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Buying Property in Italy

Buying and Financing Property in Italy


Italy is undoubtedly one of the most beautiful and attractive locations in which an Australian, or any other nationality, could hope to holiday or purchase a property. Ask people why they move to Italy, permanently or to purchase retirement or holiday properties, and the most common response is simply “lifestyle”. While the Covid pandemic had a significant, early impact on Italy the country has rebounded and there is now a very significant international interest being shown in Italian property.

Previously, the main constraints on purchasing property in Italy has been a lack of access to finance, with many Australian and other expatriates needing to purchase properties on a pure cash basis.  Apart from the cash flow impact, this will often be tax inefficient for people renting out their properties for a large part of the year – from both an Italian and Australian perspective. Australian tax rules allow you to treat offshore properties in much the same fashion as Australian domestic investment properties - subject to meeting the same qualifying requirements.

With access now available to Euro loans in many situations - although that situation has recently changed and see our comment at the bottom of the page - potential purchasers have much greater flexibility; although the ability to borrow will vary depending on where you are buying and the type of property you are considering. For example, completed homes and apartments in major urban areas will typically be much more attractive to lenders than buying un-renovated projects in the countryside. In terms of the loans available, much depends on your personal circumstances and the property you want to acquire. Arranging pre-approved finance is generally not possible, but it is typically possible to arrange a loan of up to 70% of the purchase price, with higher amounts sometimes available in significant transactions.

The selection, buying and borrowing process can be lengthy and complex, so remember to allow yourself plenty of time to view properties and locations and obtain approval from a lender.

Italy's property market is quite diverse across its varied geography so a strong and buoyant local market can exist right alongside another depressed or unchanged market. There is always interest from international buyers for Lake Como and the Amalfi coast, however interest has spread to the islands of Sardegna and Sicily in the south and the neighbouring lakes around Como in Italy's north.  Traditional hotspots in Tuscany and Umbria continue to be popular whilst Abruzzo and Le Marche are attracting increased interest from foreign buyers.

If you would like assistance in arranging finance, or with the entire purchase process in Italy, please complete the Inquiry at the bottom of this page and we will respond promptly and courteously.

Purchase Considerations

The taxation and legal issues associated with the purchase and ownership of property in Italy are complicated, and below we offer only a summary of the main issues - in the expectation that purchasers will seek appropriate professional advice both in Italy and their country of residence prior to any purchase so that they understand the full implications of purchasing property. In that regard, we can assist in providing access to both tax and legal advice in Italy and in Australia, the UK, the US and a range of other countries.

Note that, as a "rule of thumb" you should expect that the purchase costs attaching to your Italian property will amount to around 10 - 15% of the purchase price; encompassing "Nataio" (Notary public) fees, seller fees, legals fees, inspection fees and Government taxes.


Some general comments:

  • There may be some time between contract signing and final settlement – often purchase agreements come with conditions requiring local council retrospective permissions, boundary changes or minor renovations which need to be addressed by the seller prior to settlement, and these fixes always take time.
  • The average purchase time-frame is in the order 6-9 months.
  • Where mortgages are involved, the bank may require a visit to Italy for an interview prior to final loan approval – although at settlement, whether or not a mortgage is involved, a POA can suffice.
  • Rental properties often generate relatively poor returns because of rent controls and other restrictions

1. Tax Considerations

Owners of Italian property who are non-resident are liable for taxes payable in Italy; potentially including income taxes, capital gains and inheritance taxes - there is currently no wealth tax in Italy. Where a double tax treaty exists between Italy and your country of tax residence (and that includes both Australia, the UK and US) then Italy will largely retain the primary right to tax the property, and you will be able to offset any tax payable in your country of residence by the tax paid in Italy. Note that you will be treated by Italian law as a resident of Italy when you spend 183 days or more throughout the year (non-consecutive days included) in the country.

As mentioned, non-residents are required to pay tax in Italy on their Italian rental income. Usually an amount of 30% is allowed for repairs and maintenance deductions so that 70% is taxable at a progressive rate of tax depending on your total Italian taxable income. A regional surtax also applies to income, ranging from 1.20% to 2.03% in 2022, whilst a municipal surtax and a provincial surtax may also be imposed on income up to 0.80%.

There is an also an ongoing annual local property tax, approximately 0.4% - 0.76% of the official value of the property. Gains from the sale of real property held for more than five years are not taxable in Italy - but may be subject to capital gains tax in your country of residence (e.g. Australia and US). Gains from the sale of property held for less than five years are taxed as income. Capital gains are calculated as selling price less acquisition costs and related expenses. Generally speaking property inheritances by spouses and direct descendants or ascendants of the owners of Italian property are subject to inheritance tax at a rate of 4% on the amount exceeding €1,000,000 per beneficiary.

The taxation system is extremely complex and it is essential to obtain professional advice prior to making any purchase and it will often be necessary to ensure that you do not, by accident, become an Italian tax resident. If required, we can provide a referral to an experienced, English speaking, Italian tax advisor.

2. Legal Considerations

There are two main legal issues to consider, purchase/transfer and inheritance. When entering into a purchase you may think you recognise terms from your previous house-buying process. However, they may have completely different meanings, or not apply at all in Italy – so it's best to "start afresh". We recommend that you engage your own lawyer or solicitor who is versed in Italian property law. This could be an "avvocato" based in Italy acting on your behalf, or a lawyer from your home country. In Italy the Notaio handles the property transaction and legal requirements, acting essentially for both the buyer and seller. However, you should protect your own interests and the selection of an appropriate Notaio, particularly for Australians, can be very important.

Inheritance issues can arise surrounding Italian property depending principally upon whether or not the deceased person was considered a citizen of Italy prior to their death. If the majority of their estate was in Italy then this is one strong indicator, but there are others. It's important to note that under Italian law some members of the family might have the right to receive a fixed portion of the property of the deceased, even if contrary to the terms of their will.


Financing for Australian Residents Available

Since 2021 there have been constraints on the ability of Australian residents whose income was in AUD - they have now lifted and finance is available up to 70% of a property's valuation in some circumstances. Australian expats earning other major currencies such as USD, CHF, GBP and CAD have always remained unaffected by these constraint. However, it remains the case that Australian residents looking to buy lower value properties in Italy may be better placed re-financing their properties in Australia to access equity - we can assist in this regard - and then buying on a cash basis in Italy.

If you would like to make an inquiry regarding an International mortgage or seeking general assistance in the selection and purchase of Italian property please complete the form below and we will respond promptly.