4% VAT on first house under construction: can the old house be sold before the works are finished?

House under construction and VAT on invoices

The assumption of VAT reduced to 4% in the building contract allows the relief provided that the client does not own another home in the same municipality, or purchased throughout Italy with the “first home” benefits, or issues a self-certification to the builder in which he inserts a formal commitment to resell the property already owned.

Starting from 1 January 2025, the maximum deadline for making the sale has been extended to 24 months. For procurement contracts, the counting of months starts from the end of the works, i.e. with the delivery date of the property. Only at this moment, in fact, can the cottage be registered as a residential property and therefore all the conditions required by law are triggered.

Early sale and rental period: is there any risk?

Our reader, who is paying the reduced VAT on his new house under construction, however, has a doubt regarding the timing, precisely in light of the rules just seen. In fact, he asks himself: “If I sold my current home a month before the end of the works, so when the house under construction is not yet completed, and for reasons of timing I rented it for a month, would I be able to continue to benefit from the 4% VAT or would having sold before the end of the works ‘would the chain be broken’ and could the Revenue Agency find an anomaly?”

The answer is no, from the point of view of the legal conditions there is no anomaly, because the requirement of not owning another home in the same municipality, or another home purchased with benefits, is respected. In practice:

• the invoices issued by the company up to that point remain perfectly legitimate because they are covered by the formal commitment to sell declared at the beginning;
• at the time of delivery and the definitive deed, the commitment made has already materialized, therefore it appears to be “worthless” from a real estate point of view.

The only “problem” in these situations can arise in reference to the wording in the self-certification, not in relation to the right but to the form of the condition indicated in order to benefit from the reduced VAT. The Revenue system could in fact “get stuck” in carrying out cross-checks in the face of a sale announced after a purchase, but which never actually took place. But for this there is a quick and cost-free solution.

The remedy in the new declaration

Operationally, if the commitment to sell appears in the procurement contract, it is advisable to deliver a new declaration to the builder in which he declares, to rectify the previous one, that he has already sold the property and therefore is in the conditions required by law with reference to the payment of the latest invoices. Obviously it will also be necessary to report the reference data of the sale.

If, however, it is a purchase from the manufacturer, it will be sufficient to specify to the notary that you have already carried out the sale, so that the data is included in the deed. In this way it will be possible to avoid any short circuit on the controls.

The rules for residency in the event of repurchase

Finally some news. With the 2027 budget bill it is clarified that the eighteen month deadline for transferring residence in the Municipality is also extended to two years. However, this condition does not apply in the case of resale within five years of purchase, because the possibility of obtaining the relief again in the specific situation is linked to the obligation to use the new home as a first home, therefore to transfer residence to the property, within one year of purchase.

VAT 4%: resale requirements and terms in the case of a construction contract