A brief guide to taxes for buying a house

Taxes associated with buying a house are frequently overlooked, yet they are crucial additional costs that can substantially impact the overall expense of a real estate investment. Knowing them is crucial to accurately plan your budget, thus enabling you to make more informed and secure investment decisions.

After finding your ideal home and deciding to buy it, addressing the tax implications of this decision is essential. Beyond the basic factors like the property's location and size, buying a house estate necessitates a thorough analysis of the tax implications associated with the transaction.

Besides the agreed-upon purchase price, the notary fees and the commission fees in case a real estate agent is involved, every real estate transaction requires the buyer and the seller to pay certain taxes. The notary calculates these taxes and collects some of them on behalf of the government. The specific taxes and their amounts vary based on several factors. These include whether the seller is an individual or a company and whether the buyer qualifies for any tax benefits, especially when purchasing their first home.

So, let’s look at the key taxes to consider.

Taxes for buying a house from a company

When you buy a house directly from the company responsible for its construction or renovation, the following taxes apply, provided the sale takes place within five years of completing the construction or renovation work:

• - Legal transcription fee: 200 euros
• - Cadastral tax: 200 euros
• - Registration tax: 200 euros
• IVA: 10%

When you buy a house directly from the company responsible for its construction or renovation, the following taxes apply, provided the sale takes place within five years of completing the construction or renovation work:

• - Legal transcription fee: 50 euros
• - Cadastral tax: 50 euros
• - Registration tax: 9% (with a minimum amount that cannot be less than 1000 euros)

Taxes for buying a house from a private seller

Taxes for buying a house from a private seller

• - Legal transcription fee: 50 euros
• - Cadastral tax: 50 euros
• - Registration tax: 9% (with a minimum amount that cannot be less than 1000 euros)

Tax benefits for first home purchases

Purchasing a first home in Italy comes with significant tax advantages, leading to savings through reduced tax rates.

For purchases from companies subject to VAT, the first home tax benefits include:

• - Legal transcription fee: 200 euros
• - Cadastral tax: 200 euros
• - Registration tax: 200 euros
• VAT: 4%

On the other hand, when buying from private individuals or companies that are not subject to VAT, taxes for a first home include:

• - Legal transcription fee: 50 euros
• - Cadastral tax: 50 euros
• - Registration tax: 2% (with a minimum amount that cannot be less than 1000 euros)

Eligibility for these tax benefits hinges on meeting certain criteria, which must be stated in the purchase deed:

• Eligibility for these tax benefits hinges on meeting certain criteria, which must be stated in the purchase deed:
• The purchaser should not already own, whether solely or in shared ownership with their spouse, other residential properties in the same municipality.
• The purchaser should not have previously availed of first home benefits for buying other properties in Italy.
• The property should not fall under the luxury property categories, specifically A1 (luxurious homes), A8 (villas), or A9 (castles and historically or artistically significant palaces).

Additionally, these incentives also apply to the ancillary parts of the property. This is applicable even if these parts are acquired through a separate transaction, as long as it occurs after the purchase of the main property.

First home benefits for Under 36

Further measures have been introduced to support young people looking for a home. These include the so-called "Under 36 First Home Bonus," offering an exemption from legal transcription fees, cadastral taxes and registration taxes for property purchases that are not subject to VAT. In cases where VAT is applicable, this benefit not only provides an exemption from the aforementioned taxes but also grants a tax credit equivalent to the VAT amount paid to the seller.

These incentives are available for transactions completed between May 26, 2021, and December 31, 2023. Eligibility is extended to individuals under the age of 36 at the time of the contract signing and whose annual Indicator of Economic Situation Equivalent (ISEE) is below 40,000 euros.

Taxes for buying luxury homes

When purchasing a house classified as a luxury property (under cadastral categories A1, A8, A9), the applicable tax regime is more substantial, and exemptions typically offered for first home purchases are not available.

For property transactions exempt from VAT, the taxes are as follows:

• - Cadastral tax: 50 euros
• - Legal transcription fee: 50 euros
• - Registration tax: 9%

In cases where the transaction is subject to VAT, the taxes are:

• - Registration tax: 200 euros
• - Cadastral tax: 200 euros
• - Legal transcription fee: 200 euros
• - VAT: 22%

Tax calculation for house purchases

Typically, the taxes for buying residential real estate are calculated based on the price stated in the purchase agreement. Typically, the taxes for buying residential real estate are calculated based on the price stated in the purchase agreement. However, under certain conditions, the "price-value" method can be applied. This method calculates taxes based on the property's cadastral value, regardless of the actual negotiated price for the sale (which must still be officially recorded in the agreement).

The price-value approach applies to transactions exempt from VAT and when the buyer is an individual not engaged in business, artistic, or professional activities To take advantage of this mechanism, a specific request must be submitted to the notary at the time of purchase.

**This article serves the sole purpose of providing general information and should not be considered a substitute for advice from a qualified professional.**