The Italian law provides a series of Tax Benefits for those who buy their first house:
• A reduced rate Registration Tax or as an alternative a reduced rate VAT.
• Fixed rates for both Mortgage and Cadastral registration Taxes.
It’s not essential that the acquired property is used as main residence by the owner and/or his family in order to benefit from the first house tax benefits. The tax rebate is also valid when appliances estates are bought. The purchase of these appliances can be done with a separate/different contract and there is a limit of just one of the following appliances for any of the following cadastral categories:
• C/2 basement or attic.
• C/6 garage or car park.
• C/7 carport.
In order to benefit from the first house tax benefits the property must have the following requirements:
• The property doesn’t have to be qualified as “luxury home” as indicated in the Ministerial Decree of 2 August 1969 published in the Gazzetta Ufficiale number 218 of 27/08/1969 while the Cadastral Category is not relevant;
• The property has to be located in the purchaser municipality of residence or in the Municipality where he intends to take up residence within 18 months from the property purchasing, (from the 1st of January 2001 the terms have been risen from 12 to 18 months) or in the Municipality where the purchaser has set his main business.
• If the purchaser moved abroad for business reasons the property has to be located in the municipality where his business has its legal headquarters or where his employer’s business is located.
• If the purchaser is an Italian citizen resident abroad (enrolled into the Aire register) than the property can be located in any municipality within the Italian borders.
• In order to benefit from the First house tax benefits the property doesn’t necessarily has to be bound to be the owner/his family main residence. In fact the purchaser can benefit from the “first house tax benefits” if he rents or intends to rent the purchased property (Circulars n. 38 of 12th August 2005, n. 19/E of 1st March 2001 and n. 1/E of 2nd March 1994).
The purchaser/purchasers have to declare the following in the deed of sale:
• He has to declare that he is NOT: the exclusive owner or the owner in Community of Assets with his spouse of the following rights over another house located in the municipality where the purchased property is located (for which he wants to ask the first house tax benefits): right of property, right of usufruct, right of use, right of housing. The joint ownership with a person different from the spouse is not an impediment.
• He has to declare that he is NOT: the owner, not even in joint ownership nor in Community of Assets with his spouse, on the entire Italian territory, of a property nor of any property related right such as the bare ownership, the right of usufruct, use, and housing concerning another house bought by the purchaser or by his spouse benefitting from the first house tax benefits.
• The purchaser, if not yet resident in the municipality where the property he wants to buy is located, has to commit to take residence in that municipality within 18 months from the property purchasing.
As for the National Army and the National Police force the owner certified residence in the municipality where the property was purchased benefitting from the first house tax benefits is located is not required.
LOSS OF THE FISRT HOUSE TAX BENEFITS:
The purchaser will lose the “first house tax benefits” if:
• The declarations required by law in the deed of sale are false;
• He doesn’t take residence in the municipality where the purchased property is located within 18 months from the contract.
• He sells or donates the house before the end of the 5 years term. There is an exception: he will not loose the benefits if within a year he buys another property to be used as main residence.
The loss of the benefits leads to the obligation to pay back the deduced taxes for the due amount net of the amount already paid. The purchaser will also pay a penalty of 30% calculated on the higher amount of due taxes plus the interests on arrears.
The payment of a 30% surcharge will be requested, together with the payment of the legal interests of 2,5% from the 1st of January 2004 risen at 3% from the 1st of January 2008.
The taxpayer can heal the debt with the Italian Revenue Office if within 60 day from the reception of the notice of assessment he pays the due tax amount plus the interests plus the surcharge reduced to ¼ (one quarter).
Furthermore if the house is sold within the period of 5 years from its purchase not only has the purchaser to pay the recalculated amount of taxes using the regular percentage plus 30% surcharge, but also he would be subjected to a taxation of 20% over the capital gain; this last option applies only if the house was not used as main residence by the owner and/or his family (for the majority of time during his ownership)
The local Revenue Office can check and verify at any time within 3 years the existence of the “first house” requirements.
The 3 years term will be calculated starting from the law imposed deadline to fulfil the law requirement. The 3 years time starts from:
• The date when the deed of sale was signed if the declarations required by law in the contract were false;
• After the expiration of the 18 months period granted to the purchaser to take residence in the municipality where the house is located;
• From the date when the purchaser changes his residence in order to sell the house before the 5 years period has passed and if he doesn’t buy another house within a year form the selling.
In order to proceed with the check the Revenue Office must have circumstantial evidence.
The person selling a property earlier purchased benefitting from the “first house tax benefits” has the right, by law, to benefit from a tax credit if, within a year from the contract, he buys another “non luxury” house as “first house”.
In this case the already paid registration tax and VAT can be retrieved. The mortgage and cadastral registration taxes cannot be retrieved. The tax credit is equal to the lower amount of the two taxes (registration and VAT).
The credit also applies if the other property is purchased through tendering or exchange.
In order to benefit from the tax credit the taxpayer has to express his willingness with a specific declaration in the new property deed of sale. He also has to specify in the contract if he wishes to deduct the tax benefit from the registration tax which will be paid for the new property. If this declaration is omitted by mistake the purchaser can integrate the contract with a separate declaration which will be enclosed later on to the contract.
If the new purchased property is subjected to the registration tax, the compensation can take place at the signature of the deed of sale. If the new purchased property is subjected to VAT then the reimbursement will take place with the first tax return following the deed of sale.
If for the new property the taxes to pay are higher than the tax credit than the purchaser will only pay the difference. On the contrary if the tax credit is higher than the register tax or the VAT to be paid for the new property then there will be no refund for the difference.
The tax credit can be used as follow:
• As a reduction of the due amount for the new property registration tax.
• As a reduction of the due amount of registration, mortgage, cadastral taxes on deeds and tax returns presented after the date the tax credit was obtained.
• As a reduction of the amount of the Irpef tax calculated according to the first tax return after the new property was purchased; in other words according to the tax return presented in the same year the deed of sale was signed
• As a compensation for other taxes and tributes the taxpayer has to pay through unitary contributions using to the tax return model F24 (using the code 6602).