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PROPERTY

Property: Do you have to be Italian to claim Italy’s building bonuses?

Italy has plenty of schemes on offer allowing those buying or renovating in Italy to save substantial amounts of cash. But who can access these funds? Here's what you need to know about how nationality and residency play a part.

There are funds on offer to help with buying and renovating property in Italy. But are you eligible to claim them?
There are funds on offer to help with buying and renovating property in Italy. But are you eligible to claim them? Photo by Nils Schirmer on Unsplash

Italy’s various building bonuses have hit the headlines internationally, attracting interest and curiosity from all over the world.

Who wouldn’t be tempted by schemes that promise to pay for your move to Italy or give you the cash needed to renovate a home?

READ ALSO: The building bonuses you could claim in Italy in 2021

While there are various terms and conditions attached to such schemes, and not all turn out to be as attractive as they may initially sound, there really are considerable amounts of money on offer for those looking to move, buy and renovate.

Italy’s so-called ‘superbonus 110‘ and its other raft of home improvement bonuses have aroused attention and kickstarted many building projects – so much so that many homeowners are now facing delays due to a shortage of building companies caused by the demand.

The ‘superbonus’ offers a tax rebate on up to 110 percent of the expenses incurred for certain property restorations, while other smaller bonuses have fixed limits on how much you can claim.

But can anyone benefit from these schemes? How does nationality or residency affect the rules? Here’s an overview of how different personal circumstances play a part.

Houses in Italy
Homebuyers can grab a one-euro bargain. Photo by Dimitry B on Unsplash

Cash incentives to move to small Italian towns

Firstly, let’s look at the famous €1 houses across the whole of Italy, as more and more municipalities are joining in with this idea month after month.

Pettineo in Sicily has recently launched its version, broadening its appeal by allowing people to buy unused and neglected properties and transform them into not just homes, but tourist accommodation and shops too.

It joins a growing list of €1 properties and each area will have its own criteria, but so far, these schemes seem to be open to buyers from anywhere of any nationality.

The comune of Patrici in the region of Lazio, for example, is offering properties for one euro in its historic centre – and the terms extend eligibility to those from ‘third countries’, i.e. outside the EU.

OPINION: Why Italy must put its forgotten ‘ghost towns’ up for sale – or risk losing them forever

This is also true for the municipality of Cantiano in the region of La Marche, who is hoping to expand its residential base by putting properties on the market for €1, also to non-EU citizens.

But things are different with other schemes that offer cash bonuses to people moving to a particular area.

Piedmont recently announced plans to offer lump sums for people looking to move there for work or to start a business, in an attempt to revitalise some of its smallest towns.

There’s a €10 million pot of funds available to attract newcomers to municipalities with under 5,000 inhabitants, and the grants available must be used to renovate a home.

Out of that financial aid, you could personally obtain an allowance of between €10,000 and €40,000 – and there’s more available if you’re under 40, in a bid to attract younger people who’ll boost the economy for longer.

One reader contacted The Local to say they would apply for the scheme, as it ticked their wish list perfectly. Almost immediately, the most desirable properties had been snapped up and he said he was struggling to reach the agents to discuss further.

Unfortunately, as it turned out, he wouldn’t be able to proceed anyway, as this particular scheme is only open to Italian citizens, those who hold an EU passport or people living in Italy with a long stay residence permit of 10 years (permesso di soggiorno), according to the scheme’s eligibility criteria.

READ ALSO: Visas and residency permits: How to move to Italy (and stay here)

Houses in Burano, Italy.
Buying property in Italy comes with small print. Photo by Luca Bravo on Unsplash

As he’s British, he no longer falls into that category since Britain left the EU – and of course this goes for Americans, Australians, Canadians and New Zealanders too, for example.

The only way around it is to get EU or Italian citizenship, which for the latter can take years to obtain. Or if you have a family member who’s eligible, they could apply but all the documents and deeds would need to be in their name.

Not all move-to-Italy schemes are the same, though.

Santa Fiora in Tuscany, for example, is offering to stump up funds, paying up to 50 percent of your rent if you’ll move there and work for yourself remotely.

READ ALSO: Will Italy really pay you to move to its ‘smart working’ villages?

It makes no mention of the programme only being open to Italian or EU citizens – and even has an application form in English.

As such schemes are complex and vary, remember to check the guidelines of who can participate before you proceed.

The building ‘superbonus’

The Italian government’s famous building ‘superbonus’ promises homeowners a tax deduction of up to 110% on the expenses related to making energy upgrades and reducing seismic risk.

While very few people would actually be eligible to claim the promised 110%, there are still substantial savings to be made.

Under this incentive, there are two notable bonuses available for restorations: the ‘Ecobonus’ and the ‘Sismabonus’ and you can use both in conjunction.

The good news for people with non-EU nationality is you don’t need an Italian or an EU passport to access them. You don’t even need to be legally resident in Italy, as it’s open to second home owners too.

READ ALSO: 

The bonus is available to property owners, regardless of nationality and residency.

However, if you’re not a resident in Italy, your options for accessing the bonus are narrower.

A possibility for residents paying income tax is to use the tax deduction method over five years, which works well if you want to offset high taxes from your income.

Therefore, to go down this route, you must be an Italian resident paying income tax, known as ‘IRPEF’.

The percentage you can claim back will be tied to your Irpef tax bracket, meaning only those making the very largest tax payments would be eligible for the full 110%.

Alternatively, non-residents can transfer the tax credit to another party in return for a commission, such as tax credit institutes or banks.

Or, you can apply for a discount on the invoice (sconto in fattura), effectively trading your tax credit to the contractors. This means the supplier recovers the bonus on your behalf, taking a slice of it as a fee.

Which plan you choose depends on your personal circumstances, such as whether you hold residency in Italy, or how much income tax you pay.

Property renovation works.
Financial aid is on hand for property renovation for all nationalities. Photo by Vitor Pádua on Unsplash

Other building bonuses

Homeowners in Italy can benefit from even more building bonuses which are currently valid until the end of 2021.

There is a government pot for furniture, landscaping gardens and optimising water consumption, but most of these bonuses are for people who pay income taxes in Italy, as they are mainly tax-deductible schemes.

READ ALSO: How you could claim Italy’s building bonus multiple times for the same property

This means nationality isn’t as important as whether you pay income tax. Accessing bonuses such as the renovation bonus (Bonus Ristrutturazioni) require you to be a taxpayer in Italy, allowing you to offset the taxes on your income.

For a full list of the building bonuses on offer and who can claim, click here.

Help with mortgages for those under 36

People under 36 years old who want to buy their first home in Italy can apply to get financial help with getting on the property ladder.

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 (defined as under 36) 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).

READ ALSO:

At the time of purchase, the buyer pays 3% registration tax (imposta di registro) if you buy from a private individual, or 4% VAT (IVA) from a company or corporation (except for a few special cases), plus fixed mortgage and land registry taxes.

This ‘prima casa‘ bonus can save buyers up to €9,000 on the costs of buying a first home.

But can anyone access this form of help to buy a first home? The Local understands that many real estate agents, mortgage brokers and other professionals in Italy may tell non-Italian buyers that they don’t qualify as they are not Italian.

However, several of The Local’s members and writers have been able to claim this tax cut successfully.

According to Italian law, there is nothing stopping non-Italian citizens from accessing this scheme. If you’re able to buy a house in Italy, you’re eligible to benefit.

You do need to already be a resident in Italy as the bonus comes in the form of tax deductions, which means that you need to be paying income tax in order to claim these credits.

Note: if you can’t benefit from this scheme but want to get a mortgage in Italy anyway, you don’t already have to be living here. Click here for a guide on how non-EU citizens can get a mortgage for a property in Italy.

Other bonuses for people living in Italy

Aside from property-related bonuses, further tax breaks are available to people who are legally resident in Italy – and these don’t take your nationality into account either.

The newest such offer is the spa bonus (bonus terme), which is open to everyone legally resident in the country and, from November 8th until the funds run out, offers €200 per person to access spa facilities. There are no other requirements apart from being over 18.

READ ALSO: Italy’s spa bonus: How you can claim €200 towards a relaxing break

Italy has a wide range of other subsidies on multiple areas of living costs, many of which are tax deductible and therefore will usually require you to be a taxpayer in Italy.

From baby bonuses to pet tax breaks, from glasses bonuses to TV discounts, it’s worth looking into how you could cut down those hefty bills with our Italian government tax bonus guide.

See more in The Local’s Italian property section.

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MONEY

How much does it cost to raise a child in Italy?

How big is the financial commitment parents have to make in Italy to pay for their offspring’s needs and expenses until they’re grown up and independent? Here's a look at the predicted costs.

How much does it cost to raise a child in Italy?

Family is the bedrock of Italian society, but it’s also an unbalanced economic crutch, propping up children who leave home much later than most of their European counterparts.

Various factors are at play, from a declining birth rate, youth unemployment, being unable to get on the property ladder to young Italians moving abroad in search of better financial opportunities.

It probably comes as little shock, then, that parents in Italy end up forking out huge sums of cash to support their offspring through childhood and early adulthood (and beyond).

Even just up to the age of 18, raising a child in Italy can cost upwards of €320,000, according to data from Italian consumer research body ONF (Osservatorio Nazionale Federconsumatori).

The average spend of raising a child from 0-18 years is €175,642, but it rises in families with high incomes, classed as over €70,000 per year.

READ ALSO: Italian class sizes set to shrink as population falls further

Researchers noted that the cost of bringing up children has jumped up following the effects of the pandemic too: compared to 2018, child-rearing expenses increased by 1.2 percent by 2020.

The decrease in expenditure related to transport due to spending more time at home, as well as those incurred for sports and leisure activities, was not enough to mitigate the increase in costs for housing and utilities, which increased by 12 percent compared to 2018.

Photo by Suzanne Emily O’Connor on Unsplash

Food prices rose by 8 percent compared to 2018 and education and care jumped by 6 percent for the same timeframe.

In fact, Italy ranks as the third most expensive country in the world for raising children, only coming behind South Korea and China, according to data from investment bank JEF.

The pandemic has contributed to extending an already growing phenomenon: the decrease in annual income of Italian households.

Household income dropped by 2.8 percent from 2019 to 2020, the report found, citing data from national statistics agency Istat. It marks a further squeeze for families, especially low-income and single-parent families.

Depending on earnings, the amount needed to bring up a child until the age of 18 varies considerably.

READ ALSO: ‘Kids are adored here’: What being a parent in Italy is really like

A two-parent family with an annual income of €22,500 spends an average of €118,234.15 to bring up a child until the age of 18; for the same type of family but with an average income of €34,000 per year, the total expenditure to bring up a child increases to €175,642.72.

For high-income families, stated as over €70,000 annually, raising a child costs €321,617.36 on average.

The figures mark an increase of around €5,000 for low- and middle-income families, and a much sharper rise of €50,000 for high-income families, compared to ten years ago.

The money gets spent on housing, food, clothing, health, education and ‘other’ categories. The report revealed that the average spend on a child aged 16 years old is almost €11,500 annually, amounting to €955.78 per month.

Almost €2,000 per year gets spent on food, €1,615 goes on transport and communication, €782 goes on clothing and €1,600 goes on education annually, the report found.

They begin small, yet the costs are anything but. (Photo by LOIC VENANCE / AFP)

For the ONF, “these data highlight how, today more than ever, having a child is becoming a luxury reserved for the few, which fewer and fewer Italians are able to afford.”

READ ALSO:

The numbers on supporting children after their 18th birthday are a little hazier, as when children eventually fly the nest varies – but figures from Eurostat show that Italy ranks third in Europe for the average oldest age at which children move out of the parental home, at 30.2 years old.

Only young people from Croatia and Slovakia wait longer to live independently, while the EU average for flying the nest is 26.4 years old.

Even then after eventually leaving home at over 30 years old, it’s not entirely clear how many Italians are fully independent once they get their own address, or whether their parents continue to bankroll their living costs.

Italy’s president Sergio Mattarella sent a message to Italy’s Birth Foundation (Fondazione per la Natalità) in May stating, “The demographic structure of the country suffers from serious imbalances that significantly affect the development of our society.”

In response to worsening economic circumstances, the Italian government has recently pledged to do more to help people have families and reverse Italy’s continuing declining birth rate.

It has introduced the Single Universal Allowance (L’assegno unico e universale), but along with it has dropped various so-called ‘baby bonuses’ that provided lump sums to new parents.

The new allowance is a monthly means-tested benefit for those who have children, or are about to have a child. It is payable from the seventh month of pregnancy until the child reaches the age of 18 or in some cases, 21. For more information on what it is and how to claim it, see here.

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