What are "first home" benefits?
The "first home" benefits allow the purchaser to obtain a reduction in the taxes to be paid for the purchase of the property unit purchased as a first home and used as a dwelling.
The intention is to favour the purchase of a home, in particular for those who are under 36 years of age.
Let's see in detail which taxes are to be paid and the rates applied.
WHAT IS MEANT BY "FIRST HOME"?
First home is the property purchased for the first time within the municipality in which the purchaser has or establishes, within 18 months of the purchase, his residence or, if different, in the municipality in which the purchaser carries out his work.
The term "dwellings" refers to buildings in group A, with the exception of category A/10 (studies and offices).
In order to receive the benefits, the property purchased must fall into both categories (first home and dwelling).
CONDITIONS
Access to the benefits requires the existence of certain requirements:
- the deeds must be onerous or gratuitous and involve the transfer of the right of ownership, or the constitution of the rights of bare ownership, usufruct, use and residence;
- the deed of transfer or incorporation must relate to non-luxury buildings, i.e. in categories A/2, A/3, A/4, A/5, A/6, A/7, A/11 and their appurtenances (C/2, C/6 and C/7);
- the property must be located in the territory of the municipality in which the purchaser has or will establish, within 18 months of the purchase, his residence or, if different, in the municipality in which the purchaser carries out his activity;
- a declaration by the purchaser, to be made in the deed of purchase, that he is not the owner, not even in shares, even under a regime of legal communion and throughout the country, of the rights of ownership, bare ownership, usufruct, use and habitation of another dwelling house purchased by the same person or by his spouse with the benefits of first home;
- a declaration by the purchaser, to be made in the deed of purchase, that he/she is not the sole or joint owner with his/her spouse of the rights of ownership, bare ownership, usufruct, use and habitation of another dwelling house in the territory of the municipality in which the property to be purchased is located.
APPLICABLE TAX REGIME
For the purposes of applying the correct tax regime, attention must be paid to the tax-civil status of the seller, while the status of the buyer is irrelevant.
The qualification is important because it also determines the tax base to be considered for the calculation of taxes.
The registration tax regime applies in the following cases:
* the seller is a natural person;
* the seller is a VAT subject but the transaction is exempt from VAT.
The VAT system applies in the following cases:
* the seller is a VAT subject and is obliged to pay the tax;
* the seller is a VAT subject and exercises the VAT option.
TAXES TO BE PAID
There are three taxes to be paid: registration tax/VAT, land registry tax and mortgage tax.
When the seller is not a private individual but a company, the registration tax is replaced by VAT.
Taxes must be paid both at the time of the preliminary contract and at the time of the final deed of transfer, known as the 'deed'.
The taxes already paid at the time of the preliminary contract will be deducted from the final tax to be paid at the time of the final deed.
The "first home" concessions grant the purchaser lowered rates, as specified below:
- registration tax at the rate of 2% (in case of purchase from a private individual), with a minimum amount of € 1,000, or VAT at 4% (if the sale is subject to VAT);
- cadastral tax in the fixed amount of € 50.00 (in case of purchase from a private individual) or € 200.00 (if the sale is subject to VAT);
- fixed mortgage tax of € 50.00 (in case of purchase from a private individual) or € 200.00 (if the sale is subject to VAT).
If the seller is subject to VAT by obligation or by option, VAT is also added to the registration tax at a fixed rate instead of proportional, as well as the mortgage tax (also at a fixed rate).
In addition to the taxes required by law, there are also the expenses for the preparation of the notarial deed, the drafting of the mortgage deed (if required) and the real estate agent's commission in case of mediation.
DEDUCTION OF MEDIATION EXPENSES
The commission paid to the real estate agent is deductible by the buyer under certain conditions.
Since, in fact, this deduction is one of those indicated in Article 15 of the TUIR, it is necessary that:
(a) the payment is made by a traceable means of payment;
b) the deduction must be proportionate to the income received.
In particular:
* up to € 120,000 of income, taxpayers are entitled to the full deduction;
* between € 120,000 and € 240,000 of income, the deduction starts at 19%, up to a maximum of € 1,000, but decreases progressively as the taxpayer's income increases;
* over € 240,000 of income, no deduction is due.
THE TAX BASE FOR THE CALCULATION OF TAXES
When the seller is a private individual, the taxable base on which to calculate taxes is given by the cadastral rent (price-value rule).
The value will be given by the cadastral rent multiplied by a coefficient, which in the case of a first home purchase is 115.5.
For example, for a cadastral annuity equal to € 500.00, the value of the taxable base will be 57,750.00 (500x115.5).
To this taxable base must then be applied the rates to determine the taxes to be paid.
It is important to remember that in the case of the application of the price-value the notary's fee can be reduced by 30%.
As an alternative to the cadastral rent, the market value on the date of the deed or, if higher, the agreed price is applied.
The purchaser must expressly declare in the deed his wish to avail himself of the price-value principle.
THE TAX CREDIT
The "first home" tax benefits are also available when the purchaser already owns a dwelling which, however, is not suitable, due to its size and characteristics, to meet the housing needs of his family.
If a purchaser sells a dwelling qualifying for "first home" relief and within one year of the sale buys another dwelling, even if not completed, he is entitled to a tax credit equal to the registration tax (or VAT) paid for the first purchase but which cannot, in any case, exceed the amount of registration tax or VAT paid for the second purchase.
Any difference cannot, therefore, be reimbursed under any circumstances; it can only be deducted from the registration tax due for the second purchase, provided that the beneficiary mentions this to the notary at the time of stipulation.
In the event that the tax is insufficient, the partially unused credit may be:
- deducted in its entirety from registration, mortgage and cadastral taxes due on inheritances, donations, deeds and complaints filed after the date of acquisition of the credit (ordinary ten-year statute of limitations);
- used as compensation for the payment of social security contributions or withholding taxes;
- used as a deduction from income taxes due on the basis of the declaration to be submitted after the date of the new acquisition.
TAX CREDIT REGIME WHEN THE SECOND PURCHASE IS SUBJECT TO VAT
If the second purchase is subject to VAT, it is not possible to use the tax credit at the time of the notarial deed and it will be necessary to opt for one of the solutions indicated in the previous paragraph.
Moreover, the tax credit is not available in the following cases:
- absence of the "first home" requirements in the second purchase;
- the property was purchased at the ordinary rate, without taking advantage of the "first home" benefit;
- the property sold was inherited or donated;
- sale of an appurtenant garage purchased with “first home" benefits and repurchase, within the year, of another garage with the same benefits.
BENEFITS FOR THE UNDER 36S
The benefits "under 36", introduced by the so-called "support decree bis" (d.l. 73/2021) are aimed at persons who have not yet turned 36 years of age in the year in which the deed is signed and who have an ISEE value not exceeding € 40,000 per year.
The benefits relate to deeds of transfer or constitution of the right of ownership, bare ownership, usufruct, use and habitation, provided that they are "first home" (including the relevant appurtenances).
Preliminary contracts are therefore excluded.
Such deeds are exempt from registration, mortgage and cadastral taxes; registration tax, mortgage taxes and special cadastral taxes remain due.
If the transaction is subject to VAT, the beneficiaries are granted a tax credit equal to the VAT paid in relation to the purchase.
The tax credit may:
- be deducted from registration, property, inheritance and gift taxes due on deeds and complaints filed after the date of acquisition of the credit;
- be used to reduce personal income taxes due on the basis of the declaration to be submitted after the date of purchase;
- be offset in the F24 form.
In no case may the tax credit be reimbursed.
Loans granted for the purchase, construction and renovation of residential property for which the conditions and requirements described above are met, are exempt from the 0.25% substitute tax on registration, registration tax, property tax and government concession fees, provided that the fulfilment of the requirements is declared by the borrower in the loan deed or attached thereto.
The benefits for the under 36s apply to deeds stipulated in the period between 26 May 2021 and 30 June 2022.
In order to support borrowers in difficulty with the payment of loan instalments, the Solidarity Fund for mortgages for the purchase of the first home (the so-called "Gasparrini Fund"), established by the "Cura Italia" decree (Decree Law 18/2020), has been extended to 31 December 2021.
EXTENSION OF THE SUSPENSION OF TERMS
The "Thousand extensions 2022" decree (d.l. 228/2021) provided for the suspension until 31 March 2022 of the following terms:
* the term of 18 months from the purchase, within which the purchaser is required to transfer residence to the municipality where the new home is located;
* the 12-month term within which the taxpayer may purchase a new property to be used as a first home after having transferred the first one, also purchased with the first home benefits, before the expiry of the 5 years following the stipulation;
* the 12-month term within which the purchaser must resell the property in his possession, purchased with “first home" benefits, after buying a second property with the same benefits;
* the 12 months term after the sale of the first house, in which the buyer can buy a second property with the same benefits.
The new terms will start again on 1 April 2022.
Are you under 36 years of age and would you like to live on your own?
Contact us to find out all the benefits available to you.
