How to Buy Residential Property in Italy

What’s not to love about the idea of buying a home in Italy? With world-renowned wine, ancient architecture and ruins, and art for days, Italy is a hot spot for foreigners around the globe.

Let’s look at why you might want to consider buying a residential property in Italy, as well as the steps you’ll need to take.

Why Buy an Italian Residential Property 

Even if you don’t have plans to live in Italy full-time, owning property there has many benefits. If you’re an Italiophile, having a vacation home gives you stability and a place to stay for vacation every year. You’ll pay comparatively less for accommodations than you would to rent a vacation home or stay in a hotel for the same period, and you’ll be able to leave your personal items there, so you don’t have to pack as much every time.

You can also rent out the home when you’re not there, generating a little income to help you cover the cost of the mortgage.

And if you’re thinking about retiring in Italy or moving there sooner, owning property in Italy may help you with the visa process. It can be your foot in the door, so to speak, for longer-term residency.

Depending on where you buy a home, you might even benefit from government incentives designed to repopulate towns that have seen a decline in residents. Programs like €1 houses are enticing foreigners to remodel crumbling homes and revive these dying towns, and many towns are giving the new owners cash to help with the remodeling costs.

And if you’re lucky, you could renovate a home for little money and turn around and sell it. Realize, though, that in these more rural areas, it can be difficult to sell a home. Unlike in the U.S., there isn’t a “house-flipping culture,” so if you buy with this goal, be prepared to sit on the property for many years before potentially selling it.

What You Need to Do to Qualify to Buy a Home in Italy

The first thing you’ll need to do is let go of your American expectations! Buying a home in Italy is nothing like the process in the U.S.; it can take a while to find the perfect home, negotiate the price, and then close on the property.

You’ll also need a codice fiscale, or tax identification number. A notary (notaio) can help you with this, and you’ll need this professional to help you navigate the process anyway, as Italy uses this individual rather than a real estate agent.

You don’t have to already live in Italy to purchase a home. Italy and the United States have an agreement in place that allows you to purchase a residential property in Italy without living there full time.

You’ll want to open an Italian bank account before buying a home. This can be tricky if you don’t live in Italy, as proof of residency is a requirement for opening the account. Your notary can help you through this process. You may also be able to open an online account with Wise or Revolut and keep money in euros so you can provide bank statements showing your financial records.

You may also want to employ an Italian lawyer who specializes in transactions like these, especially if you aren’t fluent in Italian. Contracts in another language can be daunting at best!

What About Getting a Mortgage in Italy?

In all honesty, it would be easier if you came to the table with the cash for the purchase if you don’t already live here, though it is possible to take out a mortgage with an Italian bank. However, in true Italian style, you’ll need to provide mountainloads of documents demonstrating your financial records and proof of income. 

Unlike in the U.S., in Italy, the property you’re buying isn’t considered an adequate asset for the bank in the event that you stop paying the mortgage (given what I said about it being difficult to sell a property, what will a bank do with a property it can’t sell?). That means you present more risk as a foreigner and may have to pay a higher interest rate.

Typically, you can borrow up to 70 or 80% of the value of the property, and mortgages last from five to 30 years.

What Costs are Involved?

Besides the cost of the home, there are several other expenses you will have to pay.

If you work with a notary and/or an attorney, you’ll be responsible for their fees, typically 1-2% of the purchase price. If you work with a real estate agent, they typically take 3-4% of the cost of the purchase.

There is a registration tax of 2% if this will be your primary residence, and it’s 7% if it’s a vacation home. There’s also a mortgage tax of 2-4%, as well as a cadastral fee for surveying the land of 1%.

There may be other fees like fees for translation services, inspections, and land registry fees, as well as your garbage, utility, and maintenance fees. Oh, and fees for the many, many coffees you will drink during this process!

Steps for Buying an Italian Home

Let’s break down what you’ll need to do to find your dream home in Italy!

Step 1: Decide What and Where You Want to Live

Italy may be the size of Arizona, but each region is distinct. Start by deciding whether you want to live in the north or south, then what size town or city you’re interested in. Once you zero in on a region, look at geographic preferences. Is the sea calling you, or does a mountain retreat sound more your speed?

Step 2: Find the Right People to Help You

There are professionals who specialize in helping foreigners find homes. Realize, however, that you will pay a premium for this fee. As an expat living in Italy, I can tell you that if you visit the town where you want to live and make friends, they will bend over backward to help you find something. And everyone here knows someone who’s selling a home!

Still, if you aren’t confident in your language skills and would rather pay for the services of a professional, it’s always an option.

Also, as I mentioned above, you’ll need a notaio for the process, so now’s a good time to start that hunt. And if you plan to retain a lawyer, start the search for a good one now as well.

Step 3: Take Care of the Necessities

If you don’t already have a codice fiscale and an Italian bank account, handle these administrative tasks so you’re eligible to purchase a home. You may need to transfer large sums of money to demonstrate you have funds in your account, so allow time for those transactions from your American bank.

Step 4: Look at LOTS of Homes

It’s unlikely that the first home you look at will be exactly what you want, so dedicate several weeks or months to exploring your options. Widen your search if you don’t find what you want where you want it.

Also, let go of American expectations. In most of Italy, you won’t find walk-in closets, giant kitchens, and landscaped yards. You’re moving to Italy, so reset your expectations to align with what’s available. You may find most of the homes you look at are hundreds of years old. That means they may come with a lot of problems, not to mention high heating bills. Reassess your priorities if you’re not finding your ideal home.

Step 5: Make an Offer

Finally, you’ve found the home that feels right for you. Now, it’s time to make the offer with the assistance of your agent.

Before finalizing the offer, have a thorough inspection of the property to make sure it’s as it was listed. Italy’s tricky…sometimes you discover that instead of the one owner you were aware of, there are actually five brothers, and they all have to agree on the sale in order to make it happen. Or the boundaries of the property were fudged, and the actual land is smaller than you were led to believe. Again, it helps to have friends because coming in as an outsider, you won’t have any idea on who to trust (and who is related to one another, which can make “inspections” be a little skewed in the favor of a cousin!).

Step 6: Close on the Sale

Once all of the back-and-forth negotiations are complete and you’ve agreed on the purchase price, you’ll sign the sale contract (after having your attorney review and explain it to you). 

Then, the keys will be handed over to you, and you will be the proud owner of a residential property in Italy!

My Final Words of Advice

As an expat living in Calabria (southern Italy), I’ve seen more than one American make mistakes when buying a property here. The biggest mistake is swooping in and buying a property without ever spending time in the town or city. I advise you to rent a property in the area you’re interested in and spend at least six months getting to know the area. This lets you know whether you truly could live here long-term, and, as I mentioned before, gives you time to make friends who can help you.