The value price system in Italian law

Introduction

With the Financial Law of 2006, the regulation of the “value price” for real estate sales is introduced in the Italian legal system. This discipline can be advantageous for the buyer because it allows the buyer itself to tax real estate purchases on the so-called cadastral value and not on the purchase price.

The difference between cadastral value and purchase price

The value price is based on the cadastral value of the real estate, which is obtained by multiplying the cadastral income by a coefficient that varies according to the cadastral category of the property. In the deed of sale the Notary will give mention of the request of the buyer to apply the discipline of the price value.

The purchase or market price, is the money amount that the buyer pays for the purchase of the real estate, instead, and is an essential element of the deed of sale. This price is determined by the parties and is stated in the deed of sale itself.

The requirements for the application of the value price

First of all it is important to underline that the value price is also applied to foreign citizens who buy real estate in Italy.

The value price discipline applies only to certain types of real estate purchase that have the following requirements:

Real estate for residential use must be purchased (and related pertinences);
the deed of sale must be subject to registration tax and not to VAT;
the purchase must be made by a natural person who does not act in the exercise of atristic, professional or commercial activities. Therefore, it is excluded that the value price can be applied to a company’s purchase.

As anticipated, moreover, it is necessary that the buyer expressly requests to apply the price value and the Notary must give mention in the deed itself, also indicating the reference value.

The price value and the real estate pertinences

In short, we can say that the pertinences are defined by Italian Civil Code in the Article 817, as things destined in a lasting way to adorn another thing. The article also specifies that such a destination can be made by the owner of the main thing or by who has a real right on the thing itself (Italian real rights (or rights in rem): definition and classification – The Legal Nook (antonellolawfirm.com).

The value price can be applied, without limitation of number, also on pertinences of the dwelling that have certain requirements, indicated by the Revenue Agency with the Answer 420/2021:

have its own cadastral income;
belong to the owner of the principal asset;
indication in the deed of sale that them are pertinences of the main property.

The price value and pertinential grounds

With the same Answer 420/2021 the Revenue Agency clarifies that, in order to apply the value price also to the agricultural ground that is sold together with the dwelling, it must be demonstrated “with rigorous proof” that this ground is pertinent. The Revenue Agency therefore requires that the proof of relevance is evaluated with greater rigor than indicated by Italian civil code and that must be justified by “real needs”.

In the event that the purchaser can not provide to prove this, the residential property may be subject to price-value discipline and the gound to normal taxation based on the sale price.

The advantages of applying the value price

As we have seen the value price is a mechanism that in general allows to reduce the taxes that the buyer is required to pay at the time of the sale, thanks to the possibility of using as a tax base calculation for mortgage and cadastral taxes, the cadastral value of the property that is normally lower than the sale price.

Price value and special cases

The mechanism of the price value also applies when a private person buys a property to be used at first home, taking advantage of its benefits.

In addition, the value price also applies when the property is purchased at auction.

However it is always advisable to make all the calculations with extreme precision in order to understand from time to time the convenience for the purchaser regarding the demand of application of the price value.