, but just “translates” it for you. This makes a big difference.
  • If you are a foreigner who wishes to buy a house in Italy, you need to have a fiscal code (Codice Fiscale). This is similar to a National Insurance number, an Italian tax code which you can obtain within a short term by applying at the Embassy (if you are not in Italy) or that you can require at the Revenue office (if you are phisically in Italy).

How much does it cost to buy a house?

The purchase price is not the sole cost you have to bear. You have to consider some other costs which are exclusively on the buyer’s account. These are:

  • Property taxes, with or without fiscal benefits. Clich here if you wish to know more.
  • Notary fees. These include cost for the Notary, as well as property taxes such as land registry taxes, cadastral taxes..
  • Real estate agent fees (if you have found the property through an agency or a broker). These are in the region of 3% of the purchase price. Both buyer and seller pay the agent when involved.
  • Translation costs, if you do not speak Italian very fluently.
  • Geometra fees. Costs might depend on the required work to carry out, and the size of the property.
  • Legal costs. If you have chosen to be fully assisted during the entire process by an expert lawyer, this cost will be due (see above)

Property taxes in Italy, what are the annual costs?

Each year you are required to pay IMU and TARI. Some Municipalities decide to divide this cost in two or more tranches to be paid within certain expiring dates.

IMU is a tax due by homeowners.

TARI is the rubish tax which everyone is required to pay, and depends on the square meters of the property, or on the number of people living in the house.

TASI is an additional tax which aim is to cover all publich expenses of the Municipality.

You do not have to pay IMU and TASI for the property you live in as your primary home where you have established your residency.

If some of your queries did not find an answer, feel free to ask our lawyers! Or send your query at info@luxury-law.com 

Why you need a lawyer for a home purchase?

There are many reasons which can explain you why a lawyer is important in the process to purchase a home. Expecially if you are a foreigner and you are not confident with certain Italian rules and legislation.

Sometimes a lawyer helps you to save money! You might thing that a lawyer will unecessary increase your cost, however he or she might help you saving money and time, or might even save you from a bad purchase.

In many occasion a real estate lawyer manages to consistently reduce the purchase price during negotiations. This happens because a lawyer knows all weak points of a sale, including, but not limited to small and sortable issues with the documentation related to each property.

Moreover, the costs associated with legal assistance from an expert real estate lawyer are very reasonable and depend on the complexity of the matter.

A lawyer does not act by feelings, but rationally! Many times our clients just wish to buy the first house they see. They start dreaming about that nice and cosy home, and most of the time they do not want to see or face problems hidden behind that property. This is because it is human to get entusiastic about a nice view or a huge garden, or of a confortable area. However, this is not all. A real estate lawyer is the sole professional able to recognize a good or bad purchase. Not just because of the accurate due diligence that a lawyer is required to do, but also because a real estate lawyer is able to discover hidden issues and ask the vendor to sort them out before selling his/her property.

A lawyer might save you from a bad purchase or a scam! It is not unusual to receive enquiries from clients who have already paid a deposit on a bad deal, and are no longer willing to proceed with that purchase.

Sometimes people are told that making an offer and paying a deposit does not put them in the position of being obliged to purchase.

Unfortunately this is not always the case, since you need to make sure that you have used the correct wording. The use of some tecnical words, in fact, is strictly important. For example the word “deposit” in English can find different translation in Italian: “Caparra” “Acconto” “Cauzione”. All these words have different legal meanings, and a lawyer is the best person who can explain and use the correct ones for you, when making an offer.

A lawyer prevents problems before they happen! An example is explanatory:

A client sent us a query saying that she received a notification from the Italian revenue office. We looked at the document that she received and saw that she was supposed to pay a high amount of taxes plus a consistent penalty within a certain date. She was quite astonished in understanding that this amount was actually due! The issue was related to the fact that she bought her property as a first house, but eventually she did not move her residency within 18 months. A lawyer would have explained her the content of the deed and her obligations and consequences.

One more example: a client came to us asking for our help to sell his house which he bought 5 years before. When we saw the paper related to his property, we understood that the price per which he purchased his house was too high. This happened because the cadastral details were showing that the house was not a penthouse (as he thought) but an attic! The value of an attic is much lower than the value of a penthouse, but unfortunately the Italian translation of the word “penthouse” is… “attico”, and the English translation of the Italian word Attico is “Mansarda” which means loft! His lost was consistent, and he would have avoided it if he contacted a lawyer at the early stage of his negotiation with the vendor.