Buying a home in Italy is rarely a purely logical decision. It is usually an affair of the heart, driven by a love for the food, the pace of life and the sheer beauty of the landscape. From the rolling hills of Tuscany to the trulli of Puglia and the lakes of Lombardy, the emotional pull is undeniable.
However, the Italian legal system is famous for its complexity. It is bureaucratic, formal and moves at its own distinct pace. For the unprepared buyer, the dream can quickly become tangled in red tape, especially when it comes to understanding the unique tax laws that distinguish between a “main home” and a “holiday home”.
Whether you are looking for a renovation project in a quiet village or a turnkey apartment in Rome, you need to go in with your eyes open.
This guide breaks down the buying process in Italy step-by-step, outlining the specific costs you need to budget for (including the agent’s commission which works differently here). We also cover a critical financial factor: your currency exchange. You will be buying in euros, meaning your budget is exposed to market volatility. We explain how to manage that risk so you can buy with confidence.
Can foreigners buy property in Italy?
Yes. Italy generally operates on a principle of “reciprocity”. If an Italian citizen can buy property in your home country, you can buy property in Italy. This applies to citizens of the UK, USA, Canada, Australia and most other non-EU nations.
However, just like in other European countries, you will need a tax code before you can do anything. In Italy, this is called the Codice Fiscale. It is essential for opening a bank account, signing contracts and even setting up utilities.
Visas and residency in Italy
Since Brexit, UK citizens join Americans, Australians and other non-EU citizens as “third-country nationals”. This affects how long you can spend in your Italian home:
- 90/180 Day Rule: You can spend up to 90 days in Italy (and the Schengen area) within any rolling 180-day period without a visa. This is the standard route for most holiday home owners.
- Elective Residency Visa (Residenza Elettiva): This is the primary route for retirees. It requires proof of substantial “passive” income (pensions, investments, rental income) that continues regardless of where you live. You cannot work on this visa. The income thresholds are strict and scrutinized heavily by consulates.
- Digital Nomad Visa: Italy recently introduced a visa specifically for highly skilled remote workers. This allows you to live in Italy while working for an employer based elsewhere, provided you meet income and insurance requirements.
Why buy property in Italy?
Beyond the obvious lifestyle appeal, Italy offers some unique advantages for buyers:
- The “1 Euro” Phenomenon: While buying a house for €1 captures headlines, the real story is the abundance of incredibly affordable rural property in need of renovation, often far cheaper than in France or Spain.
- Tax Incentives: Italy offers specific tax regimes for new residents (such as the 7% flat tax for pensioners moving to certain southern municipalities), though these are subject to change with annual budgets.
- Price-Value System (Prezzo-valore): For private resale purchases, transfer taxes are often calculated on the property’s “cadastral value” (a historic tax value) rather than the commercial market price. This can significantly reduce your tax bill.
The property-buying process in Italy
The process is highly regulated and involves several formal steps.
- Get your Codice Fiscale: Apply for this through the Italian consulate in your home country or the Agenzia delle Entrate in Italy.
- Make an offer (Proposta d’Acquisto): You sign a formal written offer and pay a small deposit (often €5,000 to €10,000). If accepted, this becomes binding.
- Preliminary Contract (Compromesso or Contratto Preliminare): This is the main contract. It sets out the price, completion date and details of the property. You pay a substantial deposit (typically 10% to 20%).
- Registration: The preliminary contract must be registered within 20 days (or 30 if signed with a notary), incurring some small taxes.
- The Final Deed (Rogito): Signed at the notary’s office. You pay the balance (usually via a Banker’s Draft or Assegno Circolare) and the notary transfers the title.
Important Note: If you back out after the Compromesso, you lose your deposit. If the seller backs out, they must legally pay you back double the deposit (caparra confirmatoria).
Costs of buying a property in Italy
Costs vary depending on whether you are buying a “Prima Casa” (main residence where you will live within 18 months) or a “Seconda Casa” (holiday home). You should budget 10-12% on top of the purchase price.
- Registration Tax (Imposta di Registro):
- Second Home: 9% of the Cadastral Value (usually much lower than market price).
- Main Home: 2% of the Cadastral Value.
- New Builds: You pay VAT (IVA) instead. 10% for second homes, 4% for main homes (calculated on the purchase price).
- Agency Fees: Unusually, in Italy, both the buyer and the seller pay commission. This is typically 3% + VAT each.
- Notary Fees: Varies by property value/complexity, typically 1-2.5%.
- Legal Fees: Recommended for due diligence, typically 1% + VAT.
Why currency exchange is critical
You will need to send money at several stages:
- Reservation deposit
- Substantial deposit at Compromesso (10-20%)
- Final balance at Rogito
- Taxes and Agency fees
Italy uses the euro. If your funds are in pounds, dollars, yen or krone, the final cost of your property depends entirely on the exchange rate.
For illustration, a €250,000 (£210,000) apartment could cost:
- £211,800 at a GBP/EUR rate of 1.18
- £223,200 at a GBP/EUR rate of 1.12
That is a difference of roughly £11,400 purely due to currency movement.
How to manage currency risk
You can reduce this uncertainty with a plan.
- Forward contract: Fix today’s exchange rate for a future payment. This is vital in Italy where the time between the Compromesso and Rogito can be months. It ensures the price you agreed to is the price you actually pay in your home currency.
- Market order: If you have time before you need to buy, you can set a target rate. We will automatically buy the currency for you if the market hits that level.
Why use a specialist currency provider?
Italian notaries are strict. The final payment usually takes the form of an Assegno Circolare (Banker’s Draft). To issue this, your funds need to be in an Italian bank account or sent directly to the notary’s escrow account in good time.
Banks can be slow and charge high margins for these transfers. Smart Currency Exchange ensures your funds arrive in Italy on time and at a competitive rate. We can work with you to ensure your money is in the right place for the day of the Rogito.
Making transfers on time
To keep your purchase on track, make sure you:
- Understand whether you need to open an Italian bank account (highly recommended).
- Check the notary’s requirements for the final payment well in advance.
- Send funds early to clear compliance checks, as Italy has strict anti-money laundering controls.
In summary: buying property in Italy
To make your purchase smooth and financially secure, follow these rules:
- Budget for the “Double Agency Fee” (buyer pays too).
- Understand the difference between Prima Casa and Seconda Casa tax rates.
- Protect your budget from currency volatility using a Forward Contract.
Frequently Asked Questions about buying property in Italy
Is it safe to buy property in Italy?
Yes, the Notary (Notaio) is a public official who performs strict legal checks for the state. However, the notary does not protect your personal interests (like structural surveys). We strongly recommend hiring an independent surveyor and a bilingual solicitor.
Can I get a mortgage in Italy?
Yes. Italian banks lend to non-residents, typically up to 50-60% of the property value. The application process is thorough and you will need to translate your financial documents.
Do I need an Italian bank account?
It is technically possible to buy without one (sending funds to the Notary), but practically, you will need one to pay utility bills and local taxes (IMU/TARI) once you own the property.
