Pitfalls of buying property in Italy
It is generally safe to buy a property in Italy as an overseas buyer, with the help of a specialist property lawyer and a good currency company.
However, while there are legal protections for buyers, there are still some financial, legal and tax risks that you should be aware of.
With the right guidance and experts on your side, however, these potential pitfalls of buying property in Italy can be avoided.
Common buyer mistakes
- Misunderstanding the time required
The process of buying a property in Italy can take between two and six months. Buyers should expect a significant gap (often several months) between signing the preliminary contract and the deed of sale (rogito). - Hidden costs
There are unavoidable costs that buyers in Italy frequently overlook. In total, these additional costs can add another 10-15% on top of your property purchase price. Gain insight into these hidden costs, here. - Language barriers
Misunderstanding your estate agent, lawyer, developer or another Italian professional can cost you time and money. Make sure that whoever you hire can easily communicate with you. Should you require a translator, enquire sooner rather than later. - Skipping inspections
Failing to hire a surveyor or geometra when buying a property, particularly an older property can lead to potential issues being missed, like structural damage or outdated utilities that are not up to code. This can result in unexpected expenses.
Legal and financial pitfalls
We partner with some of the best Italian lawyers and tax experts. Things to note
- Unlike in the UK, savings products such as ISAs and National Savings & Income products (premium bonds) are taxable in Italy. If you have any of these products and are looking for a tax-free alternative, speak to a financial advisor.
- If you intend to sell your main residence outside of Italy, you need to complete the transaction before you become an Italian tax resident to avoid Capital Gains Tax
- In the UK, you can withdraw 25% of your pension tax-free however, that is taxable in Italy
- Italy does not recognise trusts.
- UK-domiciled mutual funds and EFTs could be considered non-harmonised in Italy and taxed at regular income tax rates.
Buying an old home in Italy: Potential pitfalls
Older homes in Italy are extremely appealing to foreign buyers looking to purchase a piece of history. These properties are often full of character, however, there are building types in Italy that are protected by the cultural heritage authority for their artistic significance.
“Vincoli” is an Italian law that applies to old estates in Italy of historic nature. The law states that these estates cannot be sold due to territorial boundaries and there are strict rules in place to preserves these homes.
Vincoli can apply to a number of different properties features too, such as frescoes, ancient loggias, decorated ceilings, gothic infrastructure and so on.
To ensure the property you’re interested in is free from such restrictions, you can hire a geometra (a professional who takes on the roles of architect, engineer and surveyor) or enquire with the local belle arti. There will usually be signs, e.g. the entre central area of Picinisco and its neighbouring hill towns are protected in some way or another, which may prompt buyers nearby to enquire about their own home’s history.
Choosing the right location in Italy
From the Alps in the north to the Mediterranean coastlines in the south, Italy is a diverse country with regions that hugely vary from one another. Deciding on the perfect location can be a challenging first step. Here are some tips to help you decide where suits you best:
Consider the bigger picture: While the allure of Italy’s famous cities like Rome, Florence and Venice is undeniable, they may not always be the most practical or cost-effective places to live. Sometimes, a charming town just a short drive from these bustling centres can offer a more relaxed and affordable lifestyle.
Community integration: Some buyers might underestimate the challenge of integrating into the local community. Opting for a rural and traditional area can be rewarding but may be difficult if you don’t speak Italian well.
Touristic vs. residential areas: Deciding between a tourist hotspot and a location with a stable year-round population is crucial, especially for investors and those relocating. While some Italian regions are vibrant throughout the year, others can be quite deserted off-season.
The simple way to avoid these pitfalls is to work closely with a local expert or estate agent. They offer a comprehensive service and can offer advise you on locations if you’re unsure what you’re after. We encourage you to consider their suggestions and ask questions to gauge whether a location could be right for you.
Work with Local Experts: The relationship with your estate agent in Italy is vital. They are local experts who can recommend areas, neighbourhoods and towns that align with your desired lifestyle. Trust their insights and don’t hesitate to ask plenty of questions.
Potential pitfalls when buying off-plan homes
Italy’s property market has evolved significantly over the years, but buying off-plan still comes with its own set of challenges. Here are some potential pitfalls to be aware of:
Living on an unfinished lot: If you purchase an off-plan property early in the construction phase, your completed property could be surrounded by ongoing building work for some time. This could mean loud noises throughout the day and can affect your living conditions.
Financial commitment: Buying off-plan typically requires a deposit of 10% to 30% of the property’s value, followed by additional payments as construction progresses. This means committing a significant amount of money well before you can enjoy the property.
Market fluctuations: If property prices fall during the construction period, you might find yourself in a situation where the property’s value is less than what you paid, leading to potential negative equity.
Disappointment: The finished property might not meet your expectations. To mitigate this risk, it’s advisable to visit other completed projects by the same developer. Additionally, there will be a snagging process to address any defects or issues, which might involve withholding final payments until these are resolved.
Legal protections: Italian law provides certain protections for buyers, but it’s crucial to work with a legal advisor and your estate agent to understand your rights and ensure all agreements are clearly documented. This can help you claim damages or hold the developer accountable if issues arise.
By being aware of these potential pitfalls and taking proactive steps, you can navigate the off-plan buying process more smoothly and make a well-informed investment in Italy.