Episode Transcript
[00:00:08] **Luca:** Hello everyone. Welcome to the Magic Towns Italy podcast. I am Luca joined by Anna, my co-host.
[00:00:16] **Anna:** Hi everyone.
[00:00:17] **Luca:** We have a new format for the podcast because, well, we thought we'll make it special.
[00:00:23] We have something exciting to discuss. We have launched our ultimate guide to buying and owning property in Italy. And since we spent three months working on it we thought the two of us would get in front of the mic and talk to you.
[00:00:39] **Anna:** So we are covering stuff like, uh, why Italian notaries are actually super helpful. How buying at auction isn't as scary as you think. Some smart ways to budget for renovations and a bunch more cool stuff.
[00:00:54] **Luca:** That's right. Some of the, you might say, most interesting things or funniest things sometimes from, uh, about a hundred pages of guide. And by the end of this, you have an idea, a little taste of what's inside the property guide. And just for, uh, your information, the guide is, uh, free for all Magic Towns subscribers.
[00:01:17] And, uh, anyone who is not a subscriber is welcome to come to Magic Towns Italy and, uh, take a sub subscription or buy the guide if you prefer. So shall we get started, Anna?
[00:01:28] **Anna:** Yeah. So first thing we gotta talk about someone you will definitely meet when buying Italian property, but most people don't get what they do.
[00:01:38] **Luca:** When I came back to Italy, I was, uh, a little bit _meh_ about notaries thinking, okay, here's another archaic relic of Italy bureaucratic past.
[00:01:50] And getting into an office where everyone's wearing a suit and mahogany furniture, little bit formal. I thought, okay, that's so outdated. But actually I changed my mind. I think that Italy's notary system is one of the best consumer protections in the property world.
[00:02:10] Surprising, right?
[00:02:12] **Anna:** A lot of foreigners think the notary is just another annoying paperwork person, but they're actually on your side. Like these people are seriously trained, legal expert, or basically act like gatekeepers
[00:02:25] **Luca:** That's right. One of the things that, one of the myths that we bust in the guide is this, uh, idea that you could accidentally buy a house, uh, with the bad title or serious issues on the land registry. It's called the cadastre in Italy. And I think that drives me crazy. Um. When I see these, uh, lawyers on expat forums say, oh, we saved this poor expat from buying a property from a person that did not legally own it. That's never going to happen. A notary will never let it happen. Before you are allowed to purchase the property, they are going to triple check who owns it, how they got the property.
[00:03:11] So since you have to pay them anyway, you have to pay one to 2% of the purchase price. And then like an attorney, they don't nickel and dime you for asking questions and that the, you'll say a flat fee. Ask them anything and get your money's worth from the notary.
[00:03:26] **Anna:** Basically they make sure everyone sticks to the deal. So for example, if your seller promised to fix something or hand over paperwork before closing, the notary won't finish the sale until it's done. They make sure nobody can just bail on what they agree to. That's right. In Italy if a seller backs out for no good reason, they have to give you back, double your deposit as a penalty, like double, and that's the actual law.
[00:03:55] So
[00:03:56] **Luca:** Yeah, it's sometimes it's worth paying a little bit more in deposit knowing that, uh, the bigger the deposit or the stronger the incentive for the seller to agree to what they have at contract. So I would say that the, the notary flips the script a little bit. Instead of buyer beware, it's more like seller beware.
[00:04:18] They make sure the seller is held up to what they have agreed to. And as you said, since you're paying for them anyway, you might as well make the most, or having this trusted professional on your side.
[00:04:30] **Anna:** Just trust the notary. Yeah. Now, speaking of things, people from other countries often get wrong. Let's talk about another big surprise. Buying at auction.
[00:04:41] **Luca:** Buying a house at an auction. Sounds intimidating, but also does it not sound attractive buying a property at 50 cents on the dollar, 50 cents on euro? In general, you buy properties on auction for 30 to percent below the market value. Um, and that's in addition to the fact that you will buy straight from the court without need for a notary and saving 6% on average in real estate agencies.
[00:05:13] **Anna:** Yeah, the whole thing is super transparent and run by the courts, as Luca said. So it's not some shady back alley deal. It's actually pretty fair and there's no chance of the seller suddenly backing out or changing things last minute.
[00:05:28] **Luca:** So one question that we get a lot is, can foreigners bid in these auctions. Italy sets no restrictions on a nationality basis for people to participate in, in auctions. So anyone can bid on a property, buy it, and uh, make it their own via auction.
[00:05:48] **Anna:** Before everyone rushes off to start bidding, we should mention the downside too.
[00:05:53] Those cheap auctions prices come to catches for one auction sales are, as is you, you usually have to take the property in whatever shape it's in. You can't ask the old owner to fix off, and you need to be ready to pay the full amount fast. Usually within 60, 90 days of winning. And if you don't pay by the deadline, you lose your 10% deposit just gone so.
[00:06:22] Let me counter that with a really good thing. Each property goes up an auction has a very thorough status report made by an architect or a quantity surveyor. This is because in order to be put on the block, the judge orders a such a professional to write a thorough guide, and I'm telling you, it's often 20, 30, 40.
[00:06:44] **Luca:** I've seen up to a hundred pages of information about the property, which covers literally everything. You may not even have to visit it and you will still get a extremely thorough view of what the status is both from a legalities standpoint and from a practical standpoint.
[00:07:06] It will be marked in the report if the property has issues with the damp issues with the roof, issues with the, you name it, electrical. So it's like you paid an engineer. Or three or four euro to write a very thorough report, but you get it for free. That's actually a great thing about auctions.
[00:07:27] **Anna:** Auctions are not easy money. As Luca said, read the auction, wrap carefully to any problems, budget for repairs you need to do, and maybe hire a lawyer or someone who knows options to help you through it. Um, yeah, so we actually list a ton of common mistakes in the guide, like making sure your paperwork is perfect, deciding on your max bid beforehand so you don't get caught up in a crazy bidding war.
[00:07:54] **Luca:** And that can happen. I've seen people bid them a hundred thousand more the base price just because they were caught in the heat of the moment. So you have to keep your cool, you have to keep your cool.
[00:08:05] **Anna:** Yeah, let's switch topics to something every buyer has to think about renovation costs. So yeah, if you're looking at the cute old farmhouse or even a place that seems ready to move into, you'll want to hear this next part.
[00:08:21] **Luca:** This topic is near and dear to my heart. I have done my fair of renovations both in Italy and in other countries, and, um. I think the most important thing for newbies coming into Italy is, uh, you must not underestimate your budget. The way we try to express this in the guide that is by using this fictional character with Jane, the unlucky renovator.
[00:08:48] And more than unlucky, she's unprepared because she makes a series of mistakes that end up costing her 86,000 euro on a hundred thousand euro in renovation. So it is a serious amount of, uh, mistakes and maybe we can go through the most basic ones that we listed out, shall we, Anna?
[00:09:09] **Anna:** So first starters, Italy requires all team of licensed professionals for most renovations. So not just one contractor. And a lot of foreigners don't know this. You'll probably need an architect or an engineer to design stuff and file permits structural engineer for building work, maybe a thermal engineer for certain reports. So yeah, the list goes on. But all those professional fees can add about 10 15% on top of what your project costs.
[00:09:42] **Luca:** And let's be honest, you listener had never heard about a thermal engineer until Anna mentioned that now,
[00:09:48] **Anna:** right? Yeah.
[00:09:49] **Luca:** Another big ticket item is, uh, permit fees oneri di urbanizzazione.
[00:09:55] When you get a building permit, especially if you're using the use of the building, say you're turning a barn or stables into a, um, a dwelling for yourself. The local government of the town would charge you fees to contribute to the infrastructure of the town building roads, building schools.
[00:10:13] They're just going to the general pot of money for the town. No matter what, you're gonna be on the hook for paying several thousand euros, easily tens of thousands of euros. We have seen a barn turned into a 100 square meter apartment here and it calls it 24,000 euro in tax alone.
[00:10:32] So that's something you want to budget for and there are ways to get around this. So make sure you do your homework before committing to turning a former bedroom for a horse into a bedroom for yourself.
[00:10:47] **Anna:** Let's talk about like good things. Italy has some awesome renovation tax bonuses.
[00:10:55] You've probably heard about things like the eco bonus or the earthquake bonus, but to get them, you have to follow really strict rules, like using a special bank transfer for all payments. So yeah, if you pay cash or even just do a regular bank transfer, you lose the tax breaks. We've seen people miss out just because they didn't know the right way to pay.
[00:11:19] **Luca:** O ouch. Ouch.
[00:11:20] **Anna:** Yeah.
[00:11:21] **Luca:** In, in our example, Jane lost this 50% renovation tax credit. It's the easiest one to get. Anyone can get it. It has a 96,000 euro cap. So that's a 48,000 euro mistake. Then people complain about tax in Italy. If you renovate a home and you get a couple hundred thousand euro in, uh, tax credits, that will keep you tax free for a very long time. You just have to plan accordingly.
[00:11:47] **Anna:** Yeah.
[00:11:48] **Luca:** So the bottom line from this list of, uh, renovation mistakes in my opinion is, um. You have to do your homework and get the right knowledge and planning. Assume that everything will be a little bit more complicated in costly. Make sure you budget for that.
[00:12:08] **Anna:** So yeah, personally I add this don't try to DIY the whole thing. So make sure to hire a good geometra. That's like a, like an architect surveyor or a project manager who knows the local rules. They can save you from expensive mistakes and delays.
[00:12:27] Renovating in Italy can be really rewarding. You can end up with your perfect dream home, but you need to know what to expect and keep your budget realistic.
[00:12:37] **Luca:** Absolutely.
[00:12:38] **Anna:** And speaking of budgets, there's a big myth we should clear up.
[00:12:41] So the idea that North Italy is expensive and South Italy is cheap, I think that it's actually way more complicated than that, isn't it?
[00:12:50] **Luca:** You know what I think about this topic, we spend a lot of time looking at property data and, uh. It isn't quite as simple as people make it out. There's a stereotype that all properties in the North cost a fortune and the south is the shape.
[00:13:07] We've analyzed data from, uh, over 1500 towns, which we have in the database. In fact, on the website, you can find the proper data for everything. If you're subscriber and there are dozens, well, I should say hundreds of northern towns that have a high quality of life and reasonable prices. And conversely, some famous price areas don't always deliver the best lifestyle for the cost.
[00:13:33] **Anna:** Lots of people think you have to pay crazy prices to live in the North. But yeah, if you look at prices at Milan or the fanciest parts of Lake Como, prices are actually crazy, but there are also a lot of regions like Veneto, some parts of Piedmont that have a great quality of life at surprisingly reasonable prices. So the north isn't all expensive if you know
[00:14:01] **Luca:** where to
[00:14:01] **Anna:** look.
[00:14:02] **Luca:** Yeah. And the flip side of that is that there are some premium zones that everyone talks about. Uh, some areas of Tuscany, some areas of Lake Garda that is some areas of Sicily. Think Taormina, for instance, uh, or Ischia, near Naples.
[00:14:18] Those places may have the prices that would rival Paris. And they don't always score very high in quality of life. In fact, a lot of them are middling. You will see the property guide that, that there is a map showing you a quality of life scores for the entire, and of course, subscribers can filter by quality of life.
[00:14:39] So paying more doesn't automatically mean that you're getting a better day-to-day life. And this is a bit of a shocker. Like, why are people paying so much to stay and buy property these places? Part of it is brand name. Mm-hmm. And, uh, herd mentality. Uh, you think about a town that had relatively reasonable property prices like Lucca.
[00:15:00] And, uh, in Tuscany, and it has now become very popular with expats and suddenly prices are going up. Why was it, is it better now than two or three years ago? No, it's just, as I said, herd mentality. Bit simplistic. It may offend some, but it is a fact.
[00:15:17] **Anna:** So some of the best deals are in places people usually ignore. So if you want, I don't know, the Tuscan lifestyle, talking about Luca, uh, with good food, historic towns, pretty hills, you might not actually need to buy in Tuscany. There are beautiful regions nearby like Umbria, Le Marche. They're have a really similar vibe and they are beautiful and way more affordable.
[00:15:45] **Luca:** We should mention the South because it sounds like we're only talking about the North and the substitutes for Tuscany there are, it is true that generally this, the south is, uh, cheaper than the North as a rule. Of course, now you understand that there's a lot of exceptions. But we did find a lot of towns in Puglia and Eastern Sicily particularly, they have high quality of life metrics and very low prices.
[00:16:09] Uh, possibly some of the best value in all of Europe. Some of the prices rival Bulgaria or Romania. And, um, of course with a with a different quality of life and infrastructure scores. There are lots of towns where you can buy a finished home for under a thousand euro per square meter, and they often have vibrant communities and amenities. It's just the international demand that has not driven up prices yet. So it's a good time to get in and before the crowds do.
[00:16:39] **Anna:** So you can find all of these towns in our website, but you need to be aware that our quality of life measure includes housing costs but for example, like a small town in Sicily might not have the same healthcare or eye paying jobs as a city in the north. So if you move there, you're getting affordability, the sunshine, uh, but maybe giving up nearby international airport or top hospital.
[00:17:09] I don't know. It all depends on what matters to you.
[00:17:12] **Luca:** So I guess if we had to, the takeaway is don't oversimplify Italy into North versus South, or assume that you know the market because you hear, you read newspapers, especially the big, uh, international newspapers that never so often come up with a new city. There are undiscovered sweet spots in every region. There's a whole section of the guide designed to help readers find their own personal goldlock. The climate, the culture, the services, and the prices. And you, once you've learned that there are tools in place for you to find the town that is right for you.
[00:17:46] I don't play golf, someone does. I need a special type of healthcare, someone does not. Once you have those tools in your hand, then you're going to make much better decisions. And speaking of cliches and stereotypes, shall we talk about the one Euro homes?
[00:18:06] **Anna:** Definitely. I think that it's an interesting topic.
[00:18:09] **Luca:** If you've lived under a rock, you might not know about these schemes, uh, run by certain towns
[00:18:14] **Anna:** So these programs are usually run by town councils trying to save old buildings and bring back life to dying villages. If you buy one, you have to promise to renovate it within a certain time, which is usually two, three years and meet specific standards.
[00:18:33] So you're basically taking on a project and that's often like a huge one. So most of these buildings are in a really bad shape and a lot of buyers think that they can just do, you know, a cheap fix up.
[00:18:49] **Luca:** You can't do a cheap fix up. You are gonna need architects permits. If the property is in the town center, you might need to have authorization from the local superintendents. So it is not a walk in the park. If you think you're gonna fly into Italy, buy one Euro home and be renovating it three days later, you are very sorely mistaken.
[00:19:14] **Anna:** Yeah. And
[00:19:14] **Luca:** You have three years to do it generally.
[00:19:16] So our bet is that we will spend a year getting permits a year chasing builders that don't come, and then you'll find out by the end of year three that you are not done with the renovation and then you get in trouble. So we spend a lot of time in the guide that trying to explain people how to not make mistakes.
[00:19:36] And if I had to say one thing to you is, uh, if you want to buy a one Euro home, spend a 200,000 fixing it, you might as well spend a hundred thousand to buy a property that's already kind of fixed and fix it on your rather than participate in these schemes. But hey, it worked great for marketing for certain towns, so more power to them for trying.
[00:19:56] **Anna:** Yeah, I, I mean, we, we've heard success stories like family turning a one euro house into a B, B or a summer home, but those usually mean lots, lots of money and patience.
[00:20:08] **Luca:** That's right. It is not going to be easy, so
[00:20:11] **Anna:** yeah.
[00:20:12] **Luca:** Take it with a pinch of salt. And I think we have, uh, one last thing. We kept it for last because it's
[00:20:19] **Speaker 3:** the
[00:20:19] **Luca:** weirdest of all these hacks, and
[00:20:22] **Anna:** I think this is one of the coolest little things we put in. It sounds random for buying a home, but it can really matter if you're looking at a country property.
[00:20:35] **Luca:** Oh, what is it?
[00:20:36] **Anna:** So Italy has these laws that gives special perks to registered farmers, even a small one. And a lot of experts don't know this, but if you're willing to register as a farmer, you get a bunch of benefits.
[00:20:50] **Luca:** Farmer, you mean farmer? Farmer? Farmer. Cows. Yeah. Eggs, chickens, olive. Well, yeah, I, I know all about this because, uh, this may surprise some people, but I am a farmer. I am registered a farmer, and this is the reason. Okay. It is nice to have a few olive trees. It is nice to have a few chickens, uh, but, uh, that are a lot of benefits from a property perspective, from being a farmer.
[00:21:17] To begin with, you don't need to go and milk cows at 5:00 AM You can just have olive trees as long as you have enough and then you find you can qualify. The benefits you get include tax breaks, building rights. Your farming income is taxed in a very favorable way. Basically, it's a flat tax and it's only a few hundred euro a year.
[00:21:38] It doesn't matter if you sell one liter of olive oil or a thousand liters of oil, your tax is always the same.
[00:21:44] **Anna:** I mean farmers can do things. Regular people can't build a house or barn on farmland that's normally off limits per building.
[00:21:53] So usually if you buy a beautiful place of land with olive trees, you might not be allowed to put up a house there because of zoning rules. But if you are an official farmer, you can often, like you often can build a home on your land with permission, obviously.
[00:22:09] **Luca:** And we get this a lot. Oh, I found this lovely plot of land. It over looks the sea. How do I build a house there? You don't. You can't.
[00:22:18] **Anna:** Yeah.
[00:22:18] **Luca:** If it's family land in Italy, you generally cannot build property and unless you a farmer. So you see there's an advantage there too. And there's another thing which is, uh. And following into the footsteps of people's dreams.
[00:22:33] Another dream is, uh, opening A, B, B or a farmstay. Italy has this concept of agri, which means farm stay. And uh, one of the great advantages is that you don't pay tax or you pay very little tax on your B&B operations. Uh, the rule of thumb is that you get. 75% tax rebate on any money you make from renting out the property to tourists.
[00:23:01] So if you want rooms or little apartments, that is a great way to do that. Again, you have to qualify as a farmer. So think about it. It can make a lot of difference for you.
[00:23:12] **Anna:** Yeah, I mean, this isn't for everyone. You do need to actually do some farming
[00:23:16] **Luca:** Sometimes we read of people that want to pay to harvest olives and uh, and harvest grapes. And in this case you get paid for it and it's a great lifestyle. So I guess the takeaway is this, Italy has all sorts of lesser known programs and little legal statuses to benefit buyers. Become a, a farmer, of course, we know it's not for everyone, but it gives you an example of what we have been covering in our analysis and what you can find in the guide.
[00:23:43] **Anna:** We put a lot of our own experience, um, most of all mistakes into it.
[00:23:48] **Luca:** Definitely, you might say that people that buy the guide are buying our mistakes or cents on the dollar. And the mistakes a other people do. We have a lot of experts and, uh, including tax experts, architects uh, notaries assist us with the, with writing this guide. So we hope it's gonna be useful for you.
[00:24:09] We cover everything between getting mortgages, the tax hacks, uh, to how to read real estate listings, uh, avoiding scams. You name it. If we've been through it, we wrote about it.
[00:24:21] **Anna:** And if you have questions about anything we talked about today, whether it's notary stuff or I don't know how to register as a farmer, just reach out to, to us
[00:24:32] **Luca:** Yes.
[00:24:32] Reach out to us. And in fact, you're, do us a favor because, uh, and I are always looking for excuses to do a new podcast episode. So send us your questions and we'll try and answer them to the best of our ability.
[00:24:45] **Anna:** Thank you. Thank you
[00:24:46] **Luca:** very much and see you today. And please, if you want to become a subscriber, you can do this. You're gonna get your property buying guide today in your email. Thank you again. Talk to you next week. Ciao.
[00:25:00] **Speaker:** That's it for this week on Magic Towns, Italy. You can create a free account at Magic Towns it and explore over 2000 towns, including those offering the 7% tax scheme, as well as download dozens of expat guides. We have over 200 data points per town, more than Italy's Statistics authority itself, covering everything from property prices to schools, healthcare.
[00:25:25] Crime and more. If you want full access to filters and unlimited searches, upgrade to Magic Town's Premium. Use the Code Podcast for 20% off an annual plan. Thanks for listening. Our next podcast will be live on Saturday at 9:00 AM.
