The “first home” relief represents an important opportunity for those who intend to purchase their main residence, guaranteeing significant tax advantages. However, as clarified by the Court of Cassation with order no. 20673 of 25 July 2024, it is not always possible to take advantage of it, especially in the case of particular real estate transactions such as the transfer of the property to an agent.
But in which cases is the relief not granted? What are the legal implications of this decision?
Let’s delve deeper into the issue.
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The legal case: from the first purchase to the mandate without representation
The story begins on October 27, 2006, when the taxpayer purchases a house by taking advantage of the “first home” relief, provided for by current legislation, which allows for a reduction in the registration tax and other related taxes. The purchase is one of those regulated by article 1 of the Tariff, first part, attached to Presidential Decree no. 131/1986, which regulates the tax benefits for those who purchase their main residence.
Years later, on July 22, 2013, the taxpayer decides to grant her brother a mandate without representation, with the aim of selling the property purchased in 2006. In the context of this mandate, the property is transferred to the brother, a purely instrumental act, which has the purpose of facilitating the sale to a third party buyer.
However, this operation took place in a very short time frame, and only two days later, on 24 July 2013, the same taxpayer purchased a new home, once again requesting to take advantage of the “first home” relief.
This change of ownership and the close purchase immediately aroused suspicion.
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Control of the territorial office and revocation of benefits
Faced with this unusual operation, the territorial office where the deeds were registered began an investigation, noting the very short period of time between the signing of the sales mandate and the new purchase of the home. This timing raised doubts about the legitimacy of the operation and the real economic motivations behind the transfer of the property to the brother.
The office then sent the taxpayer a summons to appear to provide clarification and explain the reasons behind the unrepresented mandate and subsequent purchase.
After evaluating the explanations provided by the taxpayer, the office considered that these were not sufficient to justify the entire operation.
Consequently, it served a notice of revocation of the “first home” benefits for the purchase made on 24 July 2013, claiming that the transaction, although formally legitimate, was aimed exclusively at obtaining an undue tax advantage.
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The office’s motivation: abuse of law and undue tax advantages
The territorial office justified its decision by referring to article 10-bis of law no. 212/2000, the so-called “Taxpayer’s Statute”, which regulates the abuse of law in the tax field.
According to this rule, the use of legal instruments that, although formally legitimate, have the sole purpose of obtaining a tax advantage that is not justified by real economic motivations, is considered an abuse of law. The operation implemented by the taxpayer, although apparently legal, was considered devoid of economic substance and aimed exclusively at evading taxes, unduly obtaining the “first home” benefit on the new purchase.
The office then proceeded to recover the ordinary taxes due, both for the registration of the deed of sale and for the mortgage contracted by the taxpayer for the purchase of the new property.
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The decision of the Court of Cassation
The matter finally reached the Court of Cassation, which confirmed the legitimacy of the office’s actions. The judges of the Supreme Court recalled a principle already consolidated, according to which the transfer of a property from the principal to the agent, within the scope of a mandate without representation, has a merely instrumental, provisional and fiduciary character.
In other words, this type of transfer does not determine a real enrichment of the agent, who is only formally the owner of the property. The agent, in fact, has the obligation to transfer the property to a third party buyer, thus confirming the temporary nature of his ownership.
The Court compared this transfer to that which occurs in a trust, where the trustee holds ownership of the property only for fiduciary and temporary purposes, and then transfers it to the final beneficiaries. This comparison made it possible to further clarify that the transfer of the property to the taxpayer’s brother had not entailed a real dispossession of the property.
The Court of Cassation also reiterated the concept of abuse of law, confirming that the transaction carried out by the taxpayer was aimed exclusively at obtaining an illegitimate tax advantage. Although the transfer of the property to the agent was formally valid, its real purpose was to circumvent the requirements to obtain the “first home” benefit again on the occasion of the subsequent real estate purchase.
The fact that the taxpayer had declared that she did not own any other properties suitable for housing, even though she had only formally transferred the property to her brother, constituted a violation of the rules.
The Supreme Court has therefore confirmed the forfeiture of tax benefits, ruling that the substantial ownership of the property had never actually been transferred. This decision, as has already happened in similar cases, has reaffirmed the prohibition for the taxpayer to use legal instruments only to obtain tax benefits, without a real economic justification.
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Conclusions of the Court of Cassation
With its ruling, the Court of Cassation (order no. 20673 of 25 July 2024) has definitively clarified that, in matters of “first home” tax benefits, the temporary and fiduciary transfer of a property to an agent does not free the principal from substantial ownership of the property.
Consequently, the subsequent purchase of a new home, with the request for tax relief, is considered an abuse of right, pursuant to Article 10-bis of Law No. 212/2000.
In essence, the Court established that the taxpayer, despite the formal transfer of the property to her brother, continued to be the owner of the property and, therefore, could not benefit again from the concessions for the purchase of a second home.
This decision not only confirms the orientation already expressed in previous similar cases, but reinforces the general principle that prohibits the taxpayer from artificially exploiting legal instruments to obtain undue tax advantages. The ruling of the Court of Cassation, in fact, is part of a regulatory framework increasingly aimed at combating tax evasion and protecting the transparency of real estate transactions.
