Pitfalls and Mistakes to Avoid Before Investing in Real Estate in Italy

Published on July 6, 2026 and written by Cyril Jarnias

Investing in bricks and mortar is attracting more and more foreigners seeking sun, returns, or a second home. But behind the stone facades, sea views, and historic centers, Italian real estate hides a legal, tax, and bureaucratic machinery of great complexity. A large share of the financial disasters experienced by buyers is not linked to the market itself, but to poor preparation, legal blind spots, or decisions made too hastily.

Underestimating Legal Complexity and Due Diligence

One of the most dangerous misunderstandings is believing that the Italian system works like in Anglo‑Saxon countries, with a title insurance policy that fixes defects discovered after the fact. This is not the case. In Italy, legal certainty must be obtained before signing the preliminary agreement (compromesso) and even more so before the notarial deed (rogito).

Failing to commission this due diligence or starting it too late is a major pitfall: any deposit paid before the checks are complete may be lost with no real recourse if a serious problem is later discovered.

Example of the Cost of a Real Due Diligence

A frequent mistake is to cut corners on these checks, even though they represent a negligible fraction of the risk covered. For a standard purchase, typical ranges are as follows:

Conversely, a structural defect or a major building irregularity discovered after the deed can require remediation costing €20,000 to over €100,000, or even render the property unusable or unsellable for years.

Confusing the Roles of Notary, Agent, and Lawyer

In many countries, the notary is seen as the overall guarantor of transaction safety. In Italy, the notaio is a neutral public official whose main role is to authenticate the deed, verify the continuity of recordings, check for mortgages or seizures in the registers, and calculate transfer taxes. He is not your lawyer or strategic advisor.

The notary:

The real estate agent, meanwhile, legally acts as a mediator (mediatore) and earns a commission from each side of the transaction. He is not required to carry out an exhaustive risk audit: his main incentive is to close the sale.

The absence of an independent lawyer experienced in international acquisitions is therefore a major risk for any foreign investor, especially where inheritance, gifts, undeclared works, or a combination of laws (home country / Italy) are involved. It is the lawyer who drafts or corrects the suspensive conditions, coordinates the due diligence, secures deadlines, and manages interactions with other parties.

Signing a Binding Offer or Preliminary Agreement Too Quickly

Many foreign buyers think that the first offer is just an expression of interest. In Italy, the proposta d’acquisto can, once accepted, produce very concrete legal effects. Depending on the wording of the form (often standardized by agencies), an accepted offer can already constitute a preliminary agreement (compromesso) under Article 1385 of the Civil Code.

Possible consequences:

The deposit paid at the preliminary stage is typically 5 to 10% of the price. It is not a simple, refundable reservation. Yet the majority of serious problems (planning, cadastre, condominium, pre‑emption rights, contesting heirs) only emerge during due diligence. Hence the critical importance of including suspensive conditions from the proposta onward.

Protective Clauses to Include from the Offer

Two declarations should systematically appear in any well‑constructed offer or preliminary agreement:

1. The seller affirms that the property is free of any undeclared encumbrances: mortgages, seizures, liens, non‑apparent easements, pending litigation. 2. The seller declares that the building is compliant with all urban planning, cadastral, and building regulations, and that the actual condition matches the approved plans.

It is common to provide that in the event of a false declaration or serious non‑compliance identified before the deed, the seller must return double the caparra and compensate the buyer for additional damages (technical, legal fees, etc.). Without these safeguards, the buyer bears the risk alone.

Neglecting Building and Cadastral Compliance

Italy is one of the European countries with the highest incidence of unauthorized works (abusi edilizi). Multiple studies estimate that 20 to 80% of buildings have at least some form of non‑compliance: a moved wall, an extension never declared, an enclosed veranda, a pool without a permit, an attic converted into living space without a change of use, etc.

Two crucial realities to understand:

The consequences of a serious abuso edilizio can be dramatic:

– mortgage loan refusal;

– inability to obtain a certificate of habitability;

– risk of partial or total demolition;

– possible nullity or cancellation of the sale;

– administrative fines that can exceed €100,000;

– criminal prosecution in the most serious cases.

Checks to Perform to Avoid This Pitfall

An independent surveyor or architect should systematically:

For minor works, a CILA in sanatoria may suffice, with a limited penalty (around €333 to €1,000 depending on whether the work is ongoing or completed). For structural changes or volume increases, a heavier permesso di costruire in sanatoria is needed, where possible.

Failing to carry out this check before committing is one of the most costly mistakes. A compliance audit generally costs between €2,000 and €5,000 and takes a few weeks; a major regularization or forced demolition runs into tens of thousands of euros.

Financial Illustration of a Compliance Defect

Forgetting About Heirs, Gifts, and Inheritance Rules

One of the most underestimated pitfalls concerns how ownership will be transferred upon death, especially for a foreign investor. Italian law is based on forced heirship (legittima): certain persons – spouse, children, and failing that, ascendants – are entitled to a minimum share of the estate, regardless of the content of a foreign will.

This implies, notably, that:

– you cannot completely disinherit your children;

– you cannot leave all your assets to a second spouse while cutting out children from a first marriage;

– an unmarried partner has no legal inheritance rights over Italian property.

Even if you draft a will in your home country designating your national law (the professio iuris mechanism under EU Regulation 650/2012), technical renvoi rules can bring the matter back under Italian law for real estate located in Italy. So this is not an absolute guarantee for bypassing forced heirship.

Inheritance and Heir Conflicts

In the absence of a valid will for Italian assets, intestate succession applies. For example:

– spouse + one child: divided equally;

– spouse + two or more children: 1/3 for the spouse, 2/3 for the children;

– only children: share equally among them.

– involuntary division of ownership among multiple heirs, making any decision (sale, rental, renovations) complicated and slow;

– conflicts over past gifts, especially when the property was received free of charge;

– difficulty obtaining a bank loan on a property that was recently gifted.

Italian law allows forced heirs to challenge a gift for a long period. A recent reform (Simplification Decree 2025) has, however, improved the “bankability” of gifted properties by limiting the possibility of claiming the return of the property: the aggrieved heir now receives a monetary claim against the donee but can no longer reclaim the property from a bona fide subsequent purchaser, except in special transitional protection cases.

Anticipating Inheritance and Taxation

Italy imposes relatively moderate inheritance taxes, but they vary according to the family relationship and the net value of the assets located in Italy:

Heirs take on assets and liabilities (debts, mortgages, charges). They can, however, accept the inheritance “with benefit of inventory” to limit their liability to the value of the assets received. The inheritance declaration must be filed within 12 months of death, under penalty of fines and interest.

It is strongly recommended to:

– prepare a specific will for assets located in Italy, coordinated with the will from the home country;

– avoid signing a later will that revokes “all previous wills” without explicitly excluding the Italian will;

– enlist the help of a lawyer specialized in international inheritance law.

Ignoring Risks Related to Gifts and Title Origin

Traditionally, Italian banks were reluctant to lend on properties that had been gifted recently, due to the risk that a forced heir would challenge the deed and seek to recover the property. A reform that came into effect at the end of 2025 has mitigated this risk for new buyers: the aggrieved heir can no longer seize the property, only request financial compensation from the donee.

– verify whether the property came from a gift, and its date;

– check for any registered opposition from potential heirs;

– adapt the contractual clauses to the findings of this analysis.

A property with a confusing chain of title (multiple heirs, partially contestable gifts, deeds not properly recorded) is fertile ground for litigation and a major obstacle to any bank financing.

Getting the Acquisition Tax and Hidden Costs Wrong

Many buyers focus their negotiations on the listed price without properly factoring in transaction costs or the structure of Italian taxation. Yet taxes, notary fees, agent fees, surveys, translations, insurance, and various other expenses can represent 10 to 20% of the price, sometimes more for complex or very high‑end transactions.

Simplified Grid of Main Entry Costs

On a resale apartment at €500,000, a non‑resident can easily spend around €50,000 in total costs, or more if the tax structure has not been optimized or if works are needed.

Holding Taxes and Rental Income

After the purchase come recurring costs: IMU (municipal property tax), waste tax (TARI), condominium fees, maintenance, insurance, possible property management, and tax on rental income. These items have a direct impact on the net yield and are often glossed over in profitability calculations.

For rents, the investor can choose:

– either progressive IRPEF taxation (up to 43%) on 95% of the gross rent, with certain deductions;

– or the flat‑rate cedolare secca regime at 21% on the gross rent (rate may be reduced depending on lease type and location).

A gross yield of 6–7% can thus be reduced to a net 3–4% once operating costs (maintenance, IMU, condominium fees, management, vacancy) and taxes are taken into account.

Underestimating Rental Vacancy and Seasonality

Italy is not a homogeneous 12‑month rental market. Many tourist areas operate almost exclusively in high season, with extended off‑season periods. A classic mistake is to extrapolate August rates over the entire year, without factoring in vacancy and seasonality.

A realistic model should:

Failing to do so leads to unrealistic yield projections, especially as some municipalities are tightening constraints on tourist rentals (quotas, licenses, duration restrictions) in saturated historic centers.

Neglecting Currency Risk and International Transfer Management

For any investor outside the eurozone, the exchange rate can weigh more heavily than notary fees. A simple movement of a few cents on a €300,000 transaction can vary the bill by several thousand, or even tens of thousands, in the home currency.

Most frequent mistakes:

Many savvy buyers:

– open an account with a currency specialist in advance;

– use forward contracts to lock in a rate for all or part of the transaction, sometimes up to two years ahead;

– stagger conversions according to a set plan, keeping a safety margin to absorb adverse movements.

Concrete Impact of an Exchange Rate Variation

These amounts add to all the euro costs (notary, taxes, agent, works). For a very tight project, a simple 3% move in the exchange rate can derail the entire budget, or even force the buyer to abandon the purchase and lose the caparra.

Forgetting About Condominium, Common Charges, and Hidden Debts

Buying an apartment almost always means entering a condominio. Italian law provides that the buyer becomes jointly liable with the seller for condominium debts from the current year and the previous year. Without a written certificate from the administrator confirming no debts, you may discover thousands or even tens of thousands of euros in arrears after closing.

Getting the Timing Wrong on Tax Residency and Special Regimes

A more discreet pitfall concerns the articulation between property investment and tax status in Italy. For certain high‑income profiles, the country offers a flat tax regime for new residents (often called “HNWI Flat Tax”) which replaces progressive tax on foreign‑source income with a flat annual amount.

Since 2026, this amount:

– is €300,000 per year for the main taxpayer;

– is €50,000 per year for each covered family member.

This regime is valid for a maximum of 15 years and does not cover Italian‑source income (work performed in Italy, rental income from Italian properties, etc.), which remains taxed under the normal progressive scale.

For other profiles (foreign retirees in certain Southern municipalities, highly skilled workers returning to Italy, etc.), other regimes exist (such as the “impatriati” regime or the 7% regime for certain pensions). Wrong choice, late filing, or imprecise wording in the employment contract can cause the loss of these benefits.

Underestimating Lawsuits, Delays, and Penalties in Case of Disputes

When things go wrong (serious irregularities, hidden defects, fraud, heir conflicts, disputes with the builder or contractor), the time and money consequences are often underestimated:

– a civil lawsuit can easily last 2 to 5 years;

– legal fees, expert costs, and court costs can reach €20,000 to €100,000 depending on the scope of the dispute;

– for unauthorized works, administrative fines range from just over €10,000 to over €100,000, with a risk of confiscation or demolition.

Ignoring these deadlines, failing to formalize complaints properly, or missing essential notifications (for example upon delivery of new construction) practically eliminates the buyer’s legal recourse.

Buying Through a Company Without a Serious Tax Audit

Some investments involve buying companies that own real estate rather than purchasing the property directly. This route can sometimes reduce transfer taxes or facilitate estate planning, but it exposes the buyer to another type of risk: by becoming a shareholder, you inherit the company’s liabilities (tax debts, labor disputes, hidden obligations).

– financial statements and annexes for the past years;

– tax and social security debts, any disputes with the administration;

– current contracts (leases, supplies, client/supplier disputes);

– regularity of VAT, corporate income tax, IRAP declarations, etc.

Without this prior audit and appropriate contractual guarantees (warranties on assets and liabilities), buying “the company that owns the building” can prove far more dangerous than buying the property itself.

Relying on National Averages Rather Than the Micro‑Market

On a purely economic level, another common pitfall is relying on national statistics to judge an investment opportunity. The Italian market is extremely fragmented: a renovated apartment in Milan or Bologna, a rooftop terrace in Naples, a villa on Lake Como, or a rural house in Molise all have different risk profiles and price trajectories.

Data example shows that:

The real risk is less a “national bubble” than a poor calibration of the micro‑market: buying an expensive property in an already overpriced area, hard to resell, or whose actual rental yield is much lower than expected.

Neglecting the Administrative Calendar and Italian Timelines

Finally, one last pitfall, more prosaic but just as real, concerns delays. A standard acquisition in Italy, from offer to rogito, often takes 3 to 6 months, or longer when adding:

– requests for planning or heritage authorizations;

– pre‑emption rights of neighbors or agricultural operators on land;

– obtaining missing certificates (habitability, system compliance);

– holidays and summer closures (August remains largely a shutdown period in administrations and businesses).

An investor who schedules based on domestic market practices (where a closing can happen in a few weeks) risks signing too quickly to avoid “missing” a property, sacrificing essential verification steps.

In Conclusion: Structure Before You Buy

Italian real estate offers real opportunities: a generally stable market, strong rental demand in major cities, potential for appreciation in certain corridors (rail lines linked to the recovery plan, university towns, well‑regulated tourist areas), and reasonable holding taxes in many cases.

But the pitfalls are numerous:

The key is to structure the project upfront: an advisory team (lawyer, surveyor, commercialista, currency specialist), a wealth‑planning structure (individual, usufruct/bare ownership, possibly a company), an analysis of available tax regimes, a financing and exit plan, and only then select the property and negotiate.

In Italy more than elsewhere, the time and a few thousand euros invested before signing often save years of litigation and tens or even hundreds of thousands of euros in potential losses. For a foreign investor, treating due diligence and advice as “optional” costs remains, by far, the first pitfall to avoid before investing in Italian real estate.

Cyril Jarnias

Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.

On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.

Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.

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