The Merger of One or More Properties

The Merger of One or More Properties: Quick Guide

The purchase of one or more properties adjacent to one’s main residence can be an ideal solution for those who want to expand their home without having to change neighborhood or city.

In Italy, the law provides specific tax breaks for those who take this path, but it is essential to understand the rules, timing and methods to be able to benefit from these incentives.

The amalgamation of two or more properties will found a single real estate unit with a new single parcel or cadastral subordinate that includes the two or more starting properties; The new parcel will coincide with a new cadastral income of the property obviously greater than the previous one, but the advantage that will be obtained will be a tax saving well above the expense burden due to the increase in square footage of the property.

First Home benefits

The first home tax breaks in 2024 offer a number of benefits including a reduction in registration tax to 2%, instead of 9%, and a 4% VAT for purchases from businesses. However, in order to access these benefits, you must meet some basic criteria.

Requirements to take advantage of the First Home benefits

1. Single ownership: you must not be the owner of another residential property in the same municipality as the property you intend to buy. In addition, you must not own other properties throughout the country that have been purchased with the first home subsidies.
2. Residence: The buyer must transfer your residence to the municipality where the property is located within 18 months of purchase.

Merger of real estate: what the law says

If you already own a house and intend to buy one or more neighboring properties to merge it, you can take advantage of the first home benefits, provided that specific requirements are met:

1. Contiguity: the property purchased must be adjacent to the one already owned. This means that there must be direct physical contact between the two properties, which must be in the same building. It is also possible to merge only a portion of the neighboring property.
2. Physical and functional unification: it is necessary that the properties are actually merged to create a single housing unit. This amalgamation must be certified through the cadastral amendment, which certifies the merger of the properties into a single dwelling. The dwellings that can benefit from this union must be from class A2 to class A7. Those real estate units that are registered as luxury and/or valuable properties, i.e. that fall into categories A1, A8 and A9, are excluded.
3. Shop amalgamation: a shop can also be merged, but the owner must first change the intended use before selling it so that the buyer who will merge it with his home can already register it as a property for residential use.
4. Size: the maximum square footage allowed in the new home must not exceed 240 square meters in total.
5. Timing: the merger must be completed within a certain period of time from the purchase of the new property, generally within 12 months, but it can be up to 36 months for justified reasons. It is essential to meet this deadline and/or report the justified reasons for not losing tax benefits and/or incurring penalties.

Declarations and Commitments

When purchasing the neighbouring property, the buyer must declare his intention to merge the property with the main residence. This declaration must be made before a notary and must include a commitment to reside in the new main residence within 18 months of purchase.

The merger of the real estate units is an intervention of extraordinary works and it is essential to present to the Municipality to which you belong one of the following two practices:-

1. CILA: a simple Notice of Commencement of Works, if it is not necessary to intervene structurally on the load-bearing walls of the houses.
2. SCIA: the Certified Notification of Commencement of Activity, on the other hand, it must be opened if the amalgamation works involve the structural parts of load-bearing walls or constructions of internal and/or external stairs.

Merger procedure

1. Purchase of the property: the purchase must be made at a notary, where the intention to merge the purchased property with the main residence will be declared.
2. Cadastral modification: after the purchase, it is necessary to proceed with the cadastral modification to officially unite the two properties. This involves submitting a file to the Revenue Agency – Land Registry Office.
3. Consolidation works: the necessary works must be carried out to make the two or more properties a single dwelling. This work must be documented and completed within the time limits set by law.

Advantages of merging

In addition to tax benefits, the amalgamation of a neighboring property offers several advantages:

1. Increased space: You get a significant increase in living space without having to deal with the stress of a move.
2. Increased property value: Merging two properties can increase the overall value of the property, making it more attractive in the market.
3. Customization: the ability to renovate and customize spaces according to your needs and tastes.

It is essential to respect the deadlines, After 36 months from the date of the deed, the verification by the Tax Administration starts which, having ascertained the infringement, recalculates the mortgage tax as a second home in addition to the application of a penalty and the related interest. The amalgamation of a neighboring property represents an interesting opportunity for those who want to expand their home by taking advantage of the tax breaks provided for the first home. However, it is essential to strictly comply with the rules and timelines set by law to avoid missing out on tax benefits.

To ensure the correct conduct of the procedure and above all, to be sure of the feasibility of the building, it is advisable to contact a notary or an expert in the real estate sector, who can provide advice and assistance at every stage of the operation. In this way, you will be able to take full advantage of the facilities and make your expansion project a reality.

Article written by Mariateresa Confalonieri