New Registration Tax for Preliminary Contracts starting from 2025 - VON POLL REAL ESTATE

Starting January 1, 2025, the registration tax on preliminary contracts and non-VAT-related deposits will be reduced from 3% to 0.5%. This significant change, introduced by Legislative Decree No. 139/2024, represents a tax relief for homebuyers and reduces the immediate tax burden when purchasing property.

What is the Registration Tax and Why is it Important?

The registration tax applies to the registration of contracts, including the preliminary contract for the purchase of property. A preliminary contract is an agreement between the buyer and seller that prepares the final sales agreement. Until December 31, 2024, the tax consisted of a fixed fee of 200 euros, plus 3% on the deposit paid and the same percentage on the security deposit. From 2025, the tax rate on deposits will drop from 3% to 0.5%, providing significant savings for buyers, especially when high amounts are involved. This change will make home buying more affordable by reducing the upfront tax cost.

The Impact of the New Regulation: A Concrete Saving

To fully understand the impact of this change, let’s look at a practical example. If a buyer pays a deposit of 50,000 euros on a property, the registration tax until December 31, 2024, would have been 1,500 euros (3% of 50,000 euros). With the new rate of 0.5%, the tax will be reduced to 250 euros. This results in a direct saving of 1,250 euros for the buyer. Even for security deposits, which are typically paid when the preliminary contract is signed, the tax reduction is beneficial. If the deposit is 10,000 euros, the tax will drop from 300 euros (3% of 10,000 euros) to just 50 euros (0.5% of 10,000 euros), providing a significant reduction in costs.

Long-Term Implications of the Reform

This change is part of a broader fiscal reform aimed at stimulating the real estate market and making home buying more affordable. The immediate tax savings will make transactions more attractive and could lead to an increase in real estate purchases, with positive effects on the economy. Additionally, the reform could foster greater transparency and simplification in the home-buying process. With the lower tax on preliminary contracts, buyers may be encouraged to pay a larger portion of the purchase price upfront, strengthening their negotiating position and streamlining the entire process.

Conclusion

The reduction in the registration tax on deposits and security payments is an important tax relief for homebuyers. Starting in 2025, the reduced tax rate of 0.5% will make purchasing property more affordable and accessible. This change not only provides tax relief but also practical benefits for buyers and could stimulate the real estate market in the long run. If you are considering purchasing a property, now is the time to take advantage of this favorable measure.