The Italian government has extended the ‘first home bonus’ for the whole of 2022. Here’s what those hoping to get on the property ladder in Italy need to know about the continued scheme.
In a bid to help more young people buy their first home and to galvanise Italy’s real estate market, the authorities introduced the ‘Bonus prima casa’ in June last year.
Originally set to expire in June 2022, good news came for those hoping to benefit from the incentive as the government announced in this year’s Budget Law that it would be rolled on until the end of December this year. This gives people even more opportunity to get financial help with purchasing their first property.
The text of the scheme’s decree law clarified details of how it works, including removing VAT on taxes related to the purchase of a new home.
It’s one of a raft of measures prime minister Mario Draghi has introduced to kickstart Italy’s economy following the impact of the coronavirus pandemic.
The aim is to remove the high upfront cost of buying a house, such as the fees related to deed transfers and a mortgage – as well as providing young people with help to secure a mortgage.
What help can I claim?
Certain exemptions on registration, mortgage, and cadastral tax are available under this bonus.
Here are the potential tax benefits you could claim, according to guidelines from Italy’s Inland Revenue Agency (Agenzia delle Entrate):
- No registration tax – usually 2% of the cadastral value;
- No mortgage and land registry tax – instead of €50 each;
- If the seller is a private individual, registration, mortgage and cadastral taxes are zero;
- If the seller charges VAT, as is the case for building companies, the sale is subject to stamp duty and mortgage taxes, amounting to a total of €320. This is also cancelled out as the buyer receives a tax credit equal to this amount;
- The 4% VAT of the selling price if you buy from a builder becomes zero as you accrue a tax credit instead;
- Exemption from the 0.25% loan tax on financing for the purchase, construction or renovation of the first home.
Italian property purchase taxes
There’s also help with getting a mortgage as the First Home Loan Guarantee Bonus (Bonus mutui prima casa) covers 80% of the total value of the property up to a maximum value of €250,000.
This provides banks with a State guarantee, making it easier to grant loans to those who otherwise may have been denied, such as the self-employed.
Who can claim?
Italy defines eligible young people in this instance as those under 36, but if you’re getting close to that age, it will depend on when your birthday is in order to determine whether you can access the bonus.
The law grants the discount to those who buy a first home in 2022 and who are no more than 35 years old for the whole of 2022.
Purchasing: Do I need an Italian Bank account?
So, if you buy in May 2022 and turn 36 in December 2022, you are not entitled to the discount, whereas if a person buys in September 2022 and turns 36 in January 2023, they are eligible.
As well as the age requirements, here are the other criteria:
- You have an ‘ISEE’ (a socio-economic indicator of household wealth) of less than €40,000 per year;
- Your mortgage doesn’t exceed €250,000;
- The house purchased will be used as a main residence and not be listed as a luxury home;
- It is not necessary to have a permanent work contract (tempo indeterminato), as the state funds are also available to self-employed and temporary workers, provided they meet the above requirements.
Claiming tax credits
Tax credits can be used to deduct from the costs of buying a house or can be offset against your personal income taxes, known as ‘IRPEF’.
The conditions you need to be aware of
To claim this bonus, it needs to be your first property and you’ll need to keep in mind that not all properties are eligible for this scheme.
So-called luxury properties are exempt, including villas, castles and places of historical value, for instance.
Does the scheme really work?
Yes, the incentive has been so popular that it’s been credited with driving the sharp increase in mortgage applications in Italy.
First home mortgages rose by 44% in 2021 compared to the year before, according to figures from MutuiOnline.
In the last quarter of 2021, nine out ten mortgages applied for by those under 36 were reportedly for a first home.
How can I claim the bonus?
We have a solid record of helping our clients to secure an Italian mortgage loan for their Italian property purchase.
If you meet the above eligibility criteria and want to find out more, we can guide you on areas such as:
- Do I have to already be a registered resident in Italy to claim?
- How can I find out my ‘ISEE’?
- Can I claim the bonus if I inherit property in Italy?
- Is there any help with notary fees under the bonus?
- Can I apply jointly with another person?
- I want to apply with my partner who is already over 36. How will that affect what we can claim?
- I want to buy an Italian house at auction. Can I use the bonus for this?
- Do I have to pay the purchase fees upfront and claim them back later?
- How long does it take for reimbursements through tax credit to be paid?
- Are there any rules on how long I need to keep the property before selling it if I use the bonus to purchase it?
Learn more about Immigrating to Italy and what to anticipate regarding life in Italy, such as property options.
Studio Legale Metta is an internationally recognized boutique Italian law firm with experienced lawyers who handle domestic and international legal matters on behalf of private individuals, corporations and public institutions.
The author, Nick Metta is a partner of Studio Legale Metta, heads the International Department which he founded in 2004. Nick leads the international team assisting non-Italian residents and entities with matters concerning Italian law. He focuses his practice on Relocation, Real Estate, Cross-Border Successions, Estate Planning, Tax matters, Citizenship and Immigration.
Connect with Nick to explore immigration to Italy and vital matters which come with immigration.
Dig deeper into the details.... Buying Property in Italy