Every week, Mansion Global poses a tax question to real estate tax attorneys. Here is this week’s question.
Q: I’m an American who wants to buy a small vineyard in Italy to try my hand at winemaking, purely as a hobby. What kind of taxes should I expect to pay?
Broadly speaking, you should expect to pay registration fees, mortgage tax and cadastral tax, said Adriana Maria Ruggeri, founder of Coco Ruggeri Law & Associates in Denver, Colorado, with offices also in Rome, Cagliari and Oristano, Italy.
If the local municipality designates the property—which may or may not include a building or home—as rural, the registration fee is 15% of the property price, she said. If it’s not a rural property, the fee is 9%. When people think of the typical Italian vineyard, they are thinking of rural vineyards, such as those in Tuscany or Umbria, she continued. In either case, the “registration tax may not be less than €1,000 (US$1,200),” Ms. Ruggeri said.
The mortgage and cadastral taxes are €50 (US$58) each regardless of the cost of the property or whether it’s rural or non-rural. The cadastral tax is a fee to record the name change in the property tax record, explained Nick M. Metta, a lawyer in Doylestown, Pennsylvania, who’s licensed to practice Italian law. A value-added tax of 22% of the purchase price is incurred if a non-rural property is sold by a business, Ms. Ruggeri said.
Since you would be making wine strictly for your own private enjoyment, the transaction is simply a property purchase, said Mr. Metta, partner and head of international practice of Studio Legale Metta, which has offices in Bari and Milan in Italy and in London. There’d be no business taxes to worry about.
The vineyard isn’t a business “if there is no sale of product or if there is no business Tax Identification Number,” he said.
You would pay “only property purchase tax, [same as a registration fee], which is 9% of the property assessment value,” of an in-town property, Mr. Metta said. The assessment value is the value on record and is generally approximately 50% less than the market value, he explained.
Italian taxes most comparable to U.S. property taxes are annual real estate taxes, which consist of two parts, Mr. Metta said. One is an estate tax, which is due because you intend to use the Italian home as a secondary home. The other is a service tax (including garbage collection tax), such as for road maintenance and local police, he said. These combine for an approximate aggregate 2% of property value, he said.
Buyers, however, should proceed with care, Ms. Ruggeri said, emphasizing that the above fees are generalities and vary case by case. “We have so many exceptions,” she said of Italian law. Therefore, prospective buyers should consult both a lawyer and a notary to ensure you “enjoy the best possible tax advantages and avoid legal troubles.”
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