The rules regarding taxes to by paid by those buying houses in Italy will change beginning January 1st, 2014. A mini-revolution, according to the experts, which simplifies the current tax regime which is too diversified, but introducing only two tax rates (2% and 9%) and limiting the tax breaks to properties that truly represent a “primary residence”. The purchase of a home requires payment of three types of taxes (registry, cadastral and mortgage), which vary depending on the intended use of property, and on the seller’s category [e.g. private citizen vs. a business].
The modifications introduced by the new regulation favor sales between private citizens. In the case of a primary residence purchased from a private seller, the registry tax drops to 2% of the value declared in the purchase contract, also known as the “rogito” property deed, compared to the 3% that was applied until December 31st of last year. The mortgage and cadastral taxes will each be paid as a fixed rate of 50 Euros each, compared to the 168 Euros that were required through 2013. For property listed as “luxury” in the cadaster, the tax rate will instead increase from 7% to 9%. If the primary residence is purchased directly from the construction company within four years from construction, the transaction is subject to a IVA [VAT] rate of 4% of the agreed price, to be paid by the buyer, and the three standard taxes are each set at a fixed rate of 200 Euros each, compared to the previously required 168 Euros. If, instead, the company from which the home is purchased is not the same one that built the property, or more than four years have passed since construction was completed, the IVA tax is no longer applicable, and the registry tax drops to 2% of the value listed on the deed, while the cadaster and mortgage taxes will cost 200 Euros each. In all cases, however, the new registry tax cannot be inferior to 1,000 Euros.
A different tax regime is applied to properties that do not constitute a primary residence. The new norms introduce increased costs for buyers. If the house is purchased from a private citizen, or from a business after four years from the completion of construction, the registry tax increases to 9% of the cadastral value, and the mortgage and cadastral taxes are each set a flat rate of 50 Euros. Like for the “primary residence” the tax rates change if the residence is purchased from the construction company within four years from the end of construction: the purchase is confirmed at 10% [VAT tax], like in 2013, while the three standard taxes are each set a flat rate of 200 Euros each. There is still an increase in the case of luxury properties: the IVA rate applied is of 22%.