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FINANCE

UPDATE: Under 36? Here’s how Italy plans to help you buy a house

Italy's government has announced that young people hoping to get on the property ladder can apply for the 'first home bonus' from June, a scheme offering tax cuts and help with mortgages.

UPDATE: Under 36? Here's how Italy plans to help you buy a house
The Italian government wants to help more young people in Italy to buy their own home. Photo by Katy Cao on Unsplash

The text of the new decree law was published on Tuesday clarifying the details of the ‘first home bonus’ (Bonus prima casa), following an announcement last week by Prime Minister Mario Draghi.

People under 36 years old who want to buy their first home can submit an application to get financial help from 24th June, with the scheme lasting a year.

The scheme aims to eliminate VAT on taxes relating to deeds transfers and the mortgage on the purchase of a home, and help young homebuyers secure a mortgage – the high upfront cost of which is often cited as one of the factors behind the high number of people in Italy still living with their parents well into their 30s (and beyond).

Purchasing a property in Italy involves no small amount of added fees and taxes – in fact, many property experts advise buyers that they’ll need to budget as much as ten percent of the property price for additional charges.

Photo: Maria Ziegler/Unsplash

What help is available?

People under 36 – the classification for ‘young people’ in Italy – will benefit from two main types of help:

Firstly, there will be a raft of reductions on the taxes paid when buying a first home.

And secondly, taking out a mortgage is set to be made more straightforward, as the state will put down the deposit for young homebuyers.

EXPLAINED: How you could benefit from Italy’s Covid-19 financial support

That’s been made possible thanks to new funding from the ‘First Home Loan Guarantee Fund’ (Fondo di Garanzia Mutuo Prima Casa).

Firming up plans to help young people buy a home is the latest step following Draghi’s pledge to boost the country’s economy following the coronavirus crisis.

In a press conference earlier in May, he promised financial help would go to  businesses, young people and healthcare services.

Photo by Tiziana FABI / AFP

Who can access the first home bonus and how?

For those hoping to buy their first property in Italy with state help, the bonus will run until 30th June 2022 and people under 36 years old are eligible to apply.

It’s available to those who have an ‘ISEE’ – a social-economic indicator of household income – of up to €40,000.

Young people falling into this category can benefit from certain exemptions on registration, mortgage and land registry tax, saving up to €9,000 on the costs of buying a first home.

If you buy property from a private individual, the bonus cancels out registration, mortgage and cadastral taxes, meaning that only stamp duty, mortgage taxes and special cadastral taxes remain to be paid, amounting to a total of €320.

On the other hand, if you buy a house from a company, you won’t pay registration, mortgage and cadastral taxes and again, you’ll need to pay stamp duty, mortgage and cadastral taxes.

The difference in the second case is that VAT must be paid to the seller, but the buyer accrues a tax credit to spend equal to this VAT for house-buying costs.

In effect, it means if the purchase of the property is subject to VAT, it will be reduced to zero with the first home bonus.

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Further to that, eligible candidates will also be exempt from the VAT on stamp duty, which comes in at around 2% of the cadastral value of the house. That’s if you live in Italy full time – it’s 9% if you don’t.

Claiming tax credits

The tax credit can be used to deduct directly from these house-buying costs, or alternatively, it can be used as tax relief to deduct from the taxes on your personal income (IRPEF).

Notary fees, which are generally fixed for each part of the sale, will be halved. The notary checks that the property is legally registered and their fees can vary from town to town.

If buying a house through an agent, a notary does all the required checks and may be able to take care of the preliminary agreement as part of their service.

How about loans?

Included in the first home bonus is state help with the deposit, after a government decision to extend the First Home Loan Guarantee Fund.

It exists already and covers up to 50% of the total value of the property, but is set to be extended to 80% of the total value, of up to €250,000, without a deposit – and the banks get a state guarantee.

Watch out for the conditions

To access the bonus, it must be your first home and you’ll need to keep in mind that not all properties can benefit from the government help, including stately homes, villas, castles and places of historical or artistic value.

The decree text appears to state that you’ll also need to not reach the age of 36 in the year in which the deed is drawn up. So that means if you’re buying a house this year, you’ll need to be no older than 35 for the whole year. In other words, if you sign the deed for a house this year, you’ll need to turn 36 from next year onwards.

The home must also be located in the municipality in which you work, study or currently live.

And once the benefits have been used, you can’t sell the property for five years – unless you buy another house.

You also can’t access the bonus if you’ve already used it for a first home anywhere in Italy.

As some aspects of the process for claiming the bonus remain unclear, anyone hoping to benefit from the scheme is advised to contact a mortgage expert for further information.

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MONEY

How to get a discount on the cost of solar panels for your Italian property

Solar panels are an understandably popular choice in Italy, and if you're thinking of installing them on your own home there's funding available to help lower the cost. Here's what you need to know.

How to get a discount on the cost of solar panels for your Italian property

As utility bills rise, more home and business owners in Italy are looking at installing solar panels as a possible way to reduce costs in the long term.

Solar panels are already hugely popular in Italy, with the nation ranking top worldwide for solar-powered electricity consumption.

READ ALSO: Who can claim a discount on energy bills in Italy?

And no wonder: it’s a solid bet in a country where there is sunshine in abundance. But what about the costs of installation?

The good news is that there’s financial help available from Italy’s national government aimed at encouraging uptake of solar energy, as well as other incentives from regional authorities in many parts of the country.

It’s in the government’s interest to incentivise solar power, as Italy has vowed to transition to greener energy with its National Integrated Plan for Energy and Climate (Piano Nazionale Integrato per l’Energia e il Clima 2030 or PNIEC).

So how could this benefit you? Here’s a look at what you can claim at both a national and a regional level.

Regional funding for installing solar panels

As well as the national government subsidies available for covering the cost of solar panel installation, some regions have introduced their own bonuses or discount schemes.

The sunny southern region of Puglia and the wealthy northern region of Lombardy have seen the highest number of residential photovoltaic systems installed, according to market research.

it’s not surprising, then, that these two regions’ governments are offering cash incentives to help cover the cost of installing solar panels.

Depending on the type of system you opt for, you could expect to pay between around €5,000 and €13,000 for installation, design, labour and paperwork.

To contribute to this initial outlay, the local authority in Puglia has created a pot to help homeowners on lower incomes move towards renewable energy.

READ ALSO: What you need to know about installing solar panels on your home in Italy

Newly introduced in 2022, the so-called Reddito energetico (energy income) offers households with an annual income below €20,000 a bonus of up to €8,500 for installing photovoltaic, solar thermal or micro-wind systems in their homes.

The bonus is intended for residents who have citizenship of an EU country or, if you are a citizen of a non-EU country, you can still claim the bonus if you have been resident for at least one year in a municipality in Puglia.

The €20,000 annual income refers to a household’s ISEE – an indicator of household wealth calculated based on earnings and other factors.

A worker fixes solar panels. (Photo by Ina FASSBENDER / AFP)

For this particular scheme, if you claim this bonus from the authorities in Puglia, it precludes you from also claiming funds at national level concurrently – such as through the popular superbonus 110 home renovation fund (see below for more on this).

Although there are other government bonuses, such as the renovation bonus (bonus ristrutturazione) that offers a much higher maximum total expenditure of €96,000, it can only be claimed as a 50 percent tax deduction spread over 10 years in your tax return.

For lower income families in Puglia, this may not be as cost effective as the grant from the regional authorities, which may equate to more money towards the cost and supply of solar panels.

For more information and to apply for Puglia’s renewable energy bonus, see here.

Lombardy is also stumping up funds to continue the solar power momentum experienced in the region.

While the coffers for private properties are currently closed, the region has made funds available for those with small and medium-sized businesses – again, in a move designed to lessen the impact of rising energy costs.

Business owners can claim a 30 percent grant for the installation of solar panels. There are more funds available to cover the cost of consultancy during the process too.

For more details on applying for this energy bonus in Lombardy, see here.

Other regions have also taken the initiative with encouraging more homes and businesses to change to solar-powered energy.

The region of Tuscany is offering an incentive on installing solar panels to residents in the form of tax deductions spread out over several years.

Works permitted include installing winter and summer air conditioning and hot water systems using renewable sources. This covers heat pumps, solar panels or high-efficiency biomass boilers.

For further details and information on how to apply, see here.

Each region may have its own solar panel bonus, either in the form of grants or tax deductions, available to private residents and/or businesses.

Check your regional government’s website to find out what may be currently on offer.

Solar panels are an increasingly popular option for those renovating homes in Italy. Photo by Jeremy Bezanger on Unsplash

National subsidies for installing solar panels

If your region isn’t offering any cash incentive to install solar panels on your property, there are government funds available, which cover all 20 regions.

The authorities introduced and extended a package of building bonuses in order to galvanise the construction industry following the economic downturn caused by the pandemic.

While there is no single, separate package of incentives for installing solar panels in 2022, you can take advantage of other government bonuses that include the cost of solar panel installation and supply.

As noted, you could use the renovation bonus (bonus ristrutturazione), which amounts to a 50 percent tax deduction spread over 10 years in your tax return – or through the superbonus 110, a scheme that promises homeowners a tax deduction of up to 110% on expenses related to property renovation and making energy efficiency measures.

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The property must make at least a double jump in energy class or reach the highest efficiency rating when accessing these bonuses.

There’s a substantial amount of funds on offer to install your solar panels.

Using the renovation bonus, there is a maximum total expenditure of €96,000 (per single housing, including condominiums). Remember this amounts to a 50 percent tax deduction, so the maximum saving you would make is €48,000.

The renovation bonus has been extended until 2024 and, where solar panel installation is concerned, you can claim for the costs of labour, design, surveys and inspections, as well as VAT and stamp duty.

You must tell Italy’s energy and technology authority, ENEA, that you’ve done the works within 90 days in order to access the state aid for solar panel installation.

If you choose to use the superbonus route to claim funds for your solar panels, however, you can spread out the tax deduction costs over five years. Alternatively, you can apply for it as a discount on the invoice (sconto in fattura) or through the transfer of credit (cessione del credito).

The limit when using this bonus is €48,000, which can now be accessed for a while longer as the government extended the deadline for single family homes.

See HERE for details on how to claim it.

See more in The Local’s Italian property section.

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