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PROPERTY

Italian property roundup: Best time for Americans to buy and a private island on sale

Fancy owning your very own slice of Sicilian paradise? From a private Italian island on sale to why now might be the best time for Americans to buy property in Italy, catch all the Italian property news you may have missed in The Local's weekly roundup.

Published: 19 January 2022 16:43 CET
Like the idea of owning your very own island in Italy? One just happens to be on sale now.
Like the idea of owning your very own island in Italy? One just happens to be on sale now. Photo by Samuel Ferrara on Unsplash

Why now might be the best time for Americans to buy property in Italy

American dollars are buying more euros than around a year ago, meaning increased Italian property purchasing power with US dollars.

Throughout 2021, the euro has steadily decreased in value against the US dollar, as can be seen in this graph. The current strength of the dollar means that you’ll need less cash to buy a property in euros than you would a year ago.

Based on today’s rate, a property in Italy selling for €100,000 would require $113,478 dollars.

READ ALSO:

A year ago the same cost in euros would have required around $123,000 dollars. 

Even on a relatively low house price, that’s a saving of around $10,000. The margin of course gets bigger if you’re dealing with higher value properties. Going up to a property worth €300,000 would mean an extra $27,000 in your pocket in 2022, compared to last year.

If the dollar holds strong and the European Central Bank don’t raise their interest rates, now could be a real opportunity to harness the strong dollar.

A Sicilian island is on sale for €10 million

Imagine the difference in US dollars for a ticket item this big. Isola Lunga (also known as Isola Grande), the largest island in the Stagnone – the largest lagoon area in Sicily – is on the market for €10 million. (That’s around $100,000 cheaper this year compared to a year ago in dollars).

The island stretches 10km and the portion of the island for sale is 88 hectares, which is also home to some disused buildings that can be renovated.

Sicily’s blue sea. A part of that could be yours surrounding your own island. Photo by Antonio Sessa on Unsplash

The Isola Lunga Nature Reserve is a wellness paradise, full of awe-inspiring landscapes and is home to biodiverse flora and fauna.

A dirt road runs through the island, meandering through coastal forests and on one side there’s a white sand beach called ‘Tahiti’ for the beauty and transparency of its sea.

For those interested in purchasing their very own piece of Italian island paradise, the listing and photos can be seen on real estate agent Sotheby’s website.

More help for those under 36 to buy their first home

In the government’s approved Budget Law for this year, tax incentives for the ‘first home bonus’ for young people – in this instance categorised as under 36 – have been extended for the whole of 2022.

The scheme is aimed at young people hoping to get on the property ladder, which offers tax cuts and help with mortgages.

READ ALSO: Under 36? Here’s how Italy plans to help you buy a house

The idea behind the bonus is to eliminate VAT on taxes relating to deeds transfers and the mortgage on the purchase of a home, thereby helping young homebuyers secure a mortgage.

It’s worked well so far with a boom in mortgage applications from young people under 36, according to data from MutuiOnline.

First home mortgages are up 44 percent compared to 2020, with the under 36 incentive scheme reported as a driving factor in the increase.

The report found that 80.6 percent of mortgages requested by this age group in 2021 were for the purchase of their first home. In the last quarter of 2021, nine out of ten mortgages requested by young people were for first homes.

The most popular terms were those of over 25 years, increasing from 46.3 percent in 2020 to 56.6 percent in 2021.

The average amount requested by young people reached an all-time high last year, at €141,800 – as well as for mortgages with a Loan-to-Value of over 80 percent. That’s 44 percent more than in 2020.

READ ALSO: Do you have to be Italian to claim Italy’s building bonuses?

Italy has seen a boom in mortgage applications from those under 36. Photo: Jens Neumann / Pixabay

According to the figures, a young person under 36 applying for a mortgage is on average 30 years old, wants a mortgage term of around 27 years and earns €1,758.

In case you missed it

After renovation plans hung in the balance for homeowners hoping to take advantage of the government’s hugely popular superbonus 110 at the end of 2021, the Italian government has provided some relief by extending the measure into 2022.

The superbonus on single family homes has been approved for the whole of this year, as published in the Budget Law 2022 on December 30th, 2021.

Italy introduced the ‘superbonus 110‘ in May 2020 to kick-start a sluggish economy following the impacts of the pandemic and to breathe new life into the nation’s many neglected properties. It offers homeowners a tax deduction of up to 110 percent on expenses related to making energy upgrades and reducing seismic risk.

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Even though the deadlines are different depending on the property type, single unit homes can benefit from the superbonus throughout the whole of 2022.

30 percent of works must be completed by June 30th 2022 to be able to claim for the whole year, however.

If less than this amount of construction work is carried out by then, no more superbonus will be made available for that property from June until December 2022.

The news gives more time to those who’ve been stuck in queues due to builder shortages and bureaucratic delays and who potentially faced the possibility of this bonus not being continued for this category past 2021.

Other types of buildings have even more opportunity to claim the bonus. Condominiums, owners of buildings consisting of two to four units and third sector organisations will be able to take advantage of the benefit until 2025, with a sliding scale: 110 percent remains valid until 31 December 2023, dropping to 70 percent in 2024 and 65 percent in 2025.

For more information on how the superbonus applies from 2022 onwards and the new deadlines, check HERE.

And there’s a raft of other building bonuses included in the Budget Law 2022. See HERE for how else you can get help with the costs of renovating and upgrading your property.

If you have any tips, stories or thoughts on what we should include in the next edition of the property roundup, we’d love to hear from you. Email us here.

See more in The Local’s Italian property section.

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PROPERTY

Five expensive mistakes to avoid when buying a house in Italy

Italy may be known for property bargains, but the purchase process itself isn't cheap - and certain mistakes can make it far more costly for buyers.

Published: 27 June 2024 11:05 CEST
Five expensive mistakes to avoid when buying a house in Italy

There’s always a lot to keep in mind when buying property, but the Italian purchase process may be quite different to what you’re used to in your home country.

As well as involving high taxes and fees, it’s likely to be more complex and formal in some ways – and this can lead to potentially costly pitfalls.

The Local spoke to three Italian property law experts at legal firm Mazzeschi to find out what foreign buyers should be aware of before they sign anything. 

1) Check your estate agent’s contract

If you use a real estate agency in your Italian home search, normally you’ll need to sign a contract with them. That contract should stipulate their fees, their duties, and their tax information.

There is one other thing in the contract which potential buyers must look out for: an exclusivity clause, meaning the potential buyer may use only that estate agent in their property search for a set period of time.

“Usually in Italy estate agents like using this exclusivity clause. It is normally the same for sellers as it is for buyers. It means you cannot have another estate agent and usually contracts say this, “says Caterina De Carolis, Lawyer at Mazzeschi.

READ ALSO: How to avoid hidden traps when buying old property in Italy

“If the time frame is not yet up, and the potential buyer uses another agency, they may still be liable to pay the agency fee for the initial estate agent they entered their contract with,” she adds.

Some contracts might not have an exclusivity clause. It’s always worth double-checking.

“If you use another agency to find a house, you’ll be liable to pay the agency with the exclusivity clause in the contract around 2-5 percent of the house’s sale price,” says De Carolis.

“The exact percentage is always in the contract.”

2) Make sure to agree on a price beforehand

This rule is universal, and may sound obvious. But there are costly consequences in Italy if the price is not formally agreed and written down.

Lawyers at consultancy firm Mazzeschi urge their clients to make sure the full price of the property is declared in the transfer deed (l’atto di trasferimento).

This is because if you resell at a market price higher than your purchase price, you are subject to pay a capital gains tax called plusvalenza. Plusvalenza is the difference between purchase and sale price.

Checking the price of the property beforehand will save you in the long run. Photo by Kirill KUDRYAVTSEV / AFP.

3) Don’t change your mind – it will cost you

If the potential buyer has signed a binding proposal (proposta vincolante) – the process before a preliminary contract is drawn up – it becomes less straightforward to withdraw from the purchase.

“This is because the binding proposal in Italy is a lot more formal,” says Mario Mazzeschi, Head of and Attorney at Law of Mazzeschi Consultancy. 

The binding proposal works similarly to an offer. When the potential buyer puts forth their offer, the potential seller decides whether or not to accept. The period of time for this part depends on the proposal drawn up.

READ MORE: Five things non-residents need to know about buying property in Italy

If, before the time is up, the potential buyer decides to withdraw their offer for any reason, they will likely lose their deposit.

“This deposit is usually around 5-10 percent in most cases, so the buyer will have to pay that,” says De Carolis.

“If the buyer decides to withdraw, they are usually liable to pay the seller twice the amount of the deposit.”

If the proposal is not accepted by the potential seller, the potential buyer pays nothing.

4) Don’t pay anything before the preliminary contract is signed

With the exception of the above, buyers are advised not to pay anything until the preliminary contract is signed. The preliminary contract allows both parties to set out clear guidelines.

“The buyer should check with a lawyer before signing the preliminary contract as it will save them in the long run,” says Mazzeschi.

A notary should be present at this signing, adds Giuditta De Ricco, Lawyer at Mazzeschi Consultancy.

“Notaries are public functionaries. They are never on the side of the buyer or the seller, but for sure a notary is needed.”

“They are completely neutral and often it is wiser and safer for the potential buyer to put their deposit into the notary’s escrow account so the notary can transfer the money to the potential buyer.” 

5) Have the property checked beforehand

While the notary will normally check the paperwork before the sale goes through, you’ll need a different professional to check the property itself.

It may then be in the buyer’s best interest to hire a contractor themselves (this will normally be a qualified geometra, or surveyor) to get the structure of the building checked out and detail any faults or repair work needed.

This should be done before the negotiation stage, as unless there is something specific in the preliminary contract you may lose anything you have paid by pulling out of the purchase at this stage.

“The only way out of this after signing a contract is if you can prove the seller acted maliciously,” says Mazzeschi.

Key vocabulary

Transfer deed – l’atto di trasferimento

Binding proposal – proposta vincolante

Notary – notaio

Preliminary contract – contratto preliminare di vendita

Final contract – atto di vendita or rogito notarile

Deposit – caparra

Surveyor – geometra

Estate agent – agente immobiliare 

Please note that The Local cannot advise on individual cases. For more information about how you can buy property in Italy, contact a qualified professional. 

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