What’s the cost of buying a house in Italy for your son or daughter? If you decide to buy a property and put it at the use of your child, you can enjoy some tax benefits and save money. Let's find out more.
Cost of registering your child’s house
When the property deed is made and signed, you can get a discount on the VAT to 4% instead of 10% if it’s a new construction that you’re buying from the builder, or knock the registration tax down to 2% instead of 9% if you’re buying from a private individual. The cadastral and mortgage taxes are fixed at 50 euro each if you buy from a private vendor and 200 euro each if you buy from the developer. You can also obtain tax deductions on the interest of the loan if you take out a mortgage to buy the house.
These are some of the benefits you can get from the first home bonus or ‘bonus prima casa’, as long as your child doesn’t have other homes in their name in the same municipality and/or any which have already been purchased with the same tax benefit. Your child must also be a resident of the Italian municipality where the house in their name is located.
Remember that if you register the house to one of your offspring and they do not go to live there, you must pay the IMU and TASI taxes as if it were your second home. The exemption, in fact, only applies to the main house, that is, the one where you are a resident and you usually live.
When you decide to register a house in your child’s name, there is an additional advantage: the property cannot be seized by debt collection agents in the event of unpaid taxes by the buyer. If the parent is only the owner of one property, the one where they live, and are not the owner of a second home, their first property can also not be taken away. This is because the law on debt collection prohibits the seizure of real estate when the taxpayer is the holder of only one property of residence, which is used as a civil home and is not registered as a luxury property (A/1, A/8 or A/9).
To buy a house and make it available to the child, you need to make an indirect donation: the parent pays the seller directly or credits the money to the account of the child and then makes a transfer to the seller.
Registering a home with your child with usufruct
Usufruct is the legal term for the right of people to enjoy both the use of their property, and to earn a profit from it, e.g. by renting it out. According to the law, parents are entitled to legal use of a property in their child's name until the child reaches the age of majority or is emancipated.
The parent’s right of usufruct shall apply to all assets (movable and immovable) of the underage child, with the exception of:
- those acquired by the child with the proceeds of his or her work
- those left or donated to the child to pursue a career, art or profession
- those left or donated on the condition that the parent exercising parental authority does not have the usufruct of it
- those received by the child by inheritance, bequest or donation and accepted in the interest of the child against the will of the parents exercising parental authority.
If none of these exceptions apply, parents may use their child's house as if they were the owners. They cannot, however, change the economic purpose of the house. Moreover, parents may not sell, mortgage or pledge their child's property.
When the child becomes of legal age, the parents lose their legal usufruct. In this case, the owner of the property could evict them, that is to say, the kids could kick the parents out. To avoid such a problem, the father or mother who buys the house on behalf of the child can pay a donation to maintain their right to usufruct.
From the original Italian article: Intestare casa a un figlio: rischi e vantaggi (La legge per tutti)