The reform of the Italian land registry is being finalized. From July 01, 2015 to December 2019 all of Italy’s more than 63 million properties should be converted to the new land registry system. This certainly is anything but an easy task, particularly as an estimated 3 to 4 million properties in Italy are not even registered with the land registry office!
If anyone considers the whole extent of the intervention, one is inclined to call the procedure a revolution rather than a reform of the land registry. The calculation system of the cadastral revenue, which has been in place so far, will be fundamentally changed: To simplify the land registry system all properties are being divided into two, instead of formerly six, cadastral categories. Group “O” stands for ordinary properties, group “S” for special properties. The calculation of the cadastral revenue of a residential property will no longer be calculated on the basis of the number of rooms, but according to a combination of the following indicators:
- Geographic Location
- Floor Level
- Exterior appearance and state of conservation
- Extra services such as lift, terrace, size of windows, …
The sum of these indicators forms the basis of the cadastral revenue per square meter. This figure will than be multiplied with the living area of the property. To avoid that the sum of this data – which has been collected mostly statistically – results in cadastral revenues which are too high, the result will be flatly reduced by 30%.
As it is virtually impossible to force all property owners to submit a floor plan to calculate the actual living area, the lawmaker has already submitted a national standardized conversion table of the living space in square meters. Just to give an example, the living space in a property classed as category A/2 will now be calculated with 21 square meters. As this system will certainly be of disadvantage for property owners, it is in everyone’s interest to present a correct floor plan with the municipality responsible.
For commercial property the calculation of the value under the new land registry will be even more complex. It resembles that of a direct estimate. In this case the estimated value will be flatly reduced by 20% afterwards.
At the moment we have got the following situation in Italy: particularly high quality properties often have a low cadastral revenue, which is in strong contrast to their actual market value. It is expected that a large number of properties will show significantly higher cadastral revenues after the conversion of the calculating system. The main problem here is primarily the fact that almost all taxes concerning properties are being calculated on the basis of the cadastral revue. The reform of the land registry thus has the potential risk to lead to massive tax increases.