Buying Property in Italy: A Guide for International Buyers

Yes, foreigners can legally buy property in Italy, but the rules depend on nationality. EU and UK citizens can purchase property freely without any restrictions, even if they are not residents. However, other non-EU citizens must follow the “Principle of Reciprocity,” which means their home country must allow Italians to purchase property there as well. If no reciprocity agreement exists, they must hold a valid Italian residence permit, known as a Permesso di Soggiorno, in order to buy property in Italy. Foreign buyers are also allowed to rent out property, and owning a home can support visa applications, such as the Italy Elective Residency Visa or an Italian Digital Nomad Visa.

Italy’s real estate market is expected to be one of the fastest-growing in Europe, with property transactions projected to increase by 8.4%. Italy’s growth is mainly driven by a shortage of new housing and rising demand for luxury properties and student accommodation. The market is also divided between the high-performing and more expensive northern areas and the more affordable southern regions.

Northern cities such as Milan and Bologna are seeing the most growth, with Milan remaining the most expensive city, where prices can reach €11,000 per square meter. In contrast, southern regions like Sicily, Puglia, and Calabria have more affordable options, with inland homes still available for under €1,000 per square meter, although popular coastal towns such as Polignano a Mare are increasing in value quickly.

1. 7% Flat Tax for Retirees: If you relocate to a qualifying town in Southern Italy with fewer than 20,000 residents, you can benefit from a 7% flat tax from the Italian Flat Tax regime on all foreign income for up to 10 years. This includes pensions, rental income, and other income earned abroad.
2. 0% capital gains tax after 5 years: If you own your Italian property for more than five years, you are fully exempt from capital gains tax when you sell. This allows long-term investors to resell without paying tax on their profit.
3. Strong Rental Yields in University Cities: Due to ongoing housing shortages, university cities such as Bologna and Padua are creating high rental returns of around 6% to 7.5%, which gives investors consistent profits from both Italian and international students.
4. Italy Flat Tax Regime: High-net-worth individuals can choose to pay a €300,000 annual lump-sum tax on all foreign income, regardless of how much they earn globally. 
5. Residency support through property ownership: Although the Italy Golden Visa does not have an option of buying property, meaning purchasing a house does not automatically grant residency. But property ownership satisfies the accommodation requirement for visas such as the Italy Digital Nomad Visa and the Italy Elective Residence Visa.

Step 1: Find the perfect home

Before starting the legal process, take time to research different regions, compare prices, and view the properties in person if possible. Consider factors like location, rental potential, renovation needs, and long-term value depending on your needs. Once you are confident you have found the right property, you can move forward with making a formal offer.

Step 2: Get a Tax Code (Codice Fiscale)

Before you can move forward with any legal paperwork, you must obtain an Italian Tax Code (Codice Fiscale). This is your personal identification number in Italy and is required to sign contracts, open a bank account, pay taxes, and complete the property purchase. You can apply for it at an Italian consulate in your home country or directly at a local tax office (Agenzia delle Entrate) in Italy.

Step 3: Get legal representation and submit the purchase proposal (Proposta d’Acquisto)

Make sure you find legal representation and have a lawyer who will help you at every step.  Once you find the right property, you submit a written offer to the seller together with a small deposit, around 1% to 2% of the purchase price. If the seller accepts, this offer becomes legally binding. To protect yourself, your lawyer should include conditions such as “subject to survey” or “subject to mortgage,” so you can recover your deposit if serious problems are discovered.

Step 4: The preliminary contract (Compromesso)

Within about 30 to 60 days, both parties sign the preliminary contract, which sets out all the final terms of the sale. At this stage, you will need to pay a larger deposit of 10% to 30% of the purchase price. If you decide to withdraw without legal grounds, you lose your deposit. However, if the seller pulls out, they must repay you double the deposit as a legal penalty.

Step 5: Technical and legal checks

Before the final signing, important checks are done to make sure the property is legally and physically compliant. A surveyor confirms that the property matches official land registry and planning records, because even small discrepancies can delay or block a sale. At the same time, the notary conducts a title search to confirm there are no mortgages, debts, or inheritance claims attached to the property.

Step 6: The final deed (Atto di Vendita)

The final signing takes place at the notary’s office. The notary reads the deed aloud, and a translator is present for foreign buyers. You then pay the remaining balance through a secure bank transfer to the notary’s escrow account. After signing, you receive the keys, and the notary officially registers you as the new owner with the Italian Land Registry.

Yes, foreign buyers can get a mortgage in Italy, though the terms are stricter than for local residents. Italian banks view non-residents as higher risk, which leads to lower loan amounts and more detailed documentation. As a non-resident, you can borrow 50% to 60% of the property’s value, while Italian residents can have access to up to 80% of the house’s value. Several banks after set a minimum loan amount of €50,000 to €100,000. 

But there are also financial requirements that must be met, like the debt-to-income ratio. This means your total monthly debt payments, including the new Italian mortgage, cannot exceed 30% to 35% of your net monthly income. If you earn money in a currency other than the euro, like USD or GBP, banks might reduce the amount they count as your income to protect against exchange rate fluctuations.