Purchase tax - based on cadastral value or purchase price?

05/14/2012 - 19:00

We recently bought a house (September 2011) expecting the tax to be calculated on the catastal value which we were told is always less than the purchase price so worked out a worst case scenario and expected to be a little pleasantly surprised. When the bill came through with projected costs a few days before it was clear the costs were based on the purchase price. No mention of the catastal value at any point. I am still reading frequently that these purchase taxes are based on the catastal value. What are others' experiences of this? We were anticipating taking up residence within 18 months but a change of circumstances might mean this could not happen in which case we need to tell the tax office before the 18 months are up and pay the difference before drumming up fines so it would be good to know how much extra we will be paying by knowing what figure to base this on. Basically who decides which figure you base your purchase taxes on...the actual purchase price or catastal value?

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Thanks Ram. Looking back at our notary's bill I'm not sure precisely how she has arrived at the figures (and don't want to publish them on a public forum!). There's a breakdown of her fee + IVA, and 'anticipazioni' of terreno and casa. I know we paid 20% tax on the terreno for sure and that's noted in the atto. I think I should write to the notaio and ask her precisely which valuation she used to draw up the bill and what the difference would be should we get posted to Timbuktu and not end up being Italian residents within the 18 months so I'm prepared for all eventualities...

Rachel, you may have read Ram's information directed at the Hallams as referring to your situation. You paid your taxes on the purchase price because you are a musician. The percentages which Ram quotes should enable you to get a ball-park figure for what you would need to 'repay' (on the purchase tax) if you decide not to take up residence within the eighteen month period. Your situation is complex and you need an accountant to look at all the options with full knowledge of your present and future circumstances. Maybe minimizing your potential future tax liability is the most important thing in your life - but often arranging your life to this sole end is a bad idea!

Thanks Phillide, Bizarre law regarding taxes and artists! Moreover I am 100% sure the notary did not ask me what my profession was at point of compravendita! So ironic as musicians are usually not the top paid people out there by a long shot! I have just written to the notary and asked her precisely to outline what level of taxes we have already paid and how much extra will be required if we do not take up residency within the 18 months. I wouldn't say we are trying to organise our life to the 'sole end' of minimising future tax liability at all but we cannot afford to be flippant about it as we have stuck out our necks financially rather more than we'd first planned! Our plan was clear 6 months ago- to start out new, long term life in Italy but if the 'residency' issue doesn't happen because of pending job considerations there start being so many knock on effects that we didn't have to consider before....anyway, fingers crossed with a bit of luck the plan will still happen and I'll be full time in Italy by next March!! Thanks again for the advice. Much appreciated.

Ok so may be your not the only one confused here. We are in the process of buying now and have been told that we will be taxed on the cadastral value ONLY. Can anyone please confirm this? Our purchase is in Tuscany.

If you are a private person buying a house (inclluding the garage and small garden etc) then you can usually elect to pay the tax on the declared value, or the catastal value. The latter is usually the most economical route, although you still need to declare the full purchase price paid. However, this option is not available for the purchase of terreno, and is not available if you are a company. To my utter amazement, my understanding, reading the guide from the agenzie delle entrate, is that a person who is professionally engaged in an artistic role (which would include a musician) does not have the option of paying the tax on the catastal value. Hopefully Ram will either know this already, or look it up and tell me if I'm wrong!

Its all true - though I dont know why - when the notaio reads the atto there is a bit where the notaio declares you are not an artist, musician etc. Its very bizarre, and have made a note to ask the notaio tomorrow why this is. Technically there is a choice about how you pay the taxes. On purchase price or catastal value and subsequent 20% discount of notaios fees!. HOwever, this isnt always the case. New house, house bought from company, house subject to IVA, are not subject to sale on catastal value, but on purchase price. Fabbricati rurali, some types of garage/magazzino and unita collabenti also. The notaio should give you the choice as regards the taxation - but (see above) he may not want to give you the discount. If you are electing prima casa then you should be paying 3% + various registrations charges. If you have land attached to the house which is not a pertinence then you will be paying 18% of the price paid for the land....

Your taxes on the catastal value ONLY - assuming its a normal private house purchase from private sellers then you will be paying 3% plus some bits as a prima casa or 7%+2%+1% as a second home - all basedon the catastal value as it results on your visure when multiplied by the correct figure. For sales - at the moment - the catastal value is not subject to 60% upgrade that is used for IMU - (though I think it will arrive sooner rather than later) Because in Tuscany the catastal value is always lower than the purchase price, it obviously makes sense to pay using that method. IN fact I know of noone who chooses to pay on price if they dont have to.

OK - that'll teach me to talk before putting my brain into gear. THere is no exclusion for artists/musicians etc on a sale. THe clause in the atto refers to whether you are buying as a company or not. If you are buying as a private person from a private person for residential use you can pay taxes on catastal value. In all other cases, ie from a company, as a company, non residential use - you pay on the price paid at atto and not the catastal value. Hope that clears up my mess!

Thanks so much Ram! V useful! So us musicians are not punished after all!! When my notary gets back I'll pass on anything useful...our sale was just 8 months ago so the information might be relevant for those about to take the plunge...

Thanks for clearing that up - it did seem most odd. The paragraph in the agenzia giude to compravendita di casa which made me jump is the following. Dal 1° gennaio 2007 ( per effetto della legge finanziaria per il 2007), per le vendite di immobili ad uso abitativo (e relative pertinenze) effettuate nei confronti di persone fisiche che non agiscano nell'esercizio di attività commerciali, artistiche o professionali, la base imponibile ai fini delle imposte di registro, ipotecarie e catastali può essere costituita dal valore catastale dell’immobile, anziché dal corrispettivo pagato. Questa regola nel 2006 era ammessa , invece, a condizione che entrambe le parti fossero dei privati. I probably didn't pick up a double negative.

You say;- " ........... if you are buying as a private person from a private person for residential use you can pay taxes on catastal value ........" Does 'residential use' mean just for use as your permanent residence - or does it include buying for a 'holiday home'? [Doesn't affect me - bought years ago, can't remember what taxes I paid]

Thanks to the kind help of Ram I have now clarified why our purchase was not based on catastal values. Our farmhouse was classed as 'collabenti' and as such the purchase was not subject to residebt to resident 3% taxes alas. So a warning - if you are buying a building which has been in a state of disuse for many years it is worth seeing what it's current classification is!

I think its the attività that threw us - here meaning company not and not profession. Rachel to be 100% clear you did get 3% agevolazione prima casa but on the purchase price not on the catastal value - because you bought unita collabenti and not a 'house' . Unita collabenti dont have a rendita catastale and therefore cannot be used as abasis for calculation..

Sorry Ram you are quite right... I don't know what I was thinking of and I did actually understand you but just wrote out a response too quickly... So for final clarification we paid 3% ie residential rate but based on the purchase price not the lower catastal value. For those of you considering buying in Italy this means that is you need to be especially aware if you are paying purchase taxes at the non-res' rate (10%) on a property to restore which is classed as 'collabenti' as you can't count on your taxes being calculated on the catastal value so will get a really hefty purchase bill. Now here's another scenario though... within the 18 months in which we have committed to obtain residency we will have made one outbuilding habitable. What will happen, does anyone suppose, if we decide not to obtain residency but in the meantime have the property acatastoed to a residential dwelling...so it now has a catastal value on which to base the taxes? Presumably the tax office would still look back to the point at which we bought and not (in our favour) ask us to pay the difference between the new 10% non-res tax based on catastal rather than the 10% based on purchase price?

This is an old thread which I am restarting because this is the only place where I have seen a potential light ant the end of the tunnel! I am going through the exact same issue and I am getting different answers from the estate agent, the notary etc. I am an EU citizen moving to Italy, buyng a beautiful house near Assisi to restore and I'm in the final days before signing the deed. The house is classified as 'unita collabente' and as such the Tax authority says that resident tax rules for 'prima casa' do not apply here because it is not livable. So, instead of the 2% tax, they are imposing 9% tax on the purchase price of the property. Hence, my questions - Why are we being charged 9% on the overall purchase price and not the cadastral value? If the cadastral value is minimal because the property is unhabitable, how did the previous poster manage to pay just the 3% and then move in within 18 months? Do you need to provide any evidence to the tax authority? Thanks anyone for your help here

Hello Gwenwiseman! So what we did as Brits buying our two properties (casale and casaletto) which were both marked as 'collabente' was to say at the point of sale that we were buying as residents, but they were uninhabitable. Our taxes would have been ridiculous for ruins requiring hundreds of thousands of euros of renovations otherwise. In 2011 in this situation you were given an amount of time, 18 months I think, to get yourself signed on in your commune as a resident. This is/was obligatory anyway if you ever want to stay for more than 3 months so isn't so onerous and easy if you're an EU member (enjoy it whilst it lasts). We ended up living in our half finished casaletto for about 8 months whilst waiting to see what life threw at us. I should add that since this (2012/13) I have written to the commune thwice asking for them to change mt status over to non-resident but they keep leaving me down as resident for some reason. I will actually go in definitively this year ad sort it out. I pay full taxes in the UK as we rented out our house there during these years so had an indisputably UK based income and the advice we had was that , owing to the double taxation agreement, we would not be taxed twice. The reason people like to have the status of their disregarded buildings as 'collabente' is that they then aren't liable to a yearly tax for their very existence. Do feel free to send me a private message if I can help further. I do feel for you having been there ourselves!

There is no cadastral value because the owner, in registering their staus as 'collabente' sacrificed this. Great for him so now 'council tax' like taxes in Italy but a bad situation for a buyer. If I had my time again and a better understanding of the system i would insist the properties were given a cadastral value if possible and start paying the taxes before buying if this means a substantial reduction in purchase taxes. I can't remember though if it's a chicken and egg situation as there are many boxes to be ticked to get a 'certificate of agibilità' which may, or may not, be required to get the building ack on the cadastral register. Maybe it's very simple and if so, arrange to do it with an agreement with the seller before you buy, even if you offer to pay the geometra etc, if it'll save you tens of thousands of euros!

If it is a unita colabente it has no cadastral value and therefore you pay tax based on the price paid - the same is true for D/10, C/6 etc - anything that is not a civil habitation.. Do not try to reaccatast the property prior to the purchase - it will end in tears. Usually the owners use the unita colabente solution to avoid paying IMU on a wreck. However if a UC suddenly becomes a house again with no building concession or SCIA for restoration the tax office/comune/Beni Culturali will want to know why - with heavy sanctions. Theagent should have explained this to you. The only way forward legally is to offer a price which takes into account the larger tax bill you will have to pay on purchase. It comes asnews to most sellers too so usually they are willing to compromise.