This guide is aimed at individual buyers (who are not acting in the exercise of commercial, artistic, or professional activities) and refers both to transactions between “private individuals” and those between businesses and private individuals.
The term “primary home benefits” commonly refers to the purchase of a residential property and its related annexes, made with a request to the notary for the application of a specific tax benefit (under Presidential Decree No. 131 of 1986). This allows for the payment of taxes owed at a reduced rate compared to a standard purchase, provided certain conditions are met.
These benefits are available to Italian citizens, EU citizens and non-EU citizens, according to the reciprocity conditions established by the various contracting Countries with Italy, and under the laws of international private law (in Italy, Law No. 218/1995).
When buying from a private seller (or a business selling exempt from VAT), the buyer must pay a registration tax of 2%, instead of 9%, on the cadastral value of the property, while both the mortgage and cadastral taxes are paid in the fixed amount of 50 euros each.
If the seller is a business subject to VAT, the buyer must pay VAT calculated on the sale price, at a rate of 4% instead of 10%. In this case, the registration, cadastral, and mortgage taxes are paid at a fixed amount of 200 euros each.
A key requirement to retain the benefits is to establish residence in the purchased property within eighteen months from the notary deed of purchase.
In any case, the proportional registration tax (2%) cannot be less than 1,000 euros. However, the amount to be paid may be lower due to the offset of the proportional tax already paid on the deposit (when the preliminary contract was registered) or the tax credit for the “first home” purchase.
Not everyone may know that:
- The taxation of the deed of sale is based on the value calculated from the cadastral income of the property and not the actual amount paid;
- The power of the Revenue Agency to assess the value is limited;
- By law, notary fees are reduced.
With this premise, what happens if the buyer who has benefited from the reduced taxation sells the property within five years of the purchase date?
According to previous legislation, the buyer (new owner) would face two scenarios:
- Purchase a new property within twelve months of the sale, still benefiting from the reduced tax rate, or
- Purchase a property located in a foreign country, provided there are administrative cooperation instruments that allow verifying that the purchased property was used as a primary residence. Lastly,
- Pay the difference of 7% compared to the standard taxation (9%), by requesting a re-calculation of taxes from the Italian Revenue Office (Agenzia delle Entrate), thus avoiding penalties and interest.
The legislator, with Law No. 207 of December 30, 2024 (Legge di Bilancio 2025), within a series of measures aimed at facilitating access to first homes and making it easier to switch to a new first home in place of the previous one, extends the duration of the 2% reduced registration tax benefit from one to two years.
This means, in other words, that if the buyer who benefited from the tax reduction sells the property within five years of the deed, he/she will have two years to purchase another property and still benefit from the same tax benefits, without losing the previous ones.
For any legal and/or tax needs, our Italian real estate lawyers are available and ready to assist with any requirements you may have. Feel free to contact them for a free initial consultation.
