How to sell a property in Italy as a foreigner: procedures, taxes and repatriation of funds

Owning a property in Italy is often a dream come true, but for a foreign owner who decides to sell their property, the process can raise a number of questions. Understanding the specific procedures, taxes in Italy on a sale, commissions and the possibilities of removing funds is key to a successful transaction. This article will walk you through the basic steps and important aspects you need to know.

Overview of the process of selling a property in Italy

1. Property valuation and price determination:
   • Work with an experienced real estate agent or appraiser (perito) to determine a realistic market price.
2. Preparation of documentation:
   • Collect all the necessary documents (see below).
3. Choice of real estate agent (recommended):
   • Most sellers use the services of an estate agency who will advertise the property, arrange viewings and negotiate.
4. Acceptance of offer and preliminary contract (Compromesso / Contratto Preliminare):
   • Written agreement with the buyer and payment of deposit.
5. Signing of the final contract (Rogito Notarile):
   • In front of a notary, where the ownership is transferred.
6. Registration:
   • The notary registers the sale in the Property Registry (Conservatoria dei Registri Immobiliari).

Taxes when selling a property in Italy to a foreign owner

These are the most significant costs for the seller:

1. Capital Gains Tax (Imposta sul Plusvalore / Capital Gains Tax):
   • What it is: tax on the profit made on the sale of the property. The profit is calculated as the difference between the sale price and the purchase price, adjusted for certain costs (purchase fees, repair/improvement fees, agency fees at purchase, etc.).
   • Size:
     • 26% Flat Tax: This is the most common option for non-residents and residents who have not used the property as their primary residence. This tax is paid directly to the notary when the deed of sale is signed, and the notary remits it to the tax authorities.
     • Progressive scale taxation (IRPEF): if the seller is resident in Italy and decides to declare the capital gain as part of his total income, it will be taxed at the progressive Italian income tax rates (IRPEF), which can go up to over 40%. This option is rarely advantageous for foreigners.
   • Exemptions:
     • After 5 years of ownership: the most important exemption for foreigners is that no capital gains tax is due if the property has been owned for more than 5 years. This is a major motivation for long-term investing.
     • Principal Residence: If the property was the seller’s principal residence for the majority of the holding period (but not less than 50% + 1 day of the holding period) and is sold, no capital gains tax is due.

Other costs and fees for the seller

1. Estate agent commission (Provvigione Agenzia Immobiliare):
   
   • Amount: usually between 3% and 5% of the sale price (plus VAT). In Italy it is customary for both the buyer and the seller to pay a commission to the agency.
   • Who pays: the seller.

2. Attorney’s Fee (Onorario Avvocato):
   
   • What it is: For legal advice, document review, negotiation representation.
   • Amount: varies, but usually around 0.5% – 1% of the sale price (plus VAT). Depends on the complexity of the transaction.
   • Who Pays: The seller (optional, but highly recommended).

3. Surveyor/Architect Fees (Onorario Geometra/Architetto):
   
   • What it is: It is necessary to provide a certificate of compliance of the property with the cadastral plans and building permits (Relazione Tecnica di Conformità). If there are discrepancies, they must be regularised before the sale.
   • Amount: depends on the condition of the property and the work required, but usually €1,000 to €3,000 and more.
   • Who pays: the seller.

4. Energy Performance Certificate (Attestato di Prestazione Energetica – APE):
   
   • What it is: A mandatory document that certifies the energy efficiency of a property. Must be available at the time of sale.
   • Size: About €150 – €300.
   • Who pays: the seller.

5. Mortgage cancellation costs:
   
   • What is: If the property has a mortgage, it must be cancelled at the Land Registry.
   • Amount: Includes notary fees and registration fees. Can range from a few hundred euros to over €1,000.
   • Who pays: the seller.

6. Interpreter fees:
   
   • What is: If the seller (foreigner) does not understand Italian, the presence of a sworn translator is mandatory when signing the final contract in front of a notary.
   • Size: About €100 – €300.
   • Who pays: usually the seller (or by agreement).

7. Utility costs and condominium fees:
   
   • The seller is responsible for all utility bills (electricity, water, gas) and condominium fees (spese condominiali) up to the date of sale. The notary will require a certificate that there are no outstanding debts to the condominium.

Repatriation of funds from the sale of a property in Italy

For a foreign owner selling a property in Italy, the process of exporting the funds back to the home country is relatively straightforward, as Italy is a member of the EU and the Eurozone.

• No restrictions: as a rule, there are no specific restrictions on the amount that can be transferred from the sale of a property, as long as the transaction is legal and all taxes have been paid.
• Banking Procedures: The funds from the sale will be deposited into your Italian bank account. To transfer them to an international bank account, the bank may require documents related to the sale (copy of the sale contract, proof of payment of capital gains tax).
• Home country declaration: although you pay capital gains tax in Italy (if applicable), you may need to declare this sale and gain in your home country, depending on local tax law and the existence of a Double Tax Treaty (DTT). Always consult a tax expert in your home country.

Important tips for a foreign owner when selling:

• Hire a professional team: you must work with an experienced Italian lawyer and accountant (commercialista). They will calculate taxes correctly, advise you on exemption options and manage the process.
• Codice Fiscale: make sure your Italian fiscal code is valid. It is needed for all transactions.
• Bank account: have an active Italian bank account to receive the funds from the sale and make the necessary payments.
• Holding period: if the property is held for more than 5 years, you won’t pay capital gains tax, which is a huge advantage.
• Keep the documents: keep all the purchase documents and any improvements made to the property, as these will help reduce your capital gains tax basis if you sell before the 5 years are up.

Conclusion

The sale of property in Italy as a foreign owner is a process that requires careful planning and understanding of all financial and legal aspects. The overall costs and taxes in Italy when selling can add up to significant sums, but with adequate preparation, the use of tax benefits (such as the 5 year possession rule) and the help of qualified local professionals, you can ensure a smooth and successful sale of your property.

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