3085 Questions on Cost and Tax implications on Buying

Within the next two weeks I will be off to Bolsena. Hopefully, to close a deal on the purchase of Land to build and old farmhouse style Dwelling (already designed and approved) However, I still have some silly questions I need answering can any of you legal minds out there help.

Registrations tax or property purchase tax: (payable on completion of sale)
• Is the land purchase eligible for registration tax as this tax is payable on property purchases? There is no mention of land only purchases.
If so:-
• As it is land, is it classified as agricultural land (where pay 10%) or can it be de-ruralised (as to be build on) and so pay 7%

• As I will be a non resident of Italy (less than 183 days residence), when purchasing the land, will I be eligible to pay further 1% land registry tax. Also, if I become a resident,then can the fees associated with buying a property be offset against income tax.

On new Italian properties ( As I intend to build my own) there is VAT payable at 9% for non luxury property and 19% for luxury property. Is this tax applicable for the land or just the build costs. That is, is the land purchase treated the same as a new property purchase? What is the distinction between luxury and non luxury property?
When does the Vat have to be paid before construction or After?

Notary fees – open cheque book possible! What are the fees charged for the work involved for the purchase.

Legal fees
Will Conveyancing fees be charged (from 1 to 2% of the value of the property) by the lawyer;

Estate agent commissions (generally 3 to 8%) and what proportions are charged by the vendor and buyer.

Is it financial better to buy the Land and property through a limited company.

Sorry if in another thread but brand new to this

Category
Legal

You need legal advice. From what I understand until someone more knowledgable replies and could be wrong. Agricultural land is taxed at 18% when buying with a property already insitue but the value placed on the land is lower than buildings. e.g. 50,000e for property and 5,000e for land so 18% on land is not so bad. In your case I am not sure,seeing it is land with planning permission.

notaio has explained the difference between luxury or not, need to do a search in bar above, he has also given guide for notary fees but expect to pay more, it depends on how much extra work is involved. Conveyancing is part of the notaries job, if you use a lawyer they tend to have fixed fee, also with additions if required, around the 2000-2500 euro mark. You will still need to pay the notary anyway.

Estate agents, 3% buyer 3% vendor is the norm but if they request higher it is your choice.

I stand to be corrected but may help in the mean time.

Shirino, I would suggest that you click on the Giambrone and Law advertisement at the top of this page, they are well versed in the Italian system and it's peculiarities and am sure they would be willing to handle your purchase and answer your questions, you will need up to date info. as I understand there were several changes for the current financial year.
Good Luck

Thanks to all for your advice I'm sure I'll get there in the end. Maybe I should just buy a Yacht and stick it on the lake

[QUOTE=shirino]
Registrations tax or property purchase tax: (payable on completion of sale)
• Is the land purchase eligible for registration tax as this tax is payable on property purchases? There is no mention of land only purchases.
If so:-
• As it is land, is it classified as agricultural land (where pay 10%) or can it be de-ruralised (as to be build on) and so pay 7%

• As I will be a non resident of Italy (less than 183 days residence), when purchasing the land, will I be eligible to pay further 1% land registry tax. Also, if I become a resident,then can the fees associated with buying a property be offset against income tax.

On new Italian properties ( As I intend to build my own) there is VAT payable at 9% for non luxury property and 19% for luxury property. Is this tax applicable for the land or just the build costs. That is, is the land purchase treated the same as a new property purchase? What is the distinction between luxury and non luxury property?
When does the Vat have to be paid before construction or After?

Notary fees – open cheque book possible! What are the fees charged for the work involved for the purchase.

Legal fees
Will Conveyancing fees be charged (from 1 to 2% of the value of the property) by the lawyer;

Estate agent commissions (generally 3 to 8%) and what proportions are charged by the vendor and buyer.

Is it financial better to buy the Land and property through a limited company.

Sorry if in another thread but brand new to this[/QUOTE]

The taxation on a land purchase depends on the "quality" of the land.
If the land is rural (agricola) you pay a total amount of 18% on the price (15% registro - 2% trascrizione 1% catasto).
If the land is "edificabile" (i.e. you can build on it), the total tax is 11% (8%registro + trascrizione and catasto).
The qualification of the land is given by the Piano Regolatore Generale (General building plan) of your local comune.

This is the general rule.
There are a lot of exceptions.
I.e.:
if the land is "edificabile" and there's a "piano particolareggiato", that is a special qualification given by the comune for a specific area, the tax is reduced to a mere 1%
If the land is in a mountain area (above 800m) there are huge reductions and so on.

I suggest you is to contact the local notaio you'll appoint for the contract and explain him your situation and needs, making a clear descripition of what you're going to buy.
He'll be able to advice you in the best way, because these kind of informations are the daily bread of notaries' activity.

[FONT=Arial]The real estate taxes (based on the value of the property) you pay on top of the purchase price are sanctioned by article 40 of D.P.R. No. 131 dated 26 April 1986 ([I]testo unico dell’imposta di registro[/I]) and subsequently amended by Decreto Legislativo No. 7 dated 31 Jan 2005. [/FONT]

[FONT=Arial]Property transactions are taxed according to whether the vendor is a company or private individual, and whether you are applying for permanent residency and buying the property as your [I]prima casa [/I]or not. If the vendor is a limited liability company for example, you will have to pay IVA of 10% (4% if it is your prima casa). If you are buying from a private individual, the taxes are as follows:[/FONT]

[FONT=Arial]Imposta di Registro: This is the transfer of title tax levied at rate of 7% (3% if it is your prima casa). [/FONT]
[FONT=Arial]Imposta Ipotecaria: This tax relates to the financial charge register and is levied at a rate of 2% (or a fixed amount of €168 if it is your prima casa). [/FONT]
[FONT=Arial]Imposta Catastale: This is the cadastral registration tax levied at a rate of 1% (or a fixed amount of €168 if it is your prima casa) [/FONT]

[FONT=Arial]In addition to what Notaio says as far as land is concerned, If I remember correctly you would only be eligible to pay the reduced rate of 1% if you register as a farmer ([I]coltivatore diretto[/I]). [/FONT]

[FONT=Arial]Legal fees will vary and I’ve already noticed some disparity between lawyers who provide conveyancing in the market place (in some cases this disparity amounts to over 30% for essentially the same package). This is for you to decide. However, it is always best to seek independent and professional legal advice, especially on how best to structure the purchase in order to get the best out of your assets whilst minimising your tax liabilities. [/FONT]

[FONT=Arial]Notary fees are not based on a percentage of the purchase price but on a scale of nationally set charges (tarriffario), which are fixed by law. They are not negotiable and are calculated on the final purchase price, with amounts ranging from a minimum to a maximum. In theory, the higher the purchase price, the higher the fees. But if the Notaio is handling a very complex case, you can expect to pay a lot more for services rendered. [/FONT]

[FONT=Arial]You can purchase a property in Italy via a UK registered Limited company, an Italian partnership with unlimited liability, a private limited company or public limited liability company, or even via an off-shore company. Each route has its advantages as well as disadvantages and you will need to weigh up the risks with potential gains.[/FONT]

[FONT=Arial]For example, incomes generated by resident limited liability companies, regardless of where they are realized, are subject to corporate income tax, or [/FONT][I][FONT=Arial]Imposta sul Reddito delle Società [/FONT][/I][FONT=Arial](IRES), levied at the rate of 33%. Consequently, income from land and buildings owned by such entities must also be calculated according to the criteria established for business income. Only rented land and buildings that are not used for commercial and business activities are excluded from this rule. In this situation, the cadastral criteria applied are those applicable to individuals. [/FONT]

[FONT=Arial]Partnerships, companies and entities of all types, which are non-resident within state territory (whether having legal status or not) are subject to the IRES on the aggregate income produced in Italy during the applicable tax period. Italian tax regulation provides that non-resident taxpayers are taxed in Italy on any income derived from land and buildings located in the State.[/FONT]

[FONT=Arial]Because of these taxation implications, I would seek the advice of your accountant or solicitor before deciding which route to take. [/FONT]