Frequently Asked Question #40:
Q: Why should I buy a property in Italy, and not for example in Spain where prices are lower?
A: Careful study of the Spanish legal system reveals that it operates to protect the rights of Spaniards over those of foreigners. A few facts that your charming and persuasive real estate agent in Spain is unlikely to tell you:
Spain does not operate a 'compulsory purchase' scheme in the same way as other European countries. In most of Europe, if the government wants a hectare of your land, for example to build a road, it must buy it from you after a lengthy statutory period of public consultation. Not so in Spain. In Spain, not only is public consultation widely flouted, but if the government wishes to build a road on your land, it can force you to pay them to do it! Not only will you then receive nothing in compensation, you may have to sell - at a huge loss, of course - to pay for their expropriation of something you believed you owned. In practice, it is usually foreigners who suffer from this unique form of state-sponsored robbery.
If the Spanish state doesn't decide to take part of your property at your expense, your problems may not be over. In Spain, land is classified as either 'urban' or 'rural'. Properties classified 'rural' are particularly attractive to foreign buyers - partly because thay are cheaper than urban properties. In early 2004, in the area around Benidorm in Southern Spain, local officials changed the status of all rural properties to urban, and presented local residents - including hundreds of British owners - with bills of up to 60,000 Euro for new sewers, lighting, roads and other infrastructure. It is hardly surprising that this bombshell caused a great deal of distress.
Death duties are another example. In most of the western world, joint assets held by a husband and wife revert to the surviving spouse, free of death duties, on the death of one of them. Not so in Spain, where the surviving spouse must pay hefty taxes on the death of his or her partner. Very frequently these taxes force the sale of the property. The foreign population is hit disproportionately by this, because the typical foreign resident is retired and on a low fixed income. For more on this, see our guide to Inheritance Tax.
In summary, this is one of the great advantages of owning property in Italy rather than in Spain: property laws in Italy are designed to protect the rights of foreigners and Italians in equal measure.
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