Prima casa but non-resident renovation tax relief question

05/14/2012 - 11:33

Hello,We are a family grappling with how to best sort out the financial side of renovating our casale in the Sabina mountains which will be our main home in a few years time. Both my partner and myself are currently UK residents and initially we had thought I'd come out to Italy before the 18 months deadline of gaining residency. However, as my partner doesn't have property in his name in the UK (but I do) I am wondering whether we should attempt to put the Italian house is in his sole name and thus it would be his 'prima casa' even though resident in the UK (we live in a rented home presently) whether he would be entitled to any of the renovation tax concession for turning our lovely ruin back into a liveable state again? Any ideas? At the moment the house ironically is in my sole name so we'd have to see if we could 'flip' it into his name anyway. Also if it's his 'prima casa' but he's a non-resident are there any other advantages?Thanks

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Property

Comment

For it to be your partner's main residence and therefore get a reduced IMU bill and claim the tax relief (remember this is claimed as tax relief on the income tax you pay in Italy and not a grant) for renovations your partner would need to live here and pay tax here. You can't 'flip' it into his name and assuming you are not married would need to do another deed at the notary I think and pay purchase tax. If you bought with the 'prima casa' reduced rate of tax you (ie not your partner) will have to take residency in Italy within 18 months from the date of the deed otherwise pay back the saving in purhcase tax. If you don't voluntarily pay it back within the 18 months (assuming you haven't taken residency within this period) you will also get a 30% fine plus charges. These things are hard to undo or change once done I'm afraid.

Thanks Penny. We are in total 'suspension' at the moment anyway as the plan was for me and the kids to go out ahead of my partner. Maybe it's the home in the UK we should put in his sole name I'm beginning to think in the same way that Italian married couples can legitimately have due prime case! I have no problems with paying tax totally above board (we even made a full declaration of value when we bought our casale, much to our vendor and notary's surprise!) it's just the huge complication of the system and I suspect a major drop in our letting income we rely on of our UK home if it is taxed at 40% rather than the 25% minus deductions at present. It is also the worry of what happens when we sell the UK house if it's in my name but my nominated prima casa is in Italy. I imagine the Italian tax system would demand some capital gains share...

Penny Whenever I ask about grants or help with renovation it seems to go quiet and dont seem to get an answer from the Italians. Do you have any information that could help us.

I agree there seem to be many misconceptions...my architect mentioned something about it being so small as to be insignificant but when I brought this up with him but when I said I thought it was currently based on up to €48,000 (don't quote me!) of renovation workover 10 years as a tax deduction his ears pricked up. Does that mean €4800 off your tax bill each year? There are lots of forms to be filled in prior to starting work for you to be eligable so you have to be one step ahead. Has anyone gone down this route? I'd love to hear of real examples of this renovation 'reward' in action. personally I think it's a great incentive to preserve many crumbling old buildings like ours...nothing 'grand' but very much part of the landscape and history of our lovely community...and the 3 feet deep walls really do keep the heat out in the Summer without air-con!! They knew what they were doing 250 years ago!

Hi Rachel - It looks like we are about in the same position as you, trying to sort it all out before the 18 months are up. Our property is in the sibillini mountains and we need to start some work before the cold weather sets in. If we want to be residents we will need work in Italy before we can get any help with repair work ? Lots of you must have been through this and find it boring now but when your in the middle of it, its not fun.

My understanding is that if you are paying tax in Italy, you can claim 36% of building restoration costs as a tax deduction, up to a maximum, as already stated, of 48,000 euro over ten years. The IVA on the building works and materials is reduced to 10% (tax payer or not, I think). Payments must be made by bank transfer and the causale of the transfer must state the codice fiscale of the person making the payment and the codice fiscale or partita IVA of the recipient. You can go to the bank or Bancoposta and have the payment made using the form 'Ordine di Postagiro - Bonifico per detrazioni fiscali'. It appears from reading the info on the Agenzia della Entrate site, that you could make the payment by online banking as a normal bonifico as long as the above information is included in the causale. I doubt that I earn enough to take advantage of the full amount of the deduction, but nonetheless I'm making payments on my restoration project in the above manner and giving copies to my accountant in the hope that she'll be able to get some tax relief for me. There's much more to this than I have stated - full details are on the Agenzia delle Entrate site http://www.agenziaentrate.gov.it/wps/content/Nsilib/Nsi/Home/CosaDeviFare/Richiedere/Agevolazioni/DetrRistrEdil36/SchInfoDetrRistrEdil36/ Warning - I am hopeless with financial matters so check with an expert as I could well be mistaken!

Many thanks Ram that's really helpful. No surprises here as the UK has been following this principle for years. Out of interest, do you know what happens as regards purchase tax if 'residenza' is held in Italy for say 3-4 years, followed by a period of being 'resident' in another country and then is resumed...or not...even if the property still exists? We are a family with internationally mobile jobs, so probably a bit unusal as we have to adapt to an unknown future all the time...hence so many questions! To those who find such questions annoying please don't reply...I've become a little nervous using this forum!

Most of us are only too ready to help if we can. The occasional resident village idiot is best ignored

Thanks Annec! I too think the world is a better place for passing on 'gleaned' information and sharing experiences when done in the spirit of making the world an better and easier place! Information can always be rejected but actually people giving real life examples of their experiences is SO helpful. If only to know what questions to ask a pro'!

Under the new Monti laws the common practise of a married couple having 2 prime case is on the way out. You get prima casa where the nuclear family live. A second house will remain a second house - unless the couple are legally separated (and even here there is discussion) To transfer a property into someone elses name requires a atto di donazione which costs about the same as a normal sale, or you sell it to the other person. Donations are fiddly things as they can be contested. Either way it has a significant cost.

Well, if you buy as prima casa, then move away but dont sell the house and switch to seconda casa - and then move back and want your prima casa back - nobody can stop you. However - you may well lose your agevolazione prima casa - ie the tax advantage onthe purchase. If you sell your prima casa and you took agevolazione at the outset, you have to buy another prima casa within 12 months or you lose it forever. Your case would be a bit more interesting as you arent actually selling the house, but you would give up your resident status. I think that it will always be your prima casa for agevolazione purposes so when it is sold you carry them forward. However, for tax purposes you would switch from prima casa - resident status to non resident and back to resident which has no inherent problems. Though it might be easier to keep residence - this is a thorny problem as the court of cassazione said that your prima casa is precisely that - the first house you buy in ITaly adn doesnt impinge on your tax status. But the government appealed so now nobody knows what the real situation is!

You have to be paying that much tax per year, to save that amount. If it works the same way as the geothermal 55% reductions, all invoices have to be paid by bank transfer. Please see below the last info I had on the above:Only existing buildings can benefit of 55% tax deduction, no benefit for new buildings/houses. Buildings have therefore to be registered by local "Catasto". This benefit is granted for all works inproving thermal and energetic consumption of the house, the complete list of works is available on Enea website, www.enea.it.Amount granted are:-euro 100.000 for lowerign energetic need of the building (new heating or conditioning system) (that is 55% of Euro 181.818,18);-euro 60.000 for house insultion, windows including shutters, roof, etc (that is 55% of Euro 109.090,90);-euro 60.000 for solar panels (that is 55% of Euro 109.090,90);-euro 30.000 for winter climatisation systems (that is 55% of Euro 54.545,45).When all works are finished, a qualified engineer has certify that all works are complying with requirements, and can fill in Form E of "Decreto del Ministro dell'Economia e delle Finanze del 19/02/2007" and sent it to Enea by internet.Other documents are to be kept for eventual inspection of Ministero delle Finanze:-copy of all payments made by bank transfer, indicating: invoice number, codice fiscale:"Pagamento fattura nr.XX del XX/XX/2009, beneficiario detrazione 55% Receipt of Form E sent to Enea by internet;-certification made by engineer that all works are made in the right way;all invoices related to the works

Hi Lucy & Gerry. There are no grants only the tax break that Belvedere (& Badger) have described above, for which you must be resident and paying tax in Italy to deduct the amount from your tax bill. If you have a building that has a vincolo (like a listing) with the Belle Arti then in theory you can get a grant off them but I would imagine that would be a long process and involve you using 'their' recommended restorers etc and so cost you more in the long run. You only need to take residency in the comune of Amandola to satisfy the 18 month residency rule so you could rent somewhere while you work on the house. If you don't take your residency within 18 months you get a pretty hefty fine (30%) and have to pay the difference between the 10% purchase tax you should have paid and the 3% you did pay so don't ignore it.