Are you dreaming of retiring to Italy? WSJ article for you.

When checking into these 'too good to be true' stories about towns offering extremely cheap homes or that pay you to move there be sure to read the fine print for each location. I got all excited about one offer meant to revitalize a shrinking town, only to find out that part of the deal was that you had to open a business that was needed in the town. Something most retirees are not prepared to do. I'm not saying they're all bad deals, just that you need to be prepared for some of the requirements.

Nancy,
Yes fine print is always important....whether bidding/relocating in Italy or in the US. Cheap usually comes with strings attached.

The article does mention that in the Molise region to get the stipend, one must commit to open a business OR renovate a home. The location is Sicily just mentioned renovating (after the purchase)..

The article went on to say that some locals are skeptical if this alone will turn around their declining town(s).

Lots and lots of homework needed on many aspects of such a commitment. Obviously a short WSJ article does not have the space to include all the details and caveats........more of a human-interest article for dreaming (and for some to take action, as some actually did/will, hopefully after very careful and thorough consideration of the pros/cons).

I haven't read that new article, but a others on this topic include:

One buyer's report: https://www.cnn.com/travel/article/italy-one-euro-home-buyers/index.html

Sambuca sale standard coverage: https://www.theguardian.com/world/2019/may/09/foreign-buyers-snap-up-sicilian-homes-at-1-auction

Couple of points from various stories on this topic...

• Simply buying a property does not solve the residency or Visa issue, might help, but you would still have work to do to solve that, and a visa that would allow "work" would likely not be in the cards.
• As was alluded to, what they are really looking for is young families, either with jobs, or looking to create jobs (open a business). A part-time Foreign Resident would not be a high priority.
• While the draw is "Get a House for a euro!!" many of the 1 euro properties probably are worth about that when you look at refurb costs and the value after refurbishment. Many takers wind up buying more expensive properties needing less work, but still getting a very reasonable priced property.
• When you consider why these towns are losing residents, it comes down to the fact that many are remote and have little commerce. I think to live there would take someone who was content with a very low key, solitary, self-sustaining life...and I mean that in the best sense possible.

And you, as an American, cannot just pick yourself and move to ANY EU country. There’s that pesky little problem of a VISA to contend with. You can buy property and fix it up, but you can only live there 90 days out of every 180 days.

These towns are dying precisely because they've hollowed out economically and consist of populations of dwindling elderly residents/pensioners, low or no birthrates, etc. In the long term, they won't be sustainable absent of an influx of young families and commerce - services and infrastructure would simply be too costly to maintain per capita in thinly populated towns. Young families should be targeted to save these towns, not retirees (and especially international part time retirees who aren't there to plant roots and really commit themselves to building a community). I doubt these places can (or even should) be saved unless serious investments (including better transportation links and IT infrastructure) are made upfront to make them remotely economically viable and attractive and to encourage population growth. As it stands, Italy is looking for mostly private investment and private risk-taking to breathe life back to these places.

I think you'd need to be a special type of person to take your retirement stash and invest it immediately on rehabbing a dilapidated house in Italy and all that entails (most people, I would think want to be debt-free at retirement and have their home paid off). The la dolce vita romanticization of Italy would probably wear off quickly, although admittedly some would relish such a challenge (young entrepreneurs with some kind of long-term vision, middle aged investors, not retirees). All real estate is local, so that's another disadvantage for those who don't know the culture, language, lay of the land, and related intricacies. One would need a real good on-the-ground and trustworthy agent to deal with these kinds of properties, and comfort with risk and uncertainty.

Friends of ours did it, although not as per the WSJ. They are UK citizens, so the visa thing was not an issue.They were both working in IT, trained as TEFL (Teaching English as a Foreign Language) and moved to Venice.
He, that is Philip Gwyne Jones, wrote a book about the whole business of moving, and what life is like in Venice. The book is “To Venice with Love”, a great read.
He has also written four novels set in Venice.

60 Minutes ran a segment on €1 Sicily houses a couple weeks ago. There have been other TV reports also. Average fix up cost is €200,000 to bring the house to up to code. Some don’t have plumbing or electrical or even a roof. Depending on which report, the deadline to fix up the house is three or four years. There are bidding wars going on to purchase some of the houses.
I googled and found this article about buying the houses. https://www.italianfix.com/italy-giving-away-houses/
We’ve had fixers uppers in the past that needed a lot less work and we were a lot younger. But if anyone does buy a €1 house, let us know the outcome.

I have some of those centuries’ old properties.
First of all remodeling those old houses is not cheap.
The properties sold for one euro are basically uninhabitable ruins. Remodeling those will cost a few tens of thousand euro. If, beside the basics (like a new roof) you want to have the amenities we like to have nowadays (large rooms, multiple bathrooms, upgraded electrical and plumbing, central HVAC), you will need several tens of thousand €.
If you intend to live in them, ok. But if you plan to remodel to resell, be very careful, because in my experience selling those properties is very difficult, unless they are located very near a large metro area. If they are located in the boondocks, not within commuting distance (25km) of a major city, it is next to impossible to sell them. At most you can rent them to some immigrant family. If you try to unload them, you will have a hard time to recoup the money you invested in the remodeling.
If you plan to rent to tourists, you need to invest even more on those properties.

If you are lucky to find the perfect property, and plan to live in Italy on a long term visa, Italy has a bilateral tax treaty with the US to avoid double taxation.

If you transfer residency to Italy or live more than 183 days a year in Italy, you become a tax person in Italy. You will pay Italian taxes on investment income and private pension income.
Public pension income (like Social Security) will be taxed in the US but not Italy unless you are an Italian citizen, in which case you pay everything to Italy.

Income taxes in Italy are as follows.
There is no standard deduction.
Up to €15,000 - 23%
€15001-28000 - 27%
€28001-55000 - 38%
€55001-75000 - 41%
€75001 and up - 43%
Investment income (interest, dividends distributions, capital gains) are taxed at a flat rate of 26% regardless of income (in USA cap gains are generally taxed at 15% while dividends and interest is added to your income and you pay according to your bracket)

For a frame of reference, in the US a single person will have a standard deduction of over $12,400.
After which there will be tax brackets that are on average half of what they are in Italy.
A couple earning about $100,000 in America will pay about $25k a year more in taxes compared to the US.

Roberto, your post would be a good addendum to the article.

This whole idea sounds like the kind of thing many of us might like to "live vicariously" through those who do it, and hope the best for them.

I am absolutely shocked at the young lady (in the CNN article Laura posted) who bid and purchased totally sight unseen......that takes a HUGE leap of faith. But, sounds like (so far) she is happy with her decision. Would be interesting to hear an update from her 5 or 10 years from now, along with stats on the other buyers (successes/challenges/failures). Demographic status of buyers would also be interesting to see.

Will be interesting to see 5 or 10 years down the road if there has been ANY significant, measurable economical improvements and population growth in these locations.

And, for those of you who are just enjoying travels to Italy, it is worth knowing what some off-the-beaten-path areas are trying to do toward re-energizing. I guess we could call them "way beyond the back door" locales, to play off Rick's famous term.

Its that darn movie Under the Tuscan Sun that makes people here think they can just pack up and move and find Romance, Charming and Colorful (English-speaking) neighbors, and endless Wine and Food. There are plenty of towns in Kansas and Nebraska that will pay for your medical school tuition if you'll promise to come there to work.

If money was no concern, I'd do it!
My first visit to Italy was in 1992, and I was instantly in love with it.
As retirement gets closer, I've often thought of moving there permanently.
But I'm also considering just taking extended vacations there that keep me under the 90 day limit... the higher tax rates are not attractive!!

If you're going to spend 200-300 EUR on a place in Italy, why not just spend 200-300 EUR on a place that's already habitable, up to code, etc (surely those exist) in contrast to a shell that you'd have to rebuild from scratch for the same amount which has likely gotten everything looted from it (copper pipes, etc) and is structurally unsound, prone to earthquakes...and worse yet, to embark on this adventure as a retiree. The process didn't even look fun in Under the Tuscan Sun, and that film came with a lot of sugarcoating. Roberto's post offers a lot of clarity to this marketing bonanza.

I am absolutely shocked at the young lady (in the CNN article Laura posted) who bid and purchased totally sight unseen......that takes a HUGE leap of faith. But, sounds like (so far) she is happy with her decision.

Color me cynical, but I suspect a version of Stockholm Syndrome. It's hard to admit that you're being held hostage by a colossal mistake you've made.

That's what I am hoping for Agnes--an inhabitable place! There are actually affordable homes if you look outside of the most popular places. But I am glad that some people are up for the endeavor or renovating those 1e homes. I think the incentive to open a business is rather inventive and hope it finds some success--it's just a matter of time before someone is calling Molise the next Umbria or some such. I'm sure a lot of us have been in tiny crumbling villages and wished they could be saved.

This is not the first go around of these 1E sales. I first heard about them avout 5 years ago...so in theory, there would be people able to report on the experience.
I may be a romantic but I have a practical streak and know I most likely wouldn't succeed. I am more introverted and a loner, so I couldn't play nice in the neighbourhood inquisitiveness games. I also have no negotiating skills or chivvying workers along smills and go nuts with the Italian version of 'mañana'. And for now, my travel style,is a little to peripatetic to spend all the time in one location. I'll take the money and rent various long term places around the world. I love Italy but maybe my aged heart connect will be somewhere I haven't been yet.

Interesting and a good move for the villages. The three people highlighted in the CNN article bought the houses as vacation homes and would think about retiring there, maybe, in the future. It’s a win to increase the population a few months a year and the dilapidated houses get restored.

Those hilltop villages in Provence that tourists love and where gobs of artsy Parisians have bought second homes were just like this in the 1970s and early 80s. I remember crumbling buildings in deserted villages with for sale signs and being overwhelmed at the thought of all the work that needed to be done. Good for these people. Hope they enjoy their vacation homes.

No tax problems Maggie as long as you keep your residence in the States over half the year.

The high Italian tax bracket is somewhat offset by the much cheaper healthcare. I know several US people that came to work in Florence in early Eighties, took Italian citizenship after 10 years or so as it was much more convenient for their job, and no one of them went back to US at retirement age. They simply could not afford a level of healthcare that is here is much cheaper; and you realize this only when you get to retirement age.

As for people that came from urban US and moved to rural Italy, I know only a single successful instance. I came to know her on a travel newsgroup and now I follow her on Facebook. A very rural place, BTW. So the thing is possible but I understand it is quite hard and needs very determined persons.

Americans who moved to Italy at a young age, and basically barely worked in the US, would not qualify to receive Medicare and therefore their healthcare costs cannot be compared to Americans who qualify for Medicare coverage, which kicks in at 65.
A retired US couple making $60,000 each a year in pension and 401k distributions ($120,000 together), with no additional investment income and no significant itemized deductions, assuming an exchange rate of 1€=$1.12 would pay $12,749 in income taxes in the US (or €11,383)
Under the exact same scenario the same couple in Italy would pay €33,354 in Italy. That is almost €22,000 more a year (or $24,000) or $2,000 more a month.
If you add investment income, let’s say $10,000 each more ($20,000 for the couple), equally split between capital gains and int+dividends, the investment income would result in almost an additional $4,000 in income tax in the US, but in Italy that would result in an additional $5,200 to the tax man.
My scenario does not describe a rich couple. $120,000 to $140,000 a year for a couple is probably below average for middle income earners in large metro areas of California or New England.
Healthcare costs may be higher in the US, but provided one has Medicare, $2,000 a month saved in taxes will pay for plenty of supplemental health insurance.
Also let’s not forget that if a US citizen moves to Italy on an Elective Residency visa, they would still need to purchase private insurance or buy into the Italian NHS (approximately €3000 for a full year).
A more money savvy strategy for retirement abroad might be to stay in Italy under 183 days a year and pay taxes in the US. Alternatively there is the Portugal option.

The Italian version of “mañana” (tomorrow) for construction workers in Italy is actually called “mâine”, which means tomorrow in Romanian.

I don’t know about other parts of Italy, but in Tuscany construction workers nowadays come only in the Carpathian variety.

there's someone who posts on RS and also has a blog (Adventures with Barley (dog)) about moving to Italy for 1 year. I think that's a good compromise, or 1st step, for retiring in Italy. HGVC house hunters also did an episode on the cheap Italy auction a few seasons ago.
I'm also just taking extended vacations there that keep me under the 90 day limit... so far, only 3 weeks, but would like to get to 8 weeks--still got 2 kids in college!

How would this be any different from moving to a very rural community in (insert any US state), with no hospital, a declining economy, and on top of that, you would know no one and would have a whole new system (governmental) to learn.... and blah blah blah..........?

Not to mention you would have to learn a new language just to talk to anyone at the store or the post office or the non-existent hospital . . .

It’s lovely while a healthy young retiree, but what does one do when they hit the chronic illness or end-of-life stage. It’s necessary to think ahead and plan.

As mentioned above, there are many day to day issues in living abroad, especially when one does not know the language. In most of those towns English is not widely spoken, yet, as a resident you need to learn to deal with:
- Banks
- Utilities providers
- Taxation
- Government bureaucracy and regulations concerning everything, from local taxes and fees, to building code requirements.

Also do not underestimate the fact that you cannot easily survive in a rural area without a car. That means you need to deal with purchase, maintenance, car insurance, and, to top it all, you also need to go to driving school and take a driving test (including the not so easy written test online, all in Italian). Yes, because let’s not forget, that you are legally authorized to drive in Italy with your home license and IDP only up to a year. Within a year from the date you establish residence in the country, the law requires that you obtain an Italian license, and unless you have a E.U. license (which can be converted automatically), you must take all necessary driving tests because there is no reciprocity on driving licenses between the US and any E.U. state.

Thanks for the info, Roberto.

There are some good points here, let me add a few details. Yes, I agree that the €1 houses are a fool's game and that moving to Italy is a game only for young healthy retirees. For the first five years of elective residency, you can opt to pay a flat 7% income tax if you live in one of the 7 central or southern regions of Italy, in a smaller town (under 20,000 pop so not tiny). So you can go, have an adventure, pay much lower tax, take advantage of cheaper, good quality healthcare (my research shows an estimate of €400/year, not €3,000. That’s a LOT less than I pay for supplemental Blue Cross now.). Then see where you are in 5 years wrt finances, health, emotionally, or family at home.

That’s our current plan anyway. We’ve bought a house for less than a third the sales price of our Canadian home. It requires zero renovation work, is up to current earthquake code, and is in a small but lively town in Abruzzo. When we're done, we'll come home or go elsewhere. In 5 years, the house will be free of any capital gains tax. There’s no property tax on principal residences. House insurance costs half what it costs here. Food costs less. Utilities cost more, unless we put up solar roof panels, which you can buy at and have installed by Ikea. We think we're going to save piles of money and have a good time. It may not be forever, but enough to set our retirement off on a good foot.

This scenario would be slightly different for Americans. Since as a citizen you have to file U.S. taxes forever, you will be able to deduct your Italian taxes from U.S. taxes but still end up paying the same total taxes as if you had stayed home, more or less. I will not have to pay Canadian taxes while a non-resident. So, using this 7% flat tax option, you could have your adventure without a huge tax drain, but without the same cost advantage as any non-American. If you stay more than 5 years, you will indeed pay the higher Italian taxes as Roberto describes.

Anyway, our adventure starts in May. I’ll post the results as we go along.

The cost of purchase of coverage by the Italian National Health Service (SSN) I cited is based on what published by the Ministry of Health in their website (see below):
http://www.salute.gov.it/imgs/C_17_pagineAree_2522_listaFile_itemName_0_file.pdf

The premium price, which is for a full year (and cannot be prorated if one is staying less than a year) is assessed based on annual income, as follows:
7.5% of income up to €20,658.28 (=€1,549.37)
4% of income from €20,658.28 up to the max €51,645.69 (=€1,239.50)
(51645.69-20658.28=€30987.48x4%=€1239.50).

Since I assumed an individual income of over $60,000 annually, therefore over the max assessed of €51,645.69, the cost of the individual annual premium would be the maximum premium possible of €2,778.87 a year, I.e. the sum of €1549.37+€1239.50.

That comes out to approximately €230 a month per person, still a bargain compared to US insurance prices, especially for someone over the age of 55, but far from the €400 a year you cited.
As the document linked above states, the price is much lower for foreign students (about €150 a year).

If your research indicates a premium of 400€ a year, that is probably a supplemental insurance that covers services in private settings for people already covered by the National Health Service (SSN)
Many Italians (including most of my family members) don’t want to deal with the long waits for specialty services with the SSN, therefore often go to private clinics and providers where there are no lines, and services are often superior. These private providers have a contract (convenzione) with the SSN and get partially reimbursed by the SSN, however (similarly to going out of network with an American HMO) the patient has to pay the difference, which often results in a copayment much larger than using the SSN. The private health insurance would cover that differential payment to the private clinic/provider in whole or in part. That is the reason why their premiums are not high. It’s because their coverage is supplemental to the amount reimbursed by the SSN to the private provider.
In your case, if you don’t buy the SSN coverage, you need a full private insurance coverage, not just supplemental. In that case the premium is higher than €400 a year (probably closer to the amount charged by the SSN above) and many Italian (or international) private insurance companies don’t even provide that type of full coverage to people over 65 or 70, because they are too risky.
Therefore please inquire if the insurance you are quoted is for full coverage or if it’s supplemental for those covered by the SSN.

@Nelly-I look forward to following your adventure!

Thanks for the article. It brought up a lot of important points and considerations. Love all of the valuable comments the respondants brought up! What a dream, though... buying a house and restoring it in Italy. Seems too good to be true unless you are young with a business plan and lots of energy. Thanks!

Also- thanks @ Roberto da Firenze
great information and you always have a lot to offer to these conversations- thank you!