Italy: Purchase With "First Home" Benefits In Italy For Italians And Foreigners

Purchase with "First Home" benefits in Italy 2019: how much can you save? 

First home benefits in Italy are fiscal measures regarding people who want to buy heir first home (Article 1, Note IIbis, "On tariff" – part I, attached to the Presidential Decree no. 131/1986).

First home benefits involve: reduced property taxes, VAT or registration fee on the property's price, more in detail:

Reduced VAT or registration fee:

- 2% registration fee;

- 4% VAT;

Fixed mortgage tax amounting each to 50.00€ for purchase deeds subject to registration fee, and to 200.00€ for purchase deeds subject to VAT.

First home benefits can be obtained even though the purchased property is not designed to be the buyer's primary residence, with the only limit being that the purchased property should not be classified as a luxury home, regardless of the requirements declared by the taxpayer. Moreover, a rented out property obviously cannot be used as a residence (Order no. 19989/2018 of the Italian Court of Cassation).

In order to be entitled to first home benefits, the property buyer should meet some requirements which have to be certified by means of a declaration provided for this purpose. The declaration has to be attached to the purchase deed.

Purchase with "First Home" benefits in Italy for Italians and foreigners: who is entitled? 

In order to facilitate and stimulate the  purchase of properties to be used as primary residence, lower taxes have been introduced in the Italian real estate tax system. Both Italian and foreign citizens are entitled to first home benefits, provided that the following requirements are met:

Foreign citizens are entitled to first home benefits only in case they have established their residence in Italy, in the same municipality where the property to be bought is located, within 18 months after purchasing the property itself.

Moreover, as regards property tax in Italy for foreigners, in order to be entitled to first home benefits the following requirements should be met:

- The property to be bought should be classified as habitation;

- The property to be bought should not be classified as luxury property;

- The property to be bought should be located in the same municipality where the property buyer has established or will establish within 18 months his/her residence;

- The property buyer should not have exclusive (either solely or jointly with the spouse) right of exclusive ownership, usufruct, use and occupancy, on another home located in the same municipality as the property to be bought;

- The property buyer should not have exclusive (either solely or jointly with the spouse) right of exclusive ownership, usufruct, use and occupancy, and bare ownership on another home bought by himself/herself or by the spouse.

Also Italian citizens living abroad but wishing to buy a house in Italy are entitled to first home benefits, provided that they are registered in the in the AIRE (the Public Registry of Italian citizens living abroad). In this case, they do not need to move their residence in the municipality where the property to be bought is located.

Purchase with "First Home" benefits in Italy for Italians and foreigners: what to do if you are an Italian citizen living abroad? 

Italian citizens living abroad and registered in the AIRE, are entitled to first home benefits if they wish to buy their first home in Italy

They do not need to move their residence in the same municipality where the property to be bought is located, but apart from that, all the above mentioned requirements are still to be met. In order to be entitled to first home benefits, anyway, they can declare their condition of emigrants either by a certificate issued by AIRE, or by a by a self-certification to be attached to the purchase deed (pursuant to the Italian Ministerial Memorandum 38/E of 2005).

Clearly this latter condition represents a discrimination against foreign citizens who want to buy a home in Italy with first home benefits. For this reason, Italy has been brought to the European Court. Foreign citizens indeed, are not entitled to first home benefits if they do not move their residence, within 18 months after the purchase, in the same municipality where the property to be bought is located, whereas Italian citizens living abroad are not subject to this limitation.

Arnone&Sicomo Law Firm provides legal assistance in matters of property taxes in Italy both to Italian citizens living abroad and to foreign citizens who wish to buy a property in Italy.

We give advice to Italian and foreign citizens about the best way to obtain first home benefits.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.