Italian property purchase jointly or separately

Question: As a married person, is it better to do the Italian property purchase jointly or separately? Could you please explain the different implications?

Answer: People buy the property under the community of Italian matrimonial property when they what to have equal rights over it. Otherwise they will buy the property under separation of matrimonial property.

Under standard circumstances, the Italian notary public who certifies the property purchase would typically ask the vendors (sellers) and the buyers for their respective marital status, i.e., whether they are married or, in any case, whether they had any matrimonial ties, to include such information in the final agreement of sale.

Often the buyer does not give particular importance to this aspect on completion (closing). However, the right choice about the Italian Matrimonial Property significantly relevant at a later stage.

In particular, if you are married and sign the Italian property purchase contract in your own name only, you might later realize that actually the person who was your spouse at the time of the purchase become a joint owner, along with you, with exactly the same rights.

This is common if you are a citizen or a permanent resident of a Common Law country, such as the United States of America, Canada, Ireland, the U.K. or Australia.

We have seen many cases of people who, at the time of purchase, were not properly advised and then, at a later stage, found themselves extremely disappointed to realize that they did not have full control over the property that they thought to have purchased in their name only.

You can imagine how significant the implications are when you have to sell or gift the property, or transfer it based on divorce agreement, or for the heirs who shall deal with the estate upon death of the buyer.

Here is how it works and how to avoid this type of problems.

When a buyer is legally married, the notary public typically asks to confirm whether he/she wants to purchase the property jointly, with the other spouse, under the community of matrimonial property law (in Italian “comunione di beni”), or separately, as a personal assets, under separation of matrimonial property (“separazione di beni”).

According to Italian law, the community of  matrimonial property applies by default, unless the buyer expressly chooses the separation of matrimonial property.

So, what are the concrete benefits of spending time and money on a separation of matrimonial property agreement?

Italian Matrimonial Property Legal Implications

There are many reasons why married couples opt for separation of matrimonial property.

Here is a short list of the most common:

1. Transfer taxes, mortgage taxes and annual property taxes (IMU): Property and mortgage tax reductions and tax exemptions: if only one spouse qualifies to the tax reductions or tax exemptions, for example, based on Italian citizenship or Italian residence, separation of property might be a great way to claim them with respect to the entire property, instead of limited to the share of the qualifying spouse only (usually 50%);
2. Income taxes: in Italy taxes are filed individually also by married couples; if the property is rented, the rental income goes entirely in the tax return of the owner; if one spouse has already a high taxable income, it might be more tax advantageous to buy the property in the name of the other spouse to keep the rental income in a lower taxable bracket;
3. Inheritance distribution: if a spouse buys the property in his/her name only, under the separation of matrimonial property, it will go entirely into said spouse’s estate;
4. Liability: if the property is purchased in the name of one spouse under the separation of matrimonial property, the other spouse’s creditors have not claim against it.

Of course each case is different and exceptions apply.

To give you a better idea of how the Italian Matrimonial Property works, check the legal summary on this other post.

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