579 question for Notaio re declared prices

Dear Notaio,

Can you help me with this question concerning our rented appartment:

With the rate of inflation being so low our rent increase was less than the cost of registering the increase (which was divided equally between landlord and tenant). My initial suspicion was that the lawyer who drafted the contract and wrote asking for the increase and the registration fee was the only winner but our landlord assures us that all the registration fee is payable to the state. So now I am feeling sorry for the lawyer who has to do all this work pro bono. Can it be possible? Why didn't he foresee this at the contract drafting stage and suggest that we started with a slightly higher rent with no increases for the four years or is that not allowed? Are you obliged to register no rent increase each year too?

It is very kind of you to offer to help us poor foreigners I can't imagine the same happening in the U.K. or U.S.

Grazie

[QUOTE=sdoj]Dear Notaio,

Can you help me with this question concerning our rented appartment:

With the rate of inflation being so low our rent increase was less than the cost of registering the increase (which was divided equally between landlord and tenant). My initial suspicion was that the lawyer who drafted the contract and wrote asking for the increase and the registration fee was the only winner but our landlord assures us that all the registration fee is payable to the state. So now I am feeling sorry for the lawyer who has to do all this work pro bono. Can it be possible? Why didn't he foresee this at the contract drafting stage and suggest that we started with a slightly higher rent with no increases for the four years or is that not allowed? Are you obliged to register no rent increase each year too?

It is very kind of you to offer to help us poor foreigners I can't imagine the same happening in the U.K. or U.S.

Grazie[/QUOTE]

Let me understand.
Are you talking about taxes payed to Ufficio del Registro for a contract regarding the rental of an appartment ?.
are you tenant or landlord ?
How much did you pay?

Usually you have to pay tassa di registro when you sign the contract - 2% of the rental fee for the first year and than, every year, 2% of the rental fee plus the inflation increase, that now is very very low.

You can also pay the tax at the beginning for all the rental years considered by the contract, but is not very used, because, if the contract is solved before of its natural end, you've payed without reason

[QUOTE=notaio]Let me understand.
Are you talking about taxes payed to Ufficio del Registro for a contract
regarding the rental of an appartment ?.
[COLOR=Magenta]YES[/COLOR]
are you tenant or landlord ?
[COLOR=Magenta]TENANT[/COLOR]
How much did you pay?
[COLOR=Magenta]50% of 2% like you said[/COLOR]
[/QUOTE]

Thank you for your answer which was nice and clear but just to clarify - is it correct that there is a requirement for the contract to be registered at a cost of 2% each year for the term of the contract (in this case 4 years) or alternatively, if there is to be no rent increase, the contract can be registered at the outset for a registration cost of 8% (i.e. 2 x term).

Thanks again for your help - much appreciated.

[QUOTE=sdoj]Thank you for your answer which was nice and clear but just to clarify - is it correct that there is a requirement for the contract to be registered at a cost of 2% each year for the term of the contract (in this case 4 years) or alternatively, if there is to be no rent increase, the contract can be registered at the outset for a registration cost of 8% (i.e. 2 x term).

Thanks again for your help - much appreciated.[/QUOTE]

yes it is correct.

[QUOTE=will]Dear Notaio, wondered if I could trouble you with another teasing technical question concerning property, the difference between "Urban" and "Agricultural" status? What are the consequences and ramifications of each catagory concerning tax etc. The status of our house was changed to "Urban" during renovation, at the time we were anxious about some of the rights of purchase that neighbours had of our land, consequently we now pay ici etc I sometimes wonder whether we should have kept agricultural status, what would have been the negatives of doing so.........?[/QUOTE]

A urban property is essentially something that has been built.
A agricultural property is essentially a field.
There are also some buildings that are agricultural property, they are the so called "fabbricati rurali": they are used by farmers for living or working and are the one that most of you are looking for.
They are considered part of the land and have no value for the taxes, because their value is included in the value of the land: it's a benfit for the farmers that are considered a poor part of the population.
Of course, if the relation with the land is broken, since they've been sold separately they can be no more agricultural and must change status.
You need more than 10.000 mq of land to keep on the status of fabbricato rurale.
Consider that the law is changing and all those houses in the the future will became "urban" even if with a low rendita catastale

Hello Notaio,

On the subject of Urban or Agricultural property. If the property is on less than 10,000mq of land does it automatically get registered as urban if buying from now onwards. If it stays Agricultural is the registration tax higher than for urban or lower, in other words less or more than 10%.

Thanks

"You need more than 10.000 mq of land to keep on the status of fabbricato rurale."

We have 110.000mq and obviously the house (still rurale). Are there any advantages to staying rurale or will it not matter anyway as the law is changing?

[QUOTE=will]Gardahomes the Notaio did answer question on underdeclaring prices on a different thread which I have now posted below. (confusion is my fault as posted question in two places!)

"The taxation of the real estate sales is hypocritical !
The law says the the tax (registrazione) must be payed on the declared price.
The tax office can verify the price and, if finds that the price in higher can recover the tax you didn't pay.
BUT, if you declared a price compatible with the valore catastale, the tax office MUST accept your price as real and is not allowed to verify it.
This is good for the tax payer, but has no legal sense, because in this way most of the public contracts have a simulated price.
The system works because the post contract litigation is very low, since all the problems are normally solved before the notary, that give a good guarantee to the buyer about the effective proprety of the seller and the absence of mortgages etc and so the declared price becames not so important, since it very unlikely that the parties will litigate.
It could be dangerous when the seller is a person that could have debts, like an entrepreneur.
In thise case, the buyer is at risk, because, in case of failure, if the price of the sale is too low, the creditors can presume that you have taken advance of the seller's problems, buyng at a price in froud of the creditors.
As notaio I always try to give the best advice I can, but is not easy persuade people to pay more taxes."[/QUOTE]

Thank you, sorry I missed that. It's a refreshingly honest answer, usually the attitude is "see no evil, hear no evil, speak no evil!" :rolleyes:

[QUOTE=Penny]"You need more than 10.000 mq of land to keep on the status of fabbricato rurale."

We have 110.000mq and obviously the house (still rurale). Are there any advantages to staying rurale or will it not matter anyway as the law is changing?[/QUOTE]

The obvious advantage is that a fabbricato rurale has no value for the taxes.
For this reason now the law impose you to change it in urban unless there are some conditions.
the most important is the land surface (at least mq. 10.000) but there are others, you should personally cultivate the fields, live in that house etc.
You better ask to a geometra if you have such conditions.
I see that your house is in Sibillini, I remind you that a mountain area has a lot of tax concessions, did you take advantage of them?

[QUOTE=notaio]A urban property is essentially something that has been built.
A agricultural property is essentially a field.
There are also some buildings that are agricultural property, they are the so called "fabbricati rurali": they are used by farmers for living or working and are the one that most of you are looking for.
They are considered part of the land and have no value for the taxes, because their value is included in the value of the land: it's a benfit for the farmers that are considered a poor part of the population.
Of course, if the relation with the land is broken, since they've been sold separately they can be no more agricultural and must change status.
You need more than 10.000 mq of land to keep on the status of fabbricato rurale.
Consider that the law is changing and all those houses in the the future will became "urban" even if with a low rendita catastale[/QUOTE]

Hello Notaio,

On the subject of urban or agricultural property. If the property is on less than 10,000mq of land does it automatically get registered as urban if buying from now onwards. If not and stays agricultural is the registration tax higher than for urban or lower, in other words less or more than 10%.

I did post this earlier but no one answered. :(

Thanks

Sorry Polly, but I thought I aswered you, may be the "aswer is blowing in the net" or I've been confused by other questions. Still friends ? :)
Anyway,
first of all we have to considere if we are talking about land or land plus a farmhouse (fabbricato rurale).
In the first case the surface counts nothing.
It's the municipal authority that decides if a land is rural or not, with Piano Regolatore Generale, where tha land is divided in rural, buildable (correct in english?) etc.
All the purchase of rural lands, (100mq or 100.000 mq doesn't matter) are taxed at 18%, unless:
- you are a famer that personally cultivate the land (1%),
- you are an agricaltural entrapeuner (10%)
- the land is situed in mountain (1%)
- you accept the rule that you won't be able to sell it for 10 years and are personally going to cultivate it (zero)
°°°°
In the second case, land plus farmhouse, since the fabbricato rurale is considered part of the land, it has no value and should be taxed with the land at 18%, but you can split the prices in the contract and so the land will be taxated separately from the farmhouse, (18% vs 10 or 3%).
You have also to remember what I already said about the duty to change rural houses in urban houses if there are more the conditions to consider them as rural.
If you're going to buy such kind of house, should be your vendor to do that change, otherwise you have to consider this cost it in the price.

Just because I like to confuse people, I remind you that the "declared price" (see the above thread) is the rule in agricaltural purchases too.
It does mean that even if 18% is a huge tax, the real price is rarely declared, while the declared "valore catastale" is hugely lower than the real.
In this case there are some risks that are not rapresented by the tax authorities, but by your neighbours.
If they are "coltivatori diretti", that is farmers who personally cultivate the land, they have the right to purchase the land at the same price you declared. So if you declare 100, instead of 1000, and since what is considered valid is only the public contract, the coltivaotre diretto has the right to buy the land against you at the price of 100.
The solution is to verify if there ere coltivatori diretti close to the land you're going to buy, talk with them and if they don't wont to take the land, ask them to confirm it in the public contract, in this way, thay can take no more your land.

This has now worried me, the agent we are working with has stated 10% and no mention of 18%. Yet another thing I have to sort out.

Thanks to both of you.

To possibly reduce this 18% for less than 10.000mq , what would the process be to change the land from "semin arbor" to urban and how much would it cost or will it be done automatically when it is transfered to the new owner? Or is it not possible to reduce this on any land?

[font=Times New Roman][size=3]Could you please help with a financial logistical problem that seems to be threatening our purchase.[/size][/font]

[size=3][font=Times New Roman] [/font][/size]

[color=black][size=3][font=Times New Roman]We agreed verbally to buy a property and are awaiting the pre-contract for signature. We have cash available in the UK but are now at the point of trying to resolve the logistics of paying for the property. The seller is declaring the value to be a lot less than the declared price and we now understand this to be normal practice. As a consequence he is not prepared to receive full payment direct into his bank account for tax reasons.[/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]We believe that funds should be transferred in a traceable way for security and to protect our legal rights. This gives a fundamental problem which at the moment we can’t see a way through.[/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]It is suggested that we transfer the deposit direct to the seller’s account (as he is prepared to receive this as it is less than the declared value). The pre-contract is signed after he has received the money is his account. To our minds this is risky and we are suggesting it is signed first but made subject to the money being in place. We seem to be close to resolving this part of the transaction.[/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]For the balance, we are being asked to provide a bankers draft, preferably one drawn locally. To us this is an extremely risky scenario as the money is at risk whilst it is in the form of a bankers draft and we will be reliant on the honesty of all parties concerned in the transfer. If something was to go wrong, we cannot see how we can prove our part, or legally trace where our money has gone.[/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]We would like to transfer electronically the balance into any secure account which remains traceable, ideally we would like to transfer it into an escrow account (as we would in England, this being a holding account which lawyers can release on completion, but remaining the buyer’s property until transferred). It would appear that these do not exist in Italy.[/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]We would be prepared to entrust the transfer to a third party, provided that that third party has sufficient status. One suggestion was that the third party should be the notary, although this was later cancelled as the notary said this was not possible due to the discrepancy in values. Our lawyer is not prepared to be that party due to fiscal problems. [/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]I would add that we do not have an Italian bank account but cannot see how this would help. We are able to transfer money readily in Euros, and similarly obtain a Euro bankers draft encashable in Italy (not that we like the idea of carrying this around!). Our UK currency transfer agents strongly advise that money should be electronically transferred and not by bankers draft – although they readily can provide us with such a draft. [/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]Looking at the amount of correspondence on this subject, this is a common problem and one which no-one seems to have an answer to.[/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]Could you please advise.[/font][/size][/color]

[QUOTE=trullomartinafranca]This has now worried me, the agent we are working with has stated 10% and no mention of 18%. Yet another thing I have to sort out.

Thanks to both of you.[/QUOTE]

It depends on what you're going to buy.

[QUOTE=DaveJ]To possibly reduce this 18% for less than 10.000mq , what would the process be to change the land from "semin arbor" to urban and how much would it cost or will it be done automatically when it is transfered to the new owner? Or is it not possible to reduce this on any land?[/QUOTE]

It's the municipal authority - the City Council - that decides if a land is urban (buildable - 10%) or rural (for agricaltural only - 18%).
If the land (less than 10.000 mq) is annexed to a farmhouse (fabbricato rurale) that is going to be changed in urban (in the way I talked above), your geometra could change the land in "corte urbana", so the land is inscribed in catasto urbano and all the purchase pay 10%

[QUOTE=Flyingpigs][font=Times New Roman][size=3]Could you please help with a financial logistical problem that seems to be threatening our purchase.[/size][/font]

[size=3][font=Times New Roman] [/font][/size]

[color=black][size=3][font=Times New Roman]We agreed verbally to buy a property and are awaiting the pre-contract for signature. We have cash available in the UK but are now at the point of trying to resolve the logistics of paying for the property. The seller is declaring the value to be a lot less than the declared price and we now understand this to be normal practice. As a consequence he is not prepared to receive full payment direct into his bank account for tax reasons.[/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]We believe that funds should be transferred in a traceable way for security and to protect our legal rights. This gives a fundamental problem which at the moment we can’t see a way through.[/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]It is suggested that we transfer the deposit direct to the seller’s account (as he is prepared to receive this as it is less than the declared value). The pre-contract is signed after he has received the money is his account. To our minds this is risky and we are suggesting it is signed first but made subject to the money being in place. We seem to be close to resolving this part of the transaction.[/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]For the balance, we are being asked to provide a bankers draft, preferably one drawn locally. To us this is an extremely risky scenario as the money is at risk whilst it is in the form of a bankers draft and we will be reliant on the honesty of all parties concerned in the transfer. If something was to go wrong, we cannot see how we can prove our part, or legally trace where our money has gone.[/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]We would like to transfer electronically the balance into any secure account which remains traceable, ideally we would like to transfer it into an escrow account (as we would in England, this being a holding account which lawyers can release on completion, but remaining the buyer’s property until transferred). It would appear that these do not exist in Italy.[/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]We would be prepared to entrust the transfer to a third party, provided that that third party has sufficient status. One suggestion was that the third party should be the notary, although this was later cancelled as the notary said this was not possible due to the discrepancy in values. Our lawyer is not prepared to be that party due to fiscal problems. [/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]I would add that we do not have an Italian bank account but cannot see how this would help. We are able to transfer money readily in Euros, and similarly obtain a Euro bankers draft encashable in Italy (not that we like the idea of carrying this around!). Our UK currency transfer agents strongly advise that money should be electronically transferred and not by bankers draft – although they readily can provide us with such a draft. [/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]Looking at the amount of correspondence on this subject, this is a common problem and one which no-one seems to have an answer to.[/font][/size][/color]

[color=black][size=3][font=Times New Roman] [/font][/size][/color]

[color=black][size=3][font=Times New Roman]Could you please advise.[/font][/size][/color][/QUOTE]

are you able to pay the full price right now ?
In this case my first advice is to sign not the preliminary contract, but directly the public contract before the notary.
The seller pays no taxes, so the price and in conseguence the taxes is not his problem.
The question is how much taxes are you prepared to pay

Hi Flyingpigs,
This part of the transaction had us tied in knots and gave me sleepless nights but it all worked out just fine.
We had originally been told that we couldn't pay with drafts for more than 10,000 euros each so were concerned that we had to obtain a handful of drafts.
After the event I think this was based on the expectation that we would be handing over drafts drawn on an english bank.
In the event we purchased our currency with fxsolutions, transferred a chunk of it into our uk euro account so that we could withdraw some and physically take some of it with us so that we could pay the notary, taxes and estate agent in cash (not the most comfortable of situations I have to say when we are not used to carrying much cash usually).
My husband had it in a money belt and even though he was frisked at airport security it was undetected (maybe they couldn't distinguish it from his big beer belly ;) ).
The remainder of the euros were transferred to our Italian bank account and we asked the Italian bank manager to write us bankers drafts made payable to the vendor that we handed to the notary for inspection. He was happy with them and told us to physically hand them to the vendor after the paperwork had been signed and that was that.
It seems everyone has a slightly different experience but hope ours help you!
Best wishes, Lesley & Brian

Oh have just noticed the other response and have to say that's what we did.
Went from 'irrevocable intention to acquire' (can't quite remember the italian for that term) to the final contract without the preliminary contract.

Hope that doesn't muddy the waters.
Best wishes, Lesley & Brian

Thanks Notaio and everyone.

The land with fabbricato rurale would need to be change before purchase then, which I guess will take months?

Oh Notaio yes still friends :o

Many thanks to all.

Our seller has now agreed to accept the full amount by electronic transfer - albeit into the bank account of a party which is new to us. Neverthless, we are hoping our lawyer can tie this down contractually.

Will let you know how we progress.

[QUOTE=Polly]Thanks Notaio and everyone.

The land with fabbricato rurale would need to be change before purchase then, which I guess will take months?

Oh Notaio yes still friends :o[/QUOTE]

If the geometra is fast not months but weeks

[QUOTE=notaio]
I see that your house is in Sibillini, I remind you that a mountain area has a lot of tax concessions, did you take advantage of them?[/QUOTE]

Hmmm. I am almost certain we don't know about all of them. I know there is a reduction in our heating gas and oil and I think that is it. Should we have had some when we bought the house? It would be very interesting to know what they are. Could you list them?

[QUOTE=Penny]Hmmm. I am almost certain we don't know about all of them. I know there is a reduction in our heating gas and oil and I think that is it. Should we have had some when we bought the house? It would be very interesting to know what they are. Could you list them?[/QUOTE]

Just talking in general, because I don't know anything about your purchase,
if you buy a land, or even a rural house in a mountain area, you pay only 1% of taxes if you're going to to cultivate the land.
To be more precise, you have to be already owner of a land and the new purchase must be an addition to the old property, but the law doesn't say how much land you must own before.
So if you're going to buy, for example, 20.000 mq., you can split the the purchase in two, buying 1.000 mq paying 18% and than purchase the ramaining part paying 1%

Hi Notaio
You mentioned that the purchase of a property may be in jeopardy if the vendor goes bankrupt - within 2 years of the sale if the information I have is correct. Is there anything a buyer can do to ensure that their purchase is safe from any potential creditors - even if the vendor does go bankrupt within 2 years of the sale. Would declaring the full purchase price be enough?
Thanks for all your advice on the forum.
Mike

[QUOTE=mike&beck]Hi Notaio
You mentioned that the purchase of a property may be in jeopardy if the vendor goes bankrupt - within 2 years of the sale if the information I have is correct. Is there anything a buyer can do to ensure that their purchase is safe from any potential creditors - even if the vendor does go bankrupt within 2 years of the sale. Would declaring the full purchase price be enough?
Thanks for all your advice on the forum.
Mike[/QUOTE]

Declaring the full price it's a good idea.
You schould also take all the documents concernig your payments, better if via bank.
As I wrote somewhere in the forum, there's a new law concerning purchases of new houses built by an etrepreuner.
In the gap between the preliminary contract and the public contract which transfers the ownership, the vendor must give you an insurance or bank guarantee for the payement he's received.
So in case of his bankrupt before the public contract, you can have your money back just using this guarantee.
After the public contract you own the house and if there's a banckrupt, within one year from the sale (law's just changed) you could be called in front of a judge to prove you didn't take advantage of the debtor's problem.

[QUOTE=notaio]Declaring the full price it's a good idea.
You schould also take all the documents concernig your payments, better if via bank.
As I wrote somewhere in the forum, there's a new law concerning purchases of new houses built by an etrepreuner.
In the gap between the preliminary contract and the public contract which transfers the ownership, the vendor must give you an insurance or bank guarantee for the payement he's received.
So in case of his bankrupt before the public contract, you can have your money back just using this guarantee.
After the public contract you own the house and if there's a banckrupt, within one year from the sale (law's just changed) you could be called in front of a judge to prove you didn't take advantage of the debtor's problem.[/QUOTE]

Isn't it also possible to "register" the preliminary contract? Doesn't this provide the best protection?

[QUOTE=gardahomes]Isn't it also possible to "register" the preliminary contract? Doesn't this provide the best protection?[/QUOTE]

The mere "registration" doesn't give you more protection.
For "registration" I mean that you just pay the tax on the preliminary contract, bringing a copy to the "ufficio del Registro" a.k.a "Ufficio delle Entrate". In this way your contract has a legally definite date, but not a better protection.
A solution is to authenticate the contract before a notary.
In this way the contract in registered by the notary at the ufficio del registro AND inscriberd in the real estate register.
This second formality gives you a good prtection, because even if you're not yet the owner, when the preliminary contract is "inscribed" in the real estate registrar, the vendor can't sell the property to other persons, and you dont' have to be afraid of mortgages etc, because your contract prevails.
This is not very used, once again, for tax reasons.
In the preliminary contract (compromesso) you write the "real" price, while in the public contract.....see thread re declared prices.
So if you've authenticated the compromesso, then you have to pay the taxes on the "full" price .....

[QUOTE=notaio]
A solution is to authenticate the contract before a notary.
In this way the contract in registered by the notary at the ufficio del registro AND inscriberd in the real estate register.
This second formality gives you a good prtection, because even if you're not yet the owner, when the preliminary contract is "inscribed" in the real estate registrar, the vendor can't sell the property to other persons, and you dont' have to be afraid of mortgages etc, because your contract prevails.
This is not very used, once again, for tax reasons.
In the preliminary contract (compromesso) you write the "real" price, while in the public contract.....see thread re declared prices.
So if you've authenticated the compromesso, then you have to pay the taxes on the "full" price .....[/QUOTE]
Dear notaio
Yes, in fact I meant authentication before the notary, and the procedure you described above. Obviously there remains the problem of the amount of taxes to pay. If only there was a way to persuade the seller to comply...
many thanks for the clarification.