Registrar tax and property purchase
Any residential or non-residential property transfer in Italy is subject to the Registrar Tax; further taxes may be due upon recurring certain requirements, the most common taxes are:
- Stamp duty
- Mortgage Tax
In terms of taxes, it makes a difference whether the seller is a private person or a business, and whether the property is residential rather than industrial or commercial.
Normally, the registrar tax rate due upon purchase is set at 9% of the transaction value, therefore if the property costs € 100,000 registrar tax due amounts to € 9,000. As simple as that.
Another system applies to residential properties purchased by private individuals, the so called “prezzo-valore”. This system disregards the actual transaction value, but rather focuses on an arithmetic formula to determine the price on which to calculate the registrar tax, starting from the “rendita catastale”.
Rendita catastale x 1.05 x 120
On the above result, the 9% tax rate is applied to determine the amount of registrar tax due upon purchasing a real estate property. It is therefore more beneficial in case the property has a higher market value, thus resulting in a reduction of the value onto which the registrar tax is calculated.
Tax is due at notary deed signature and you must transfer the funds in escrow to the notary who in turn will pay the taxes due on your behalf.
Finally, note that all of the above transactions must take place via bank wire, bank guaranteed cheques or any traceable money transfer, excluding therefore cash payments.
Further taxes are due if the property is financed through a mortgage.
Calculate Imposta Registro
Primary residence purchase
A reduced 2% registrar tax rate is applicable to any primary residence purchase. In order to benefit of such reduced rate, the buyer needs to state the intent of benefitting of the reduced rate in the deed, and then transfer the registered residency in the same municipality where the property is located within 18 months from the purchase date.
The taxpayer is not required to move his residency in the property, because the property might not be livable, requiring renovations and restorations that may extend beyond the period set by the law.
Note that in order to benefit of the primary residence property tax exemption, you must be registered in that premise, not just in anywhere in the Municipality.
On top of that the coefficient used to calculate the cadastral value is reduced from 120 to 105, thus resulting in a lower overall value onto calculate any tax due.
If a taxpayer already benefit of the primary residence reduction in registrar tax is not barred from the benefit on any other residential property purchase, as long as the previous property will be donated or sold within 12 months from the deed date. This is normally applicable when moving to a larger house that carries a higher cadastral value.