PURCHASE FEES FOR ITALY

Once you have signed the deed of sale, it’s time to settle up and pay all the assorted taxes. If you purchased the property from a company, there is a value-added tax to be paid, which is set at a higher rate if the property can be described as a luxury. Otherwise, you will pay a duty, a real estate tax, and a local tax, all of which add up to somewhere around 10 percent. Last, but not least: the notary’s fees, which can vary according to the value of the property. For real estate worth under ‚500,000, the fee might amount to about 1 percent and would decrease as the property’s value increased from there. Until recently these rates were set by law and were nonnegotiable, but now you can shop around.

Financially speaking, buying a property abroad is always more complicated than buying one at home, because it presents unique considerations. The first of these (unless you plan to pay for the home in cash) is where to get the money. One choice is whether to mortgage an existing property back home or take out a loan for the home you are about to buy in Italy. There are advantages and disadvantages to each.

There are currency risks involved. If you take out a mortgage for your Italian home, the monthly payments will be in euros. And, chances are, you’re paying it off with dollars”unless you have an income source in euros, such as renting out part of the home, which can be risky in itself. The dollar euro fluctuation can be damaging. When the dollar plummets about 25 percent against the euro, which certainly has happened in the past, a couple previously paying a euro-denominated mortgage of US$2,000 per month will suddenly find themselves forking over US$2,500. The payments will likely come out of your Italian bank account. For those not working in Italy and depending on savings at home, this means picking the right time to transfer funds. Clearly, when the dollar is strong, you’ll want to transfer as many dollars as possible into euros in your Italian account for future payments.

Keep in mind that there are always hefty fees on wire transfers, and there’s really no way to avoid them, short of traveling with 3,500 one hundred-dollar bills in a carry-on bag, which is a pretty risky affair and won’t go over well at the customs office. An alternative is to ask your bank for a certified check”an international draft”but this process can take a long time, the exchange rates are unfavorable at the Italian bank, and they will also exact a fee. In the end, a wire transfer is probably the best way to get the job done. The other huge factor, of course, to consider when choosing whether to set up a mortgage in Italy or at home is whose interest rates are lower. As of press time, they were at rock bottom in both Italy and the United States.

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