Italy — investment

My home is my castle

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Italy’s “dolce vita”’s lifestyle is iconized by movies like Roman holiday (1953), La dolce vita (1960) and more recently Under the Tuscan sun (2003).

The country is famous also for its food which is considered to be the world’s most popular.

My favorite movie about Italian food is Stanley Tucci’s THE BIG NIGHT (1996), the story of two brothers, recent immigrants to America, who run a restaurant named Paradise. You cannot miss the hilarious (dramatic for an Italian!) scene when the chef labors all day to create a perfect seafood risotto but a customer complains she cannot find the seafood. Then she asks for spaghetti and meatballs as a side dish and the Chef tell his brother (Stanley Tucci):

“…………… she is a criminal!”.

Can you obtain a residence permit by purchasing a property? NO

Italy — differently from other EU countries — does not have a residency by real-estate investment program, but this does not discourage many buyers to dream purchasing a house in our country.

Houses for sale at € 1, is it true?

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A growing number of small towns in Italy have started to put abandoned properties on sale for just € 1. The programs are attracting worldwide attention and the interest of many potential buyers. The goal of these programs is mainly to resettle rural areas. Details of the programs vary depending on the town but in most cases the purchaser is required to submit a renovation plan which must be completed within a set deadline.

Why not buy a Castle?

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If your budget is higher than € 1 there are plenty of historical buildings on sale in Italy. Some properties are privately owned and have been owned for centuries by the same family. In recent years, however, due to the increasing costs of maintenance, cuts in government subsidies to maintain historical properties and an increase in property taxes, many of these properties were put on the market. Furthermore, many historical and valued buildings are also owned by the State which has started a program to sell it or lease it. Many of the assets (which include palaces, villas and hotels) need to be redeveloped but several are in city centers and attractive locations and prices can be lower than market prices. The Tuscany Region has a dedicated website where available properties are displayed.

Which visa options are available?

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While the purchase of a property does not automatically grant a visa, it is still possible to obtain a kind of ‘retirement visa’ (residenza elettiva) by proving a “passive” income (i.e. pensions or savings, not a salary or compensation for work) of not less than € 31,000/year. This visa, however, does not allow the individual to work while in the country. Another option could be the Investor’s Visa which requires to invest (i) € 2 Million in Italian government bond; (ii) € 500 K in a company or € 250 K in a start-up (ii) € 1 Million in a philanthropic project.

Is my purchase safe and guaranteed?

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The purchase of real estate, from a legal standpoint, is very safe in Italy. A Notary, who is a public officer under Italian law, will intervene in the acquisition procedure. Notaries act on behalf of the Government and NOT on behalf of either the buyer or the seller and they are completely neutral. Italian Notaries perform more duties than those normally associated with Notaries in other countries. Notary Public must carry out a legal and administrative due diligence on the property to make sure that the seller has the full title on the property, the property is free from mortgages, liens or other burdens, and it is compliant with building and safety regulations. The Notary’s due diligence does not include any checks on possible structural defects and it is therefore advisable to appoint a specialized technician for this purpose. As additional guarantee, if you buy a property under construction, the builder — until Closing is finalized — must provide a bank or insurance guarantee equal to price paid. The buyer is therefore protected against the builder bankruptcy or failure to complete the project. Furthermore, the seller is liable for major defects of the property until 10 years after the Closing. Last but not least, the buyer can request that the Notary acts as escrow agent and keep any funds paid by the buyer in deposit, until the closing is finalized.

Where to buy

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Many foreign buyers purchase a property with the scope of deriving an income from short rentals to tourists. Buying a residential property in the historical centre of one of main cities can be expensive, but there are surely more opportunities to rent it. Gross rental yields in the historical centre of Rome, Milan, Venice and Florence, range from 2.4% to 4.4%. If you have a lower budget, you can take into account a property in regions such as Abruzzo, Molise, Calabria or Sicily or the less expensive parts of more famous and expensive areas such as Tuscany or Lake Como. Generally speaking, northern Italy tends to be the most expensive part of the country, and the further south you go, the lower the house prices are. But there are many exceptions to this rule, for example Capri Island, Amalfi Coast or Puglia.

Are there any limitations for foreigners to buy?

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As a general rule, Italian law permits the purchase of real estate by foreigners. However, can be a few exceptions for foreigners coming from countries that do not grant reciprocity rights to Italian citizens (i.e. countries which do not allow Italian citizens to purchase a property).

Incentives for restructuring works

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In order to protect and boost the construction industry, the Italian government has approved a special 110% deduction applicable to building renovation works for energy efficiency and for seismic risk reduction work. In addition, the possibility of assigning credit to financial intermediaries is also given to the end of favoring the energy requalification of the buildings to become more eco-sustainable. Investors can also take advantage of the new flat-tax regime for new residents. In fact, individuals transferring their tax residency to Italy can take advantage of a flat tax regime (€100,000) on their foreign income.

𝗟𝗮𝘀𝘁 𝗯𝘂𝘁 𝗻𝗼𝘁 𝗹𝗲𝗮𝘀𝘁 …… 𝘁𝗮𝘅 𝗯𝗲𝗻𝗲𝗳𝗶𝘁𝘀!

Italy offers several tax benefits and incentives to new residents:

  • 7% income tax: Pensioners residing abroad who move their residence to certain municipalities of the Centre and Southern Italy can benefit from the optional scheme for non-national pensioners, which provides for a substitute tax of 7% on all income generated abroad;
  • Tax benefits for impatriate workers: income from employment and self-employment generated in Italy by workers who move their tax residence in Italy is 50% exempt. The benefit is due from the year in which the residence for tax purposes is acquired and for the following 4 years;
  • Individuals transferring their tax residency in Italy can also apply for a special yearly flat tax of € 100,000. To qualify for the option the applicant must not have been resident in Italy for at least nine tax years during the previous 10 years.

Disclaimer: The information provided on this article (i) does not, and is not intended to, constitute legal advice; (ii) are for general informational purposes only and may not constitute the most up-to-date legal or other information (iii) this website may contain links to other third-party websites. Such links are only for the convenience of the reader; (iv) readers should contact their attorney to obtain advice with respect to any particular legal matter.

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Marco Mazzeschi, is an attorney at law admitted in Milan and Taipei, Adjunct Professor at the Chinese Culture University — www.mazzeschi.it

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Marco Mazzeschi

Marco Mazzeschi

Marco Mazzeschi, is an attorney at law admitted in Milan and Taipei, Adjunct Professor at the Chinese Culture University — www.mazzeschi.it

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