Buying a second home: everything you need to know
Who has never dreamed of having a second home? Whether it is sea view or immersed in the pristine nature of some mountain landscape, rather than the lake or in a European capital, it does not matter: sooner or later we all had the desire to escape from our daily lives for a relaxing break, in a place at our complete disposal at all times.
But not only that, because the second home can also prove to be an excellent real estate investment to consider. In short, buying an “extra” property can certainly have its advantages and, like every important step worthy of respect, can offer great satisfaction.
If you are willing to buy a second home, the first question you need to ask yourself is: do I want a solution to spend weekends and holidays out of town, or do I want to make it a source of income? If you favor the first hypothesis then the choice must be based on your tastes and needs. Otherwise, if you think about an investment, the perspective changes. The focus, in this case, becomes the potential tenant with his preferences. If you point to the customer who loves the sea, you will have to look to regions such as Veneto, Puglia, Sardinia and Sicily. While if you opt for a traveler passionate about history and art, better bet on squares like Milan, Rome, Bologna, Florence or Naples. A further aspect to consider is the proximity to primary services, including public transport. Finally, the conditions of the house itself must pass under the magnifying glass. In addition to improvements and maintenance (where necessary), furnishing a room with taste or equipping a kitchen with everything you need are elements that can influence the return on your investment.
Compared to costs and expenses to be incurred in case you decide to buy a second home, are you sure you know what awaits you? Let’s see it together.
What are the costs for the purchase of a second property?
First of all, it is important to inquire about the trend of the real estate market in the area where you decide to buy to understand what the average price is and what type of investment you need to think about. Still on the subject of economics, one must be aware that the purchase of a home involves a package of hidden expenses which is essential to take into account: notary costs, taxes and duties, which could generate a rather salty final account.
Moreover, unlike what happens for the first house (for which there are concessions), taxation on the second houses does not enjoy the same advantages. Even if buying a property always provides for the payment of the costs due to the State for the provision of a public service and some taxes (VAT, registration, cadastral and mortgage tax), the amounts go up if you do not talk about the main home .
Two, specifically, the variables to be considered for the second home. If you buy from a private individual or from a real estate agency, the amount is exempt from VAT. On the tax front, however, the following should be counted:
- the registration tax, set at 9%;
- the cadastral tax, with a fixed value of 50 euros;
- the mortgage tax, equal to 50 euros;
If you rely directly on a construction company, on the contrary, VAT must be paid. Be careful, however, because the percentages change according to the cadastral category of the property: for solutions A/1, A/8 and A/9 it reaches 22%, while for the others it drops to 10%. As for taxes, in any case it must be foreseen:
- the registration tax, equal to 200 euros;
- the cadastral tax of 200 euros;
- the mortgage tax, also of 200 euros.
Taxes are paid upon registration of the deed of sale in front of the notary. Obviously, to these are added the fees for the professional and – if you have turned to a real estate agency – the commissions of the agent who followed you.
Taxes and maintenance costs for the second home
If it is true that the most significant costs are concentrated in the purchase phase of a property, also its maintenance – beyond the known tasks (such as payments for electricity and gas or condominium fees) – involves having to do accounts with not insignificant tax expenses. In detail, there are three costs with which a citizen is called to measure himself periodically:
- the Imu (single municipal tax), due by the owner of real estate (with a series of limitations and exclusions);
- the tax for indivisible services (Tasi), intended for the financing of municipal services aimed at the community (expenses for the road surface, public lighting, etc.);
- the waste tax (Tari), intended to finance the costs of the waste collection and disposal service, charged to the user.
The same applies to both the main house and the second house. Although a clarification is necessary: while Tasi and Tari must always be paid, the IMU is not intended for the first home.
In fact, for all that is not the main home since January 1, 2020, two different installments for IMU and Tasi are no longer paid: the Budget Law has merged them into a single tax, called Super Imu. The payment method remains unchanged, which is divided into two annual installments (in June and December). However, in consideration of the current health emergency, the suspension of the payment of the half-year advance payment has been established for properties leased for short periods.
Figures in hand, the base rate of the IMU is equal to 0.86%, with possible variations based on the type of property, and the Municipalities may decide to bring it up to the maximum ceiling of 1.6% or – on the contrary – reset it .
The income tax of individuals deserves a separate discussion, aka Irpef. If the second house is rented, the rent contributes to the owner’s total annual income. The risk? The lessor’s income could slip into a higher bracket of the personal income tax, forcing him to pay more on accounts made. To avoid this – upon signing the rental contract – you can opt for the dry coupon, which allows you to separate the rental income from the personal one, thus allowing you not to pay registration and stamp duty.
What tax breaks are available for the second home?
As the definition itself says, tax breaks for the first house cannot be requested for the second.
However, there is an exception, established by the Court of Cassation with sentence no. 2565 of 2 February 2018: the aforementioned tax relief can be requested for the “extra” home only if the main one is unsuitable as a home.
In other words, if in the past you have already bought a first house but it is unsuitable, then on the second you are entitled to the same facilities as the first (ie VAT and reduced registration tax). However, the Court of Cassation did not specify when a residential unit is considered unsuitable, although it has provided some examples. Among these, natural disasters such as an earthquake can make an apartment unusable.
Changing the playing field, an additional facility for the second home consists in the exemption from the payment of the Rai fee. The rule has always been this and continues to apply even with the introduction of the fee within the electricity bill. The same principle, then, for rental properties: if you have a house rented, the tenant will have to pay the rent. Finally, if the second house is used as a holiday home, it will be sufficient to send a communication to the Revenue Agency to specify that the payment of the rent is already made for the main house.
Mortgage: what are the differences between the first home and the second home?
Never before has buying a second home with a mortgage turned out to be an excellent investment, even in the face of ever lower interest rates.
However, there are differences between the first home and second home mortgages. First of all, the second type does not enjoy the same facilities as the first and is taxed at 2% of the total amount of funding requested (against 0.25% of the other).
It must be said then that, if the borrower has already taken out a mortgage, he has more possibilities to choose from: he can apply for the loan in the same bank where he obtained the first one; alternatively, you can contact a different credit institution for the latter. Not only that: the two loans can be combined to obtain a single installment on a monthly basis.
Last note: the second home loan does not allow you to request, and obtain, no tax deduction. Because? In this case, the property is considered a purchase not essential for everyday life.
Renovations and bonuses on the second home
The good news comes on the restructuring front. Yes, because if you buy the second home – and this needs to be renovated – you have the opportunity to take advantage of the Renovation Bonus. In other words, you can deduct the costs incurred and documented on some ordinary or extraordinary maintenance work.
The tax deduction recognized on renovations for the second home is 50% of the expenses incurred in 2020, for a maximum of 96 thousand euros. The deduction will drop to 36% from 2021, with a spending limit of 48 thousand euros for payments made after 31 December 2020.
The bonus is valid for every single real estate unit. Consequently, if you have more than one property to renovate (which is not the main house), you will be able to benefit from the deduction for each housing unit.
But what interventions does the Restructuring Bonus include?
- ordinary maintenance only on the common parts of the building;
- extraordinary maintenance;
- restoration and conservative restoration;
- building renovation.
In addition, with the May relaunch decree there is also the possibility of accessing the Ecobonus, obtaining the 110% deduction for energy requalification interventions, seismic risk reduction, installation of photovoltaic systems and columns for vehicle recharging electric. But only if the expenses are incurred from 1 July 2020 to 31 December 2021. Please note: the deductions provided for by the Ecobonus are valid for any type of housing unit, provided that the property is located in a condominium or at least in a two-family house.