First Home Mortgage
With the approval of the 2017 Budget Law, these measures were confirmed and expanded, guaranteeing ample savings margins, especially for young people. The government’s intent is to mainly facilitate couples under 35 who do not have the financial means to take on a first home loan.
Table of contents
- The Guarantee Fund for the first home loan: what is it?
- The procedure for accessing credit
- Although young couples are favored, albeit, with some particularities, there are no formal age limits for requesting access to the Fund.
- Fund guarantee also for restructuring or energy-saving interventions
- The other tax breaks for the mortgage: premise
- First home loan interest expense deductions
- The requirements for mortgage deductions
The Guarantee Fund for the first home loan: what is it?
The Guarantee Fund for the first home loan was created with this in mind. The Government wanted to create a sort of social safety net, a fund dedicated to all those (especially young people) who wish to buy a house but do not have the possibility. The Guarantee Fund saw the light for the first time in 2014 and was created to support the project of those who cannot present the guarantees required by the banks at the time of the loan.
The Guarantee Fund is available to couples and families, therefore also to unmarried homosexual couples after the approval in our legal system of civil unions. For couples whose application is deemed to be compliant, 50% coverage of the entire principal amount is guaranteed, within the limit of the loan request of a maximum of 250,000 euros. This loan can be used both for the purchase of the property and for the renovation and energy adaptation works. For couples who have access to the Guarantee Fund, credit institutions they must not ask for further guarantees for the disbursement of the loan. The only protections and guarantees that banks have the right to apply are insurance and mortgage on the property until the loan is completely extinguished.
The Guarantee Fund for the purchase of the first home is valid only in the event that the property object of the attention is not considered in the land registry as a luxury residence.
The procedure for accessing credit
Although young couples are favored, albeit, with some particularities, there are no formal age limits for requesting access to the Fund.
The application must be presented at one of the bank branches that have signed the agreement, using the appropriate forms that can be downloaded online from the Consul and Treasury Department sites. Acceptance is subject to evaluation; therefore, it may take a few days before the notification of admission of the request is given.
In some cases, payment of an additional rate is required as a guarantee, which can never be higher than the TEGM (Average Global Effective Rate).
This happens when:
- the request is made by young couples in which one of the two is under the age of 35.
- the request is made by a single parent with a minor child.
- those who request access to the Guarantee Fund are under 35 years of age and have an atypical employment contract.
- to submit the application is a subject already a tenant of public housing.
Fund guarantee also for restructuring or energy-saving interventions
The Guarantee of the Fund is also available to those who want to start the renovation works for energy-saving interventions on the property, implementing the planned interventions … Read the in-depth study here. The maximum spending limit within which the deduction with the Guarantee Fund is valid is 96,000 euros. It is also valid as a form of financing for the purchase of furnishing elements, in this regard I have already written this other in-depth article. Also in this case, the application must be sent using the specific forms directly to the financial branches that have joined the Guarantee Fund.
The other tax breaks for the mortgage: premise
The Guarantee Fund is not the only facility provided for those who have decided to take the plunge and buy their first home. In fact, beyond this measure prepared by the Government, which has currently been extended until 2021, there are other solutions. Starting from the assumption that it is necessary to follow the classic procedure foreseen for the taking out of any mortgage, in case you have the requisites you can obtain the concessions.
Mostly these are deductions and tax breaks that aim to reduce the overall cost of the loan.
These concessions consist in deducting from the tax return all the credits accrued in the fiscal year which will therefore be subtracted from the total taxes to be paid for personal income tax.
First home loan interest expense deductions
Specifically, the deduction for opening the first home loan is in the order of 19% on the amount of interest expense. This deduction must necessarily be calculated on the gross amount, therefore on the overall amount, including ancillary charges. The maximum deduction of 19% must not exceed a total of 4,000 euros in a year, to be understood as 12 months.
The maximum deduction is 760 euros, calculated on a maximum of 4,000 euros.
- The 19% deduction on mortgage interest expense is valid only on mortgage loans, i.e. on loans that provide for a mortgage on the same property as a guarantee.
- The purchased property must necessarily already be registered for residential use.
- Ensure that that property is the primary residence (first home) or that it will become one within 12 months of opening the mortgage and purchasing.
The requirements for mortgage deductions
To be entitled to tax benefits for the first home loan, it is necessary to meet certain requirements. The legislation provides that the beneficiaries possess them all. In the event that even just one of the necessary requirements is vacant, the subject loses the right to the concessions for the first home loan.
1) not having previously enjoyed other benefits
Those who submit the request to take advantage of the concessions for the opening of the loan for the first home, in the past must not have already enjoyed these benefits. It is possible to reiterate your application if and only if the property for which the benefits were obtained has been sold. In that case, the property becomes a new first home and it is possible to obtain the benefits. The applicant must not be the owner, not even in communion or usufruct, of another property purchased with tax benefits.
The directive is valid for all properties located in the Italian national territory.
2) not owning other properties
To accept the loan interest expense deduction application, the applicant must not be the owner (of all or part) of another property. Neither must he be a participant as a usufructuary with the spouse of another property.
This applies exclusively to real estate and real estate properties located in the municipal area in which the property subject of the application exists.
3) residence in the same municipality as the property
The acceptance of the application can only take place if the person submitting it is resident in the municipality where the property subject of the request exists. Otherwise, it is necessary to ensure that the transfer of residence will take place no later than 18 months after the purchase of the property. If the subject does not carry out the transfer, his right to deduct interest expense lapses.