How to Buy a House in Italy: Make Your Italian Villa Dream a Reality

 

Why Invest in Italian Real Estate?

Italy, with its rich history, breathtaking landscapes, and vibrant culture, has always been a dream destination for many people. But beyond its tourist attractions, Italy also offers a lucrative real estate market that has been attracting investors from around the world. In this section, let’s explore the allure of Italy’s real estate market and the benefits of investing in Italian property.

The Allure of Italy’s Real Estate Market

Italy’s real estate market is like a hidden treasure waiting to be discovered. The country is known for its diverse property options, ranging from charming countryside villas to luxurious apartments in bustling cities. Whether you are looking to buy a house in Italy for a vacation home, a rental property, or a long-term investment, it’s a great location which offers something for everyone.

One of the key factors that make Italy appealing to investors is its stability. Despite economic fluctuations, Italy’s real estate market has shown resilience over the years. Property prices have remained relatively steady, making it a safe and secure investment option.

Moreover, Italy’s real estate market offers excellent capital appreciation potential. The demand for Italian properties remains high, driven by both domestic and international buyers. As a result, property values have the potential to increase significantly over time, allowing investors to reap the rewards of their investment, especially if you are willing to put in the work (and deal with the hassle) of upgrading the property to meet modern standards.

Benefits of Investing in Italian Property

Investing in Italian real estate comes with a multitude of benefits, making it an attractive choice for savvy investors. Here are some key advantages to consider:

• • Income Generation: Investing in Italian property can be a great source of rental income. The country’s thriving tourism industry ensures a constant demand for short-term rentals, especially in popular tourist destinations like Rome, Florence, the Cinque Terre and the Amalfi Coast. By renting out your property, you can generate a steady stream of income in the summer season to offset your costs of home ownership.

• • Investment Diversification: Adding Italian real estate to your investment portfolio can provide diversification benefits. By investing in different markets, you can spread your risk and protect yourself from potential downturns in other sectors or countries.

• • Golden Visa Program: Italy offers a Golden Visa program that grants residency to non-EU investors who invest a certain amount in Italian property. This program provides access to Italy’s healthcare system, education, and other benefits, making it an attractive option for those seeking European residency. You don’t need to be a resident in Italy to buy property, but the taxes you pay will be less if you are legally resident and you will require residency (or Italian citizenship) to be able to stay in Italy for more than 90 days. For more information on how to become an Italian resident, see my post on Moving to Italy.

• • Lifestyle and Enjoyment: Investing in Italian real estate not only offers financial benefits but also allows you to enjoy the Italian lifestyle. Imagine owning a charming villa nestled in the Tuscan countryside or a stylish apartment overlooking the canals of Venice, or like us, a tiny villa in the deep south, minutes from spectacular beaches and incredible seafood. You can experience the beauty of Italy firsthand and create unforgettable memories.

Investing in Italian real estate can be a rewarding decision, combining the potential for financial gain with the allure of Italy’s culture and lifestyle. Whether you are looking for an investment opportunity or a place to call home, Italy’s real estate market has much to offer.

Who Can Buy a House in Italy?

Great question! There are some restrictions to buying property in Italy (check based on your country of nationality), for example, for two years (2023-2025) Canadians cannot buy property in Italy due to a reciprocal law in force in Canada restricting foreign buyers. That said, in general, Italy is considered a restriction-free country when it comes to property purchases.

What is more important is whether you can live in your dream Italian villa year-round. The biggest mistake people make is to buy a house in Italy assuming they will be granted a residence permit and then get denied. Pro tip: Don’t sell off your house and worldly belongings in your home country until you are certain you are legally entitled to live in Italy full-time.

If you do not have Italian citizenship or EU citizenship, generally speaking, you are limited to 90 days in Italy (or any Schengen area) in any 180-day period. For more information on the Schengen visa program, click here. If this is your situation, then you’ll either be visiting your home in Italy for limited chunks of time or you’ll need to obtain Italian residency to stay longer. The Golden Visa program mentioned above which grants residency to non-EU investors is not the only way to gain residency. There are a number of options you can pursue (work permit, study permit, elective residence, etc). For more information on obtaining Italian residence status, see my post on Moving to Italy.

Understanding the Italian Real Estate Market

Are you dreaming of owning a beautiful house in Italy? From the picturesque countryside of Tuscany to the bustling streets of Italy’s largest cities, there is a wide array of stunning properties and low-cost fixer-uppers for any budget. However, before you embark on your journey to buy a house in this enchanting country, it’s crucial to understand the Italian real estate market which is INCREDIBLY different from the real estate market in Canada or the US. In this section, you’ll get an overview of the Italian property market and explore the regional variations in property prices.

An Overview of the Italian Property Market

The Italian property market is known for its unique characteristics. The market is incredibly diverse, offering a range of property styles from historic villas, charming farmhouses, modern apartments to crumbling country homes and independent city homes in serious need of TLC. Like all real estate markets, demand, location, proximity to the ocean, major cities, transit and the current economic climate all will play a factor in your choice of where to buy a house in Italy.

As mentioned, the way the real estate market works in Italy is quite different from North America. You may rely upon a Multiple Listing Service (MLS) in your home country where every home being sold through a realtor is listed to peruse a ton of property details, comparable properties, last sold dates, etc. Not so much in Italy, where realtors work in specific regions and with specific properties which can be listed on certain websites that collect property listings (e.g. Idealista, Immobiliare, or Casa) but many properties only appear on the realtor’s webpage or nowhere. Properties can also be listed on multiple platforms for different prices. Additionally, the details you will get about the property being sold are very limited compared to an MLS-listed property.

Regional Variations in Property Prices

While the Italian real estate market has remained fairly stable over the years, there are steep inclines in certain regions and cities. Italy is divided into 20 regions, each with its own distinct charm and character. These regions also exhibit significant variations in property prices. Understanding these differences will help you make an informed choice when deciding where to buy a house in Italy.

In general, property prices tend to be higher in popular tourist destinations and major cities such as Rome, Florence, and Milan. These areas offer great cultural and economic opportunities, but they often come with a higher price tag.

On the other hand, if you venture off the beaten path and explore smaller towns and rural areas, you’ll find more affordable properties. These regions still boast picturesque landscapes, authentic Italian experiences, and the potential for growth as more people discover their hidden gems.

Moreover, if you take a look at a current map of property price ranges, you’ll note that Italy’s northern property market tends to be more expensive than the south. That said, even in the south where we live, there are certain cities or tourist destinations where prices far exceed the average. Think about it this way, if the town is booming with an influx of cash every May to October (tourist season), it’s likely a hot place to buy property driving prices up.

It’s important to research and compare property prices across different regions to find the best value for your investment. Keep in mind factors like accessibility, amenities, and potential rental income if you plan to rent out your property. If you plan to be in Italy part of the year, proximity to an airport will be important too.

Most people, myself included, suggest you first live la dolce vita for a short period, travel around and find the perfect place to buy a house in Italy before starting your official property search. If you can, visit Italy in the winter and summer if you are intending on moving full time. Many places in the south are ghost towns in the winter, but thriving in the summer when Italian and international visitors run to the beaches. You will not get a true feel for a town or city until you’ve stayed there longer term and embedded yourself in the local cadence of life.

Step-By-Step Overview Process to Buy a House in Italy

The Italian property buying process has its own unique intricacies, and being familiar with these steps is essential. Here’s a breakdown of the key stages:

1. 1. Property Search: Begin by identifying the areas of Italy where you would like to purchase a property. Research properties using realtor websites or the resources listed below to get a sense of the market.

2. 2. Engage a Lawyer or Real Estate Agency: This step has two options, you can reach out to realtors on your own where you see properties listed, or you can rely upon a buyer representative like an agent or lawyer. Local agents will be able to find properties for you through online research, word of mouth and collaborating with fellow agents. Lawyers may not have the same intel but will be great to help you with negotiation and ensuring the property is in order to finalize the sale. More on working with real estate agents and their role in your home purchase process can be found below.

3. 3. Preliminary Agreement: Once you find a property you’re interested in, your lawyer or agent (with legal advice) will help you draft a preliminary agreement (compromesso), outlining the terms and conditions of the purchase. The most important thing for you to do at this step is ask questions. For example, unlike at home where a property is sold empty, Italian properties are often sold with furniture, but can also be sold without furniture, fixtures, appliances, even the kitchen can go! Be sure to include specifically what you’d like to stay in the house, that clarity will save you in the end.

4. 4. Due Diligence: During this stage, your lawyer or agent will use a technical expert (a geometra) to conduct thorough checks on the property, including verifying ownership, checking for any liens or encumbrances, and ensuring all necessary permits are in order. Essentially what they are looking for here is whether the house appears as according to the legally approved plans registered with the local commune. If for example, the sellers made one room into two or installed a second level without the proper permits on record, the house cannot be sold until the illegal portions are remedied. Getting permits for building in Italy can be your worst nightmare, lasting years and causing much stress, so sometimes, understandably, people opt to just build anyway and ask for forgiveness later. This is why the due diligence of your lawyer or agent is mission critical as if the sale goes through and something is illegally done, and you want to make changes to the house, you’ll be in a sea of red tape with your local permit office. Ugh.

5. 5. Final Contract: After completing due diligence, you will proceed to sign the final contract (rogito) in the presence of a notary. This legally transfers the property to your name. You need to understand the documents being signed so if you do not speak Italian you either need to hire a translator to attend the signing meeting with you or you hire a power of attorney (your agent or lawyer can do this assuming you trust them with this task).

6. 6. Registration and Tax Payment: The final step involves registering the property with the relevant authorities (your local comune) and paying any applicable taxes and fees.

Working with Real Estate Agents to Buy a House In Italy

When it comes to navigating the Italian real estate market, it is advisable to seek the expertise of a local real estate agent. They possess in-depth knowledge about the market, legal requirements, and can guide you through the process to buy a house in Italy. As mentioned above, there are some major differences in working with a realtor in Italy versus in Canada or the U.S. Below are all the insider tips I wish I knew when embarking on this process, so hopefully these will come in handy for you!

First, Italian realtors, by and large, work in Italian, so if you aren’t an Italian speaker, it will be imperative that you hire an agent to represent you as a buyer or a lawyer who can navigate the process for you. If you are comfortable enough in Italian, you can do the legwork yourself and reach out to all the listing agents whose properties you’d like to see. Then when you find a property you are interested in, you can engage a lawyer to help you with the due diligence and offer process. Some real estate agents who help international clients buy property in Italy may also act as a buyer representative at this stage if you’d like.

If you decide to save some costs and reach out to agents yourself, know that it’s not always a straightforward process as an email or phone call and you get to see a property. Sometimes it takes persistence to get an agent to respond to set up a showing. And when you do finally get someone to show you a property, keep in mind that that agent’s interests are to sell the property so be cautious about any statements or warranties they give you about the property until you conduct your own due diligence. For example, agents will commonly say “you could put in a pool here, sure” but when your inspector or geometra assesses the property you may discover it’s in an area where the comune will not allow a permit for pool installation due to its proximity to the ocean or a natural area.

How Do I Find a Good Representative: If you are looking for an English-speaking agent or lawyer, your best bet is to look for recommendations online (there are several expat Facebook groups with a plethora of people ready to recommend someone great), select a reputable firm and ask for references or follow in the footsteps of friends who have used the services of particular agents. Also, unlike in Canada for example where you select one agent who represents you, you aren’t limited to using one agent in Italy, so you can have multiple agents with properties in the area in which you are interested searching for options for you and setting up showings. 

What To Expect: When you meet the agent or lawyer, you need to clearly articulate your budget, desired location(s), property type (e.g. country house, “town house” which means home in a town or city, apartment), and any specific requirements (e.g. it needs to have a pool, it needs to be on a city gas line, it needs to have ample parking). This will help the agent or lawyer narrow down the options and find properties that match your criteria.

How Does the Agent Get Compensated?: Lawyers who are not certified realtors will charge you a flat fee to find properties, negotiate, set up a technician to complete due diligence and draft the necessary offer documents. Real estate agents will get a percentage commission when you buy a house in Italy. Most agents will require some minimum commission if they are representing you as a buyer (e.g. their fee may be 3-4% of the purchase price, or a minimum of 5,000 Euros if 3% of the purchase price is below 5,000 Euros). 

Agents will collaborate with the selling agent who has the property listed. This means, they will share the commission with the selling agents. For this reason, some selling agents will not collaborate with agents or lawyers representing buyers as they will lose a portion of their commission. This is just something to keep in mind if you are looking for a lower-priced property, not all agents will be thrilled to share their small commission on the sale, but that doesn’t mean you can’t approach them directly.

Whether you proceed with an agent or a lawyer, remember, they are your trusted ally throughout the buying process, so it’s essential to establish a strong working relationship based on open communication and make sure they understand your priorities. When in doubt, ask questions!

Understanding Property Taxes and Fees in Italy

When buying a house in Italy, it’s also extremely important to be aware of the various taxes and fees associated with the purchase. Taxes, ugh, I know. Trust me, it will help in the long run to understand what to expect once you buy a house in Italy. Taxes will vary if you are buying the house as a foreigner (a vacation home) or as an Italian resident (your primary residence). When you are budgeting for what you can afford, here are some key considerations to keep in mind:

• • Registration Tax (or Stamp Duty Tax): This tax, known as imposta di registro, is paid upon the transfer of property ownership and is calculated based on the property’s declared value. While it can be as low as 2% if you are resident in Italy (you live in Italy at least 6 months out of the year) and it’s your first home purchased, it can go up to 9% if it’s a second home, you’re a foreign purchaser or you are buying from a registered company or developer. This tax is also based on the cadastral value of the property listed in the deed, not the market value so will typically be substantially lower than the purchase price. Short answer: it’s complicated. It’s best to estimate high for your budget and when you find the perfect place, get your notary to determine the value in the deed and calculate the taxes owing.

• • Value Added Tax (VAT): VAT may be applicable if the property is classified as new or has undergone significant renovations. If you purchase from a private seller, there is no VAT owing, but if you purchase from a registered company or developer, VAT will be due. The rate is set at 4% for your first home, 10% for a second home or vacation home and 22% for a luxury property.

• • Notary Fees: Notary fees are charged for the notary’s services in preparing and executing the final contract. They are typically calculated based on the property’s value around 1% but usually no less than 1,000 Euros plus VAT. Usually your agent or lawyer will have a reliable notary to use. Notaries will also charge additional fees to use their escrow accounts to hold the funds for the sale.

• • Land Registry Tax: This tax, known as imposta catastale, is paid upon registering the property with the land registry and is calculated based on the property’s value. Budget for 50 – 200 Euros.

• • Real Estate Agent or Lawyer Fees: If you engage a real estate agent or lawyer, they will likely have a percentage rate or flat rate for assisting you depending on the service you provide. See Working With Real Estate Agents to Buy a House in Italy section above.

• • Mortgage Costs: If you require a mortgage to finance your property purchase, you should consider the associated costs, such as mortgage arrangement fees and interest rates. For more details, see the next section.

There are also a number of taxes that follow when you buy a house in Italy, including IMU (regular property taxes), TASI (municipal service fees) and TARI (waste collection fees) which vary considerably.  Additionally, if you decide to rent your property and generate income, you will be taxed at the appropriate marginal tax rate for the income made each year. Before you buy a house in Italy, it’s best to consult an accountant (commercialista) to get an assessment of your future tax requirements. Understanding these legal and financial considerations will empower you to make informed decisions and navigate the Italian property market with confidence.