Wed, 07 Nov 07
Investors thinking of buying in Italy have been handed a major boost...
With new tax laws in Italy recently introduced, property investor’s can now benefit from a cheaper buying process in certain circumstances. Instead of paying a percentage of the purchase price, buyers could be legally entitled to pay purchase taxes on a significantly lower value, known as the cadastral, or land registry value.
However, this is a situation that is likely to change in the near future, as the cadastral values of properties are re-evaluated, providing a window of opportunity that will unlikely come again and proving that now, more than ever before, is the perfect time to invest in Italy.
Dramatic tax drop
Sarah Ferrara, Managing Director of Garda Homes says, Investing in Italian property can be a daunting prospect and it is imperative for investors to take sound advice from respected bilingual professionals with consolidated experience in this area.
The new tax laws can benefit investors, but it is a process that the potential buyer needs to be guided through. In the past, tax for non-resident buyers would have been at 10% of the purchase price; the new laws concerning registration taxes on purchases mean that now, if the seller is a private individual, or if the seller is a company but the property was built more than four years previously, the basis for calculation would be the cadastral value of the property, which means that purchase taxes payable could shrink dramatically to as low as 2 or 3% of the property's price, even for non-residents and owners of second homes.
More cost effective
Sarah continues, These new laws, making investment considerably more cost effective, are sure to give the Italian property market a boost. However, beware of Italian estate agents telling potential UK buyers that they can claim ‘prima casa’ tax relief (reducing the purchase taxes even further) simply because they don’t own another property in Italy.
While this is theoretically possible if you officially become an Italian resident, they often neglect to inform you that you will then be liable to pay Italian tax on your worldwide income and, if you decide to sell your property without buying another in Italy before five years have passed, you must pay back the saved tax plus interest and a substantial 30% fine.
My advice is to let the experts do the hard work for you and guide you through this complex process, advising if and how you can legitimately reduce tax liability without setting yourself up for extra expense or even legal problems later.
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