House Renovation Contract In Italy

House Renovation Contract In Italy

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What do you need to include in an Italian property remodeling contract?

Many people who buy a property in Italy intend to do some renovations, whether cosmetic or more extensive.  Below are some points that we advise homeowners to keep in mind as they gear up for a renovation of any size.

  1. Building permit: mandatory and good leverage.
    In some cases, it is mandatory. Some people underestimate the potential negative impact of remodeling work without a permit when required. In this article, we talk about this topic. In other cases, it is optional. We recommend getting a permit when required by the law. However, if you intend to claim a remodeling tax credit, you are required to have a permit before you start spending money on it.
  2. Written contract: you need one!
    Too often private property remodeling work is based on a handshake or an informal exchange of brief notes. Remodeling costs might be significant. Additionally, during the remodeling process, often changes are needed or requested. Clearly written terms will help satisfy your expectations. Establish the details in writing of all expectations, both yours and the contractor’s.
  3. Work & Material Specifications: be precise.
    Include a detailed description of the work to be done and included material. If the contract lists brand names and product tiers, the process of material deviations and project price adjustments will be more transparent.
  4. Timing, Construction Milestones & Penalties: timing is everything.
    Include time-based construction milestones, critical deadlines, and applicable delay penalties. Be aware that a deadline is enforceable only if written in compliance with certain specific legal requirements.
  5. Payment Structure: progress = payment.
    Typical remodeling/construction payment schedules are based exclusively on time.
    Make sure to connect your payment obligations to remodeling/construction progress so that you make payments only if the work progresses.
    Specify construction progress stages based on objectively verifiable and pre-determined parameters.
  6. Tax Credit Price Reduction:  planning is important.
    Discuss in advance and incorporate in the remodeling/construction contract the terms under which the project will qualify for a tax program, for example a 50% or 65% tax credit.
    Include terms and conditions for the contractor to be paid through tax credit transfer and applicable commission, if any.
  7. Lower VAT Rate: first home.
    If you are refurbishing a property that qualifies for “First Home Tax Reductions,” discuss it in advance with the builder and include in the contract the provision to apply the lower 4% VAT rate instead of 10% or 22% that might otherwise apply.
    We assist clients with preparation and review of Italian property remodeling contracts. 
    Please contact us to discuss your case.
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