When you purchase a property in Italy, you need to be aware of the amount of taxes you will be required to pay, and at that stage you need to be informed if you are purchasing a luxury home or not, this might make a huge difference, as a luxury home is excluded from “fiscal benefits”.
What are the fiscal benefits and when are they applied? What is meant by “Luxury Home”?
When you purchase a “Primary House” (Prima Casa) in Italy, you might be entitled to purchase with fiscal benefits. This happens in the following cases:
- In the deed of sale the purchaser has to declare that he does not have any rights in other properties in the same area/Commune where he purchases with fiscal benefits, such as life estate, right of use etc.
- The purchaser does not have to own a property that he has bought in Italy with fiscal benefits.
- He needs to be resident in the Commune where he is purchasing the property or move his residency in the Country within 18 months from the purchase.
- The purchaser does not have to sell the property that he has purchased with fiscal benefits in the following 5 years from the purchase unless he purchases a new property within 1 year from the sale.
- Finally, purchasing a luxury home makes the purchaser to lose the possibility to buy a house with fiscal benefits.
The above is just a generic indication of the most relevant rules, but it needs further clarification especially with reference to the concept of luxury home.
Concentrating on the concept of Luxury Home, this is not as simple and straightforward as it might appear.
When a purchase can be defined “Luxury”?
In general, there are several conditions that explain when a purchase is luxury, but these conditions are different depending on the fact that the purchase is subject to “IVA” (Italian VAT) or to “Imposta di Registro” (stamp duty).
Therefore, we need to distinguish two situations:
a) When the property purchase is subject to Imposta di Registro (stamp duty), and
b) When the property purchase is subject to Iva (Italian VAT).
In the first case, a Luxury Home can be defined as those properties which are listed in the cadastral registry as category A/1, A/8 and A/9. These are: stately house, villas and artistic or historical castles/palaces. You can see the above indication in the land registry searches (Visura).
If, as in case b), the property purchase is subject to Iva, the Italian Ministry Decree of 1969 n. 218 will help you to understand when a purchase is luxury (Decreto Ministero Lavori Pubblici 2 August 1969, published on official journal “Gazzetta Ufficiale” n. 218 of 27.8.1969). This Decree gives some guidance to understand when a property is considered luxury, among which: properties built in areas where it is established to build Villas, private parks or other buildings qualified as "luxury", properties with a swimming-pool larger then 80 sqm., or with tennis courts with some specific requirements, large properties, etc
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