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How to Buy an Italian Home Remotely during a Pandemic

This is an interesting article. An American/Italian couple who've spent a lot of time in Italy and want to retire there in the next few years decided to buy a home ahead of time so any necessary building modifications could be completed before they were ready to move. Pandemic-related travel restrictions made it impossible for them and not advisable for their European-resident daughter to see the place in person before the sale was finalized.

I was surprised one could buy a 3-bedroom, 3-bath house (with lake view from the top floor) in Meina, a town on Lake Maggiore, for €85,000 ($100,000). The house is described as needing work but charming, watertight and weathertight. The planned refurbishment (including insulation, rewiring, and removal of the third bathroom) will be much less expensive than usual due to economic-recovery tax breaks currently available in Italy. The article estimates the remodeling will total about €97,000 ($114,000) but only cost about €22,000 ($26,000) out of pocket due to the incentives

https://www.msn.com/en-us/travel/news/the-americans-who-bought-a-house-in-italy-online/ar-BB1f9F7e?ocid=msedgntp

Posted by
1116 posts

Yes, this was interesting. My husband is one of those who looks at homes on vacation, and wants to buy. Just like the author said not to!

Posted by
6974 posts

Interesting.

Not something that can be easily replicated by others.

Posted by
1856 posts

will be much less expensive than usual due to economic-recovery tax breaks currently available in Italy.

I'm not sure they can ask for tax breaks if they don't pay labour/retirement income taxes in Italy. They must have found a bank willing to buy their tax credit, but I wouldn't bet on it.

Posted by
178 posts

They must have found a bank willing to buy their tax credit, but I wouldn't bet on it.

The "tax discount" (incentivo) can be "sold" to the company who do the refurbishment. This procedure is called "cessione del credito".
The official webpage says that the discount can be required by the owner or the renter of a building: is not told that must be an Italian or somebody is working (and paying taxes) in Italy.
This is the official webpage: https://www.agenziaentrate.gov.it/portale/web/guest/schede/agevolazioni/detrristredil36

Posted by
1856 posts

Page 3, chapter 1 first line:
"È possibile detrarre dall’Irpef (l’imposta sul reddito delle persone fisiche) una parte dei costi sostenuti per ristrutturare... etc."

Translated: you can deduct from IrPeF a % of the costs incurred...

Irpef is the gross income tax paid by natural persons. Someone not working/paying taxes in Italy doesn't pay Irpef. I wonder how someone can sign a credit assignment agreement about a tax credit he had no way to claim. But, as the accountant of a famous poet and play-writer used to say: "There are more things in the Tax Code, William, than are dreamt in all your plays"

You can sell these tax credits to both banks and construction enterprises, anyway.

PS Selling you credits to the bank is quite common: many Italian entrepreneurs working only for public bodies are used (forced...) to sell some credit to the bank when it's time to pay VAT. In short, every 3 months you bring invoices to your bank and get back around 96% of the money the Italian state owes you.

Posted by
178 posts

@Dario
The deduction on IRPEF is one of the method. You can even pass the credit to the company who is doing the refurbishments or a bank (sorry, in Italian because is the official statement):
"Cessione del credito e opzione per il contributo sotto forma di sconto
Ai sensi dell’articolo 121 del decreto-legge n. 34 del 2020 (c.d. Decreto Rilancio), i soggetti che negli anni 2020 e 2021 sostengono spese per gli interventi di ristrutturazione edilizia possono optare, in luogo dell'utilizzo diretto della detrazione spettante, alternativamente:
- per un contributo, sotto forma di sconto sul corrispettivo dovuto, fino a un importo massimo pari al corrispettivo stesso, anticipato dai fornitori che hanno effettuato gli interventi e da questi ultimi recuperato sotto forma di credito d'imposta, di importo pari alla detrazione spettante, con facoltà di successiva cessione del credito ad altri soggetti, compresi gli istituti di credito e gli altri intermediari finanziari
- per la cessione di un credito d'imposta di pari ammontare, con facoltà di successiva cessione ad altri soggetti, compresi gli istituti di credito e gli altri intermediari finanziari."

So, even if the owner isn't paying taxes in Italy, could obtain a discount. Maybe lower than the deduction, but in any case quite high.