When you decide to sell a property purchased with the tax break “first house” before five years, you run the risk of losing the benefits obtained, unless you proceed with a new purchase with certain characteristics. However, there is a lot of confusion about what you need to purchase to avoid forfeiture.
Is just the right of usufruct on another property enough? Or is it necessary to purchase full ownership?
In this article we try to clarify the conditions provided by the law and the most recent interpretations of the Revenue Agency and jurisprudence.
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The legislation: when the “first home” benefits are lost
The “first home” incentives allow taxpayers to purchase their main home with a preferential tax regime, applying reduced registration, mortgage and land registry taxes. However, these benefits are not definitive if the property it is sold within five years of purchase.
Article 1, paragraph 4, Note II-bis of Presidential Decree no. 131/1986 establishes that, in the event of early sale, the taxpayer loses the right to benefits and must repay the taxes in the ordinary amount, increased by a penalty equal to 30% of their amount. This provision aims to prevent the benefits from being exploited for speculative purposes, rather than for actual housing needs.
However, the legislator offers a way out for those who, despite selling before the five years, do not intend to give up the benefits: if the taxpayer buys within a year from the sale of a new property to be used as your main residence, you will not lose the benefits.
It is important to underline, however, that the legislation requires the purchase of full ownership. This means that the purchase of only real rights of enjoyment, such as usufruct or right of residence, is not sufficient to safeguard the benefits. This distinction may seem subtle, but it has significant practical implications, especially for those who, for example, only want to purchase a limited right for economic or family reasons.
The law is therefore clear: in order not to incur the forfeiture of the benefits it is necessary to proceed with the purchase of a property in its entirety, to be used as one’s main residence, and not simply purchase partial rights on the property itself. This principle has been reiterated in numerous interpretations of the Revenue Agency and in various pronouncements of the Court of Cassation.
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The Revenue Agency’s interpretation: the importance of full ownership
The Revenue Agency has clarified several times the correct application of the “first home” concessions in the event of early sale. In the recent response no. 192 of 4 October 2024, reiterated that to maintain the tax benefits it is necessary to purchase a property in full ownership within one year of the sale of the original home.
According to the Agency, in fact, the purchase of only real rights of enjoyment, such as usufruct or the right of residence, does not satisfy the requirements required by the legislation, as these rights confer only partial availability of the asset.
This position is also confirmed in previous interpretations, such as resolution no. 49/2015, where it was underlined that the purchase of the right of usufruct, although conferring the possibility of using the asset, is not equivalent to the purchase of full ownership and is therefore not suitable for maintaining the benefits.
In other words, the legislator requires a more complete commitment: only full ownership of the property guarantees its effective use as a stable and long-lasting residence.
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Legal precedents: what the jurisprudence says
Jurisprudence has also repeatedly confirmed the need to purchase full ownership to maintain the “first home” benefits in the event of early sale. The Court of Cassation, with various rulings, including order no. 11221/2020, clarified that the law does not extend the protection to the acquisition of real rights of enjoyment, such as usufruct or the right of residence.
According to the Court of Cassation, in fact, the purchase of a partial right does not guarantee the effective and stable use of the property as a main residence, a condition which must be respected to maintain the tax advantages.
The Constitutional Court confirmed this orientation with order no. 46/2009, reiterating that the favorable rules, such as those regarding “first home”, must be interpreted restrictively, precisely to avoid distorted or speculative uses. Therefore, also for jurisprudence, the concept of “purchase” must be understood as referring exclusively to full ownership of the property and not to the acquisition of partial rights.
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Tax credit and forfeiture of benefits: the tax consequences
When a taxpayer sells a property purchased with the “first home” benefits before the end of five years, in addition to the refund of ordinary taxes and penalties, he must also pay attention to the tax credit management.
The legislation (law no. 448/1998, art. 7, paragraph 1) in fact provides for a tax credit in the event of the repurchase of a new home with the same benefits, but only if the forfeiture of the benefits relating to the original purchase.
If you lose the benefit, not only do you have to pay back the taxes you saved, but you also lose your right to the tax credit. This means that the relief can no longer be used either to reduce the registration tax due on the new purchase, or to offset any income taxes due in the tax return.
The Revenue Agency reiterated this position in circular no. 38/2005, specifying that the recovery of ordinary taxes automatically implies the forfeiture of any credit used.
