Protect Your Deposit on Your Property Purchase in Italy
When purchasing property in Italy, it’s crucial to navigate the earnest money deposit accurately to avoid hefty taxes and potential deal breakers. Generally, buyers pay a 10% deposit of the property’s purchase price. Italian law offers three treatments for this deposit: “acconto prezzo”, “caparra confirmatoria”, and “caparra penitenziale”. The former lacks legal protection for both parties and incurs higher taxes. Meanwhile, “caparra confirmatoria” provides security, allowing buyers to reclaim twice the deposit if the seller withdraws. “Caparra penitenziale” serves as compensation for withdrawal, held in escrow, and can be adjusted during the closing. Registering the agreement with Italy’s IRS, the “Agenzia delle Entrate”, requires tax payments that vary based on the deposit’s treatment. Utilizing a knowledgeable real estate agent is recommended for a seamless transaction.