Buying property in Italy

mr spuckler

I'm curious as to whether anyone here has done this or knows of anyone that has?

Right now it's an idea that's only beginning to form in my mind and would need to clear many hurdles at home etc before I'd really need to get into the detail of what I'm asking about! What I'm trying to figure out however is whether there's anything obvious that should discourage me...

I'm finding it hard to get certainty around the challenges / tax implications etc. I understand that language would be one, but have a close relation living in the area who would be able to assist to some degree. I don't want to speak to him until I've a better sense of whether it's realistic...

I know exactly where I'd like to buy, what kind of property etc. I'd plan to rent it out as much as possible also.



Any thoughts / advice appreciated!

GGTrek

It looks like you have a lot to learn and not knowing the language will be a major hurdle. Italy suffers from:
a) a continuous economic crisis that started in 2008 and never really stopped (except in a few cities located in the North)
b) like Ireland a continous change of the laws regulating rentals and a very slow judiciary in order to recover a property from a non paying tenant (4-6 months in small provincial towns) well above 1 year for big cities and if you rent to a family or old or disabled people you are screwed. In addition you will have to hire a solicitor to start eviction proceedings at substantial cost (depending on the length and type of case)

Only benefit is that unlike the Irish govvie which is tax hammering landlords, in Italy for long term leases you just pay 21% of the rental income and you are done. This was the only clever move introduced by the MPs in order to provide stable long term tenancies (in Ireland they were thinking of doing it, but the govvie is too greedy and the media is too socialist to understand). I must say that this rule helped both paying tenants and landlords in general.

My suggestion is to translate these documents and read them:
https://www.agenziaentrate.gov.it/wps/content/Nsilib/Nsi/Schede/FabbricatiTerreni/Cedolare+secca/?page=schedefabbricatieterreni
https://www.rentila.it/blog/2016/11/03/contratto-affitto-4-4-informazioni-suggerimenti/
https://blog.mioaffitto.it/2015/affitto/contratti-44-conoscere-tutto-per-essere-preparati-2/
https://www.guidafisco.it/contratto-locazione-nuove-regole-affitti-canone-modelli-agevolazioni-1880
https://www.guidafisco.it/sfratto-per-morosita-955
http://www.studioassociatoborselli.it/it/lo-sfratto-per-morosita-tempi-costi-procedura-e-modello-di-intimazione/

In addition you have to consider that to purchase real estate you will have to consider:
a) public notary costs (a % of the sale value of the property) a few ks eur and how they are split between buyer and seller
b) estate agent costs (1.5-3% of sale value paid by buyer usually)
c) registration costs
d) annually you will have to pay the equivalent to the local property tax (which is much higher than in Ireland, but it is a expense that you can deduct from income tax)
In 2005 I was thinking about purchasing a property in the north, but the upside on the property sale value was very limited (it would have been a very bad investment since property values in Italy never really recovered from the peaks of 2007). Outside major northern cities and the capital there is a massive underoccupation of real estate.

marieholmfan

GG Trek as well as the tax to the Commune you have to pay the condominium.
There is almost no prospect of making a profit out of your Italian property.
Legal fees can be shockingly high (as a proportion of the value of the property).

GGTrek wrote: »

It looks like you have a lot to learn and not knowing the language will be a major hurdle. Italy suffers from:
a) a continuous economic crisis that started in 2008 and never really stopped (except in a few cities located in the North)
b) like Ireland a continous change of the laws regulating rentals and a very slow judiciary in order to recover a property from a non paying tenant (4-6 months in small provincial towns) well above 1 year for big cities and if you rent to a family or old or disabled people you are screwed. In addition you will have to hire a solicitor to start eviction proceedings at substantial cost (depending on the length and type of case)

Only benefit is that unlike the Irish govvie which is tax hammering landlords, in Italy for long term leases you just pay 21% of the rental income and you are done. This was the only clever move introduced by the MPs in order to provide stable long term tenancies (in Ireland they were thinking of doing it, but the govvie is too greedy and the media is too socialist to understand). I must say that this rule helped both paying tenants and landlords in general.

My suggestion is to translate these documents and read them:
https://www.agenziaentrate.gov.it/wps/content/Nsilib/Nsi/Schede/FabbricatiTerreni/Cedolare+secca/?page=schedefabbricatieterreni
https://www.rentila.it/blog/2016/11/03/contratto-affitto-4-4-informazioni-suggerimenti/
https://blog.mioaffitto.it/2015/affitto/contratti-44-conoscere-tutto-per-essere-preparati-2/
https://www.guidafisco.it/contratto-locazione-nuove-regole-affitti-canone-modelli-agevolazioni-1880
https://www.guidafisco.it/sfratto-per-morosita-955
http://www.studioassociatoborselli.it/it/lo-sfratto-per-morosita-tempi-costi-procedura-e-modello-di-intimazione/

In addition you have to consider that to purchase real estate you will have to consider:
a) public notary costs (a % of the sale value of the property) a few ks eur and how they are split between buyer and seller
b) estate agent costs (1.5-3% of sale value paid by buyer usually)
c) registration costs
d) annually you will have to pay the equivalent to the local property tax (which is much higher than in Ireland, but it is a expense that you can deduct from income tax)
In 2005 I was thinking about purchasing a property in the north, but the upside on the property sale value was very limited (it would have been a very bad investment since property values in Italy never really recovered from the peaks of 2007). Outside major northern cities and the capital there is a massive underoccupation of real estate.

mr spuckler

Thanks and yes I have a huge amount to learn, hence the request


Given the location on a holiday destination up north the rental potential would be on a short term basis, ie weekends / weekly etc.


I'll be there in a couple of monoths for a holiday and hope to speak to a local agent about rental returns etc but as above am curious to learn more on the more fundamental legal / tax implications.


I'll give that suggested light reading a bash, thanks.

handlemaster

mr spuckler wrote: »

I'm curious as to whether anyone here has done this or knows of anyone that has?

Right now it's an idea that's only beginning to form in my mind and would need to clear many hurdles at home etc before I'd really need to get into the detail of what I'm asking about! What I'm trying to figure out however is whether there's anything obvious that should discourage me...

I'm finding it hard to get certainty around the challenges / tax implications etc. I understand that language would be one, but have a close relation living in the area who would be able to assist to some degree. I don't want to speak to him until I've a better sense of whether it's realistic...

I know exactly where I'd like to buy, what kind of property etc. I'd plan to rent it out as much as possible also.



Any thoughts / advice appreciated!

Italy has a very high debt. Crime is whzt understand engrained in the society. They have left wing populist government. For me stay well clear of italy for property investment. Know an italian go has seen his property value drop like a Stone trying to sell and still no buyers.

CelticRambler

Although not specific to Italy, my experience from a French perspective is that there are two questions you need to answer first:

(1) Why do you want to buy a place in a different country, especially one where you don't speak the language?
If your prime motivation is to have somewhere for yourself to go on holidays, then you should plan to pay cash and not expect it (ever) to pay for itself through rentals.
If your prime motivation is to generate income as a non-resident, then you should employ someone locally (or an agency) to manage it, and never expect to be able to use it yourself during the holiday season.

As a non-national, non-resident owner, there is rarely any satisfactory (i.e. stress-free) compromise between these two positions.

(2) If you're determined to buy, are you planning to buy something that is walk-in ready-to-rent, or will it need work to bring it up to standard. If it requires any amount of renovation - even a "simple" redecoration - then plan for an extraordinarily long and tortuous road to completion. Here on the continent, our notions of time and space (especially time! ) are very different to what passes for normal these days in Ireland/UK.

Irlandese

Hi,
Sorry, this is a bit late. I have bought property in Italy for friends and contacts for twenty years.
Italy is the best option for buying a holiday or retirement home on the continent for a whole lot of good reasons.
Their legal system is good and if you follow the rules and are honest, you can save yourself a lot of hassle and costs.
They do not squeeze foreign buyers with extra taxes, as in France, Spain, Portugal et al. They have a wonderful pre-purchase contract
called a compromesso, whereby if the seller tries to gazump or derail the sale, you are repaid TWICE your deposit, by the notary, without delay or costs to you. It is a very legal and beaurocratic country. But this is a PLUS when you are paying out hard cash for a property and need to be protected from the usual conmen you meet everywhere. Too much to explain here. But Italian property prices are way down at present, so its a no brainer to buy now. Location, close to airports, sea, supermarkets and sights ! Go south to Puglia. Get good advice from REPUTABLE agents, not cowboys and avoid english re-sellers !! Have fun !

Irlandese

This is good advice. Buying in the sun, in a low cost environment, near sea and services (year round- not just july and august ) airports and usual infrastructures, on retirement, can be a great life choice. But do it in stages. Holiday for a year on rental and then decide area, options and agents ! Get a reliable mediator and dont cut corners !
Having lived in a lot of european countries over the past thirty years, I can confidently plug Italy as probably the best option for a lot of reasons.
But always go with honest, experienced and LEGAL agents. It will save you time, money and grief !
I prepared a set of notes for buyers for my own clients, but can give a short summary to genuine people, free, if it is not going to be sold on for profit. I reply to mails on those lines at strider2004@libero.it but do not really need extra business at this stage. Avoid buying on the sea in remote spots if you intend to stay year round, which you should ! Go inland to nearest fully civilised town ! Good luck.

Mad_maxx

italy is notoriously beauracratic

Irlandese

It certainly is.
But it has it's funny sides too.
Just don't be in any hurry or simply get a mediator to go queue for you.
But, the weather, the food, the wine, the low cost of living !
Give me beaurocracy every time !!

Irlandese

Mr Spuckler,
How did you get on ?
I hope you found the right property and are happily settled in by now ?

Mic 1972

I bought a 1bed apt in italy in 2004 located 5 min walk from the sea front of a famous holiday resort, i paid 200K. The apartment is now worth about 150k, I lost 50K in 15 years
Rent is taxed in Italy at 21% and then taxed again in Ireland. in the last 15 years i probably profited about 50K, that's very little profit for a 15 year span and the hassle of renting in a foreign country

I wouldn't recommend anyone to invest in property in Italy,
Prices are very low at the moment but there are no signs of economic recovery. Also, if yo are considering the south of italy be aware of earthquakes which have been very frequent in the last few years

mr spuckler

Irlandese wrote: »

Mr Spuckler,
How did you get on ?
I hope you found the right property and are happily settled in by now ?

Hey, just catching up on this thread now. Change of tack, we ended up extending our own house this year so any thoughts around foreign property have been put on the back burner for now anyway

In May I'll be back in the town where I'd buy if the stars aligned so will check out property prices then out of curiosity but I'd say concrete plans have been put back for a while...

Irlandese

Mic 1972 wrote: »

I bought a 1bed apt in italy in 2004 located 5 min walk from the sea front of a famous holiday resort, i paid 200K. The apartment is now worth about 150k, I lost 50K in 15 years
Rent is taxed in Italy at 21% and then taxed again in Ireland. in the last 15 years i probably profited about 50K, that's very little profit for a 15 year span and the hassle of renting in a foreign country

I wouldn't recommend anyone to invest in property in Italy,
Prices are very low at the moment but there are no signs of economic recovery. Also, if yo are considering the south of italy be aware of earthquakes which have been very frequent in the last few years

Hi,
Just see this now. Sorry to hear about your experience. But, it sounds like you went in and bought a small place at top of market as a foreign buyer, without perhaps due diligence or a good local mediator. This could happen in Dublin too !
I know similar stories, about similar approaches. That's why I always recommend finding and staying with a reliable local agent, who has your best interests at heart. Last year I viewed a property for a client who had seen it advertised. Buyer offered it to me at euro 85 k after seeing I was a north European. It needed a lot of work and was not in a great position. My own local trusted partner, a local builder, visited the property separately. He was offered a deal at euro 40K for a quick sale. Not really a surprise. I suspect we could have closed at 38k, but I was not prepared to recommend my client invest so far from local amenities or the sea.
I only deal for people I can trust, as I invest a lot in insurance, research and controls. I pay my own advisors and agents market rates and benefit accordingly. I don't end up paying top prices or buying in locations where the market will drop. I trade on the satisfaction of happy buyers. This is not easy to guarantee from afar. I live here, work through Italian and only represent clients who can prove their own bona fides. Life is too short for cutting corners when big stakes are involved and the relationship with buyers is expected to be a happy and long-term one.

Irlandese

mr spuckler wrote: »

Hey, just catching up on this thread now. Change of tack, we ended up extending our own house this year so any thoughts around foreign property have been put on the back burner for now anyway

In May I'll be back in the town where I'd buy if the stars aligned so will check out property prices then out of curiosity but I'd say concrete plans have been put back for a while...

Good luck with it all. The market is very slow right now, for obvious reasons, so you can afford to wait.
It is always best to take your time and do your research well.

Mic 1972

Irlandese wrote: »

Hi,
Just see this now. Sorry to hear about your experience. But, it sounds like you went in and bought a small place at top of market as a foreign buyer, without perhaps due diligence or a good local mediator. This could happen in Dublin too !
I know similar stories, about similar approaches. That's why I always recommend finding and staying with a reliable local agent, who has your best interests at heart. Last year I viewed a property for a client who had seen it advertised. Buyer offered it to me at euro 85 k after seeing I was a north European. It needed a lot of work and was not in a great position. My own local trusted partner, a local builder, visited the property separately. He was offered a deal at euro 40K for a quick sale. Not really a surprise. I suspect we could have closed at 38k, but I was not prepared to recommend my client invest so far from local amenities or the sea.
I only deal for people I can trust, as I invest a lot in insurance, research and controls. I pay my own advisors and agents market rates and benefit accordingly. I don't end up paying top prices or buying in locations where the market will drop. I trade on the satisfaction of happy buyers. This is not easy to guarantee from afar. I live here, work through Italian and only represent clients who can prove their own bona fides. Life is too short for cutting corners when big stakes are involved and the relationship with buyers is expected to be a happy and long-term one.

At the time when I bought I actually lived in Italy, the apt was meant for me, but i never really used it. I did buy at the top of the market, new built in fancy area, so that was quite expensive.


I was disappointed with the double taxation and with how low the rental market is in italy. Ireland is a much more profitable market

The Ging and I

First you really need to learn the language or you are working with at least on hand tied behind your back.
Why not just rent, saves a lot of problems and you can rent in a different area every year.

Irlandese

The Ging and I wrote: »

First you really need to learn the language or you are working with at least on hand tied behind your back.
Why not just rent, saves a lot of problems and you can rent in a different area every year.

You are right about the language, but not for buying. Living is easier and far, far more enjoyable, if you go for full immersion. It takes a bit of time, but it is fun and deepens your relationships and you will end up with loads of new and permanent friends. The Italians are just like us. Get a life, immerse yourself !

Rent first, yes, but why travel around like a hobo ? Sort your base, get a decent oldish car and travel anywhere you like, with a solid base to come home to ! Life is too short to be a homeless !

joinme

Irlandese wrote: »

Go south to Puglia. Get good advice from REPUTABLE agents, not cowboys and avoid english re-sellers !! Have fun !

Hi Irlandese, Can you recommend somewhere in Puglia to rent that is close to a beach and is family friendly? To get a feel for the area.

Irlandese

joinme wrote: »

Hi Irlandese, Can you recommend somewhere in Puglia to rent that is close to a beach and is family friendly? To get a feel for the area.

Yes I can. There is a fine chap in Dublin with a small house in the picturesque little fishing village of Savalletri, easily accessible by road from either Brindisi or Bari airports, served by Ryanair from Dublin. I could ask his permission to share his number or pass yours on to him if you share it here or with me via strider2004@libero.it.
Alternatively, I would recommend a small self contained stone house with vaulted ceilings , terrace and all mod cons, in the town of Fasano, just 5 mins from the coast and with all you need on your doorstep. It is also easily reachable from Brindisi or Bari airports. Both properties 25 mins from Brindisi and 45mins from bari airports on excellent free motorways. Details again via your mail or number or strider2004@libero if interested.
It is beautiful here most of the year and getting very hot these days. The Savalletri - Fasano areas are top rung re amenities and services and optimum for family and wine and food, beach and culture focussed holidays. Do some googling. Rent a car. It opens more to you along the coast and hinterlands although public transport is very good.

Irlandese

Hi again,

I have had an enquiry from a chap in Dublin three weeks ago, looking for a property near the sea, close to Bari or Brindisi airports.

I replied to the mail used by him, after a couple of days with details of two really nice options, at reasonable cost, citing all necessary details. But the mail address seems blocked and my replies keep coming back as un-sendable. I am not tech savvy. It may be a glitch somewhere. If you recognise yourself, maybe send me another mail to same address, strider2004@libero.it and include a telephone whatsapp number and I will call you, if you like.

The Savalletri house is a real jewel and houses in that beautiful location almost never come on the market. Then, the seller lives in Dublin, so you can deal direct with him there, avoiding any middle-men like me. I will leave it with you.

It is very here these days !

regards, Jonno.