The taxation of deeds in Italy.
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The purchase of a property for residential use, in Italy, as in other countries, is subject to the payment of taxes that affect the transaction. There are three main taxes:

    • The registration tax, essentially connected to the transfer of wealth.
    • The mortgage tax, connected to the service of the deed in property registers.
    • The cadastral tax, arising from the service of tax census of the property in the tax books.

If the purchase is made by a builder who has built or totally renovated the property it is subject to the payment of another and different tax VAT, which is paid directly to the seller in addition to the price and which the seller in turn pays to the state.

The VAT rate is normally 10% of the price, or, if it is the buyer’s ‘first home’ (see below), the rate is reduced to 4%.

In these cases, the three taxes referred above are paid in the fixed amount of 200 euros each, which are paid to the notary together with stamp duty (230 euros) and other minor taxes with a total expenditure of 920 euros that the notary collects and turns over to the state.

If, on the other hand, the purchase is made by a private individual and the transaction is exempt from VAT, the mortgage and cadastral taxes (referred to in letters B and C above) will be only 50 euros each, but the registration tax (letter A) will have a greater incidence and will be 9% of the purchase price (if the purchasing party is a company) or of the tax value of the property (normally much lower if the purchaser is a person (or persons) and not a company.

The rate is reduced to 2% (but still with a minimum of EUR 1,000) if the person buying is eligible for the first home allowance.
These benefits apply if:

  • The purchaser has residence in the municipality where the property is located or undertakes to transfer it within eighteen months of the deed
      .
  • Does not already have any other property in the same municipality
      .
  • Has no other property, anywhere in Italy, purchased with the benefit of the first home relief
      .

Finally, these same requirements are required in the case of purchase from a company to reduce VAT from 10 to 4%.

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