Probing realty transactions
Tax inspectors are opening the bank accounts of buyers and sellers to establish actual prices
Tax inspectors are opening the bank accounts of real estate buyers and sellers to establish whether their property purchases and sales were legal.
Auditors are mostly targeting high-value properties that were sold at fair value, when their true value is significantly higher. They will investigate if there are any deposits that are not justified, specifically money transfers from the buyer’s account to that of the seller’s that are higher than the sale price of the property.
The Independent Authority for Public Revenue (AADE) employees will also look for cases where large sums were withdrawn from the buyer’s account during the period when the property was being purchased, possibly concealing the payment of part of the property’s value in cash. In essence it will be checked if the purchase amount is different from the one stated in the contract and the extra was paid in cash.
In this context, indirect control techniques will also be used, such as, for example, the way of paying bills (e.g. with cash), travel and, in general, the lifestyle of the seller, who may have collected money under the table during the sale of the property. These cases are characterized as high risk for committing tax evasion as well as money laundering.
It’s not only the purchase of property that is to be probed: In total in 2023 it is estimated that over 2,500 property audits will be carried out, also related to inheritances, parental concessions and donations. Emphasis will be placed on parental concessions and donations, after the increase of the tax-free limit to 800,000 euros.
In inheritances, the audit will focus in particular on cases where there was an exemption from inheritance or parental benefit tax because the value of the property was below the tax-free threshold.
Short-term rentals will also be targeted by the AADE employees to see if income was declared on the tax return, as well as property purchases for collecting a five-year residence permit, known as a Golden Visa.
