Buy a house for 1 euro while saving on taxes

A unique opportunity for foreigners in Italy

MGI Vannucci & Associati
October 5, 2020 - 16:04

In 2008 the town of Salemi reached international headlines due to an interesting real estate program: houses on sale for 1 euro. Many foreigners who had always dreamed about being immersed in one of Italy’s mesmerizing towns and surrounded by its art and history, filed thousands of requests from all over the world. Nowadays, more than 20 municipalities across Italy have joined the initiative “Case a 1 Euro”. Recently, a sale took place in Fabbriche di Vergemoli, in the province of Lucca, where the advantage for the sellers was to get rid of unused property, but still subject to taxation, while the benefit for foreign buyers was the possibility of making an investment starting from almost a zero expenditure base.

 

Fabbriche di Vangemoli, Lucca

 

 

Buy a house for 1 euro in Italy

 

The houses are sold for a symbolic price of 1 euro to buyers who can prove their serious intention of renovating the properties and formalizing the act.

 

These two requirements must be proven by providing a restructuring project within 365 days of purchase and incurring in notarial fees for the registration, deed, and transfer of the property.

 

When all permits have been granted, the buyers must then start with the renovation works within a maximum of 2 months. In addition, the municipalities ask to stipulate a 3-year guarantee policy of 5,000 euro, which is then reimbursed on expiry.

 

Please note that there are changes in the availability of houses for sale for each region. For details, contact the building offices of each municipality or check the relevant notices of the project Case a 1 Euro.

 


 

 

Benefit from tax deductions when renovating your 1-euro house

 

The most important requirement to purchase a 1-euro house is the commitment to renovate such property, and the idea of having to invest money on renovation works might daunt potential buyers from grasping this opportunity. However, it is important to note that the Italian government has introduced some convenient tax deductions linked to property’s renovations. The following tax deductions are dispensed through reimburses to be discounted from future taxes, in several annual rates:

 

• Restructuring bonus: It is a bonus for extraordinary maintenance, restoration and renovation of the building unit. The tax deductions amount to 50% of the expenses (until a maximum of 96,000 euro) and must be divided into 10 equal annual installments.

• Facades bonus: It is a bonus for interventions aimed at the restoration of existing building’s external facades, such as painting and restoration of gutters. The tax deduction of 90% of the expenses is divided into 10 equal annual installments and there is no limit for the expenses. However, the property must be in an area of artistic and historical interest or with a territorial density not less than 1,5 mc/mq (zone A and B as identified by DM 02/04/1968 n. 14.444).

 

 

In addition, the 2020 “Rilancio” Decree brought two major tax changes, valid until 31.12.2021:

 

The Superbonus 110% tax deduction for the restructuring bonus and facades bonus. This rate is only applied when the renovation works are carried out together with the interventions encouraged with the eco-bonus or the seismic bonus (thermal insulation interventions, replacement of air conditioning, seismic interventions).

• The possibility of immediately taking advantage of the tax discount with the invoice discount or credit transfer for the works that were carried out.

 

For more information about other eligible tax deductions, read our article on the topic: 6 Types of Tax Deductions for Renovation Works.

 

 

Benefit from an advantageous tax regime when moving to Italy

 

After the renovation works have been completed, many foreigners consider moving into their newly established property. For them, Italy has introduced a special tax regime. Under the dispositions of the “2017 Budgetary Law”, new residents In Italy can benefit from a flat-rate tax on earnings generated abroad. In particular:

 

• A substitute tax equal to 100,000 euro per year for earnings from non-Italian sources, in place of the normal payments of IRPEF (Tax on Earnings of Natural Persons) and additional regional/communal taxes. This regime can, upon request, also be extended to family members, and the substitute tax for these is equal to 25,000 Euro.

• Exoneration from the obligation of declaring investments abroad or a financial foreign activity that produce earnings in Italy.

• Exemption from the obligation of paying the tax on foreign properties (IVIE) and of the tax on foreign financial investments (IVAFE).

• Exemption from taxes on donation and succession on property held abroad.

 

New residents can access this regime for maximum 15 years after the first period of validity.

 

For further information about how to qualify for these tax benefits, read our article “Tax Reductions for Foreigners in Italy”.

 

 

 

 

What we can do for you

 

Purchasing a 1-euro house is a unique opportunity for those who have always dreamed about living in Italy. However, this symbolic price carries within itself an important investment consisting of renovation works and administrative procedures.


Thanks to our experience and professionalism we can provide you with support and assistance in your investment choice, while helping you to carefully assess the timing of your transfer to Italy in order to benefit from the tax benefits mentioned above.


The Firm MGI Vannucci e Associati boasts many years of recognized experience in real estate services and tax consultancy for foreigners.

 
 
 

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