Buying a first home is a fundamental milestone in many young people’s lives, but economic challenges can make it a difficult goal to achieve. In Italy, as in many Mediterranean cultures, family support plays a crucial role. Help from parents, often in the form of a gift, is a widespread practice that combines tradition and modern necessity. Recent studies show that about 70% of young people under 35 who apply for a mortgage have received financial support from their family of origin. This guide analyzes the different ways parents can help their children buy a property, with a focus on tax and legal aspects to operate in complete safety.

Understanding the differences between a direct and indirect gift, knowing the tax implications, and following the correct procedures is essential to turn the dream of homeownership into reality without running into future problems with the tax authorities or within the family. Approaching this step with awareness allows you to make the most of your parents’ generous help, a gesture rooted in a strong culture of intergenerational support.

The Gift for a Home Purchase: A Bridge Between Generations

In an economic context characterized by job insecurity and a competitive real estate market, help from parents often becomes indispensable. This practice is not just a financial necessity but also reflects a deep cultural value typical of the Mediterranean region: the “strong family,” a supportive unit that helps each other through life’s most important stages. Buying a home is perhaps the most emblematic example of this phenomenon, an investment in the future that strengthens family bonds.

Statistics confirm this trend: more than half of homebuyers in Italy have received financial help from family members, and this percentage rises significantly for younger people. This support comes in various forms, from a gift of a sum of money to an advance on an inheritance, demonstrating considerable flexibility to adapt to different needs. Tradition thus merges with innovation, finding in modern legal instruments, such as the indirect gift, the solution to make this help effective and secure.

Direct Gift: What It Is and When a Notarial Deed Is Required

A direct gift occurs when a parent transfers a sum of money to their child with the explicit intention of giving it as a gift. This act of liberality, if it involves sums of “non-trivial value,” legally requires a public deed, which is a contract drawn up before a notary in the presence of two witnesses. The notary’s involvement is crucial to ensure the legal validity of the transfer and the transparency of the transaction, avoiding future disputes.

The concept of “trivial value” is relative and is assessed based on the financial conditions of both the donor and the recipient. For significant amounts, such as those needed to purchase a property, a notarial deed is almost always essential. It is important to remember that, even if the gift is between close relatives, the law requires this formality to protect all parties involved, including other forced heirs who might one day make claims.

Indirect Gift: The Most Common and Advantageous Solution

The indirect gift is the most common and often most advantageous way to help a child buy a home. It occurs when the parent, instead of gifting the money to the child, either pays the seller directly or provides the child with the necessary sum specifically for the closing. In this case, the goal is not to enrich the child with a sum of money, but to enable them to purchase a specific asset: the home.

The great advantage of this method is that, in most cases, it does not require a specific notarial deed for the gift. It is sufficient to specify in the deed of sale that the payment, or part of it, is made with money provided by the parents. This mention, in addition to ensuring transparency with the tax authorities, makes the transaction simpler and more cost-effective. It involves a single notarial act (the sale) that serves two purposes: the transfer of ownership and the parent’s act of liberality.

How an Indirect Gift Works

To carry out an indirect gift correctly and safely, the traceability of money flows is crucial. The two safest methods are:

1. Wire transfer from the parent to the child: The parent transfers the necessary amount to the child’s bank account. It is essential that the reason for the transfer is explicit, for example, “Gift for home purchase” or “Gift for notarial deed.”
2. Direct payment to the seller: The parent pays the property seller directly, always using traceable methods like a wire transfer or a cashier’s check. In this case, too, the reason must clarify the purpose of the payment.

In the deed of sale, the notary will include a clause in which the buyer (the child) declares that the funds for the payment of the price come from a gift from their parents. This declaration is essential to justify the origin of the funds in case of future audits by the Italian Revenue Agency (Agenzia delle Entrate) and to avoid tax assessments.

Tax Aspects: When Are Taxes Due?

One of the most interesting aspects of a gift for a home purchase concerns taxation. For gifts between parents and children, the law provides a very high exemption threshold: each parent can gift each child up to €1 million without paying gift tax. Above this threshold, a 4% rate applies to the excess amount.

The good news is that an indirect gift, if intended for the purchase of a property already subject to registration tax or VAT (as happens in every sale), is generally excluded from gift tax. A recent ruling by the Court of Cassation confirmed that it is not necessary to pay gift tax if the money is directly linked to the purchase of a property. This principle avoids double taxation on the same economic value, making the transaction very tax-efficient.

Tradition and Innovation in the European Context

The Italian and Mediterranean model of strong family support stands out in the European landscape. While in many Northern European countries the financial independence of children is a primary cultural value, in Southern Europe, the family continues to be a pillar of welfare. This tradition, however, is not static. It adapts and innovates, using modern legal and tax tools to meet the challenges of the present.

The indirect gift is a perfect example of how a traditional practice evolves. It allows intergenerational support to be kept alive while ensuring transparency, legal security, and tax advantages. In an increasingly complex market, knowing these solutions is essential for anyone who wants to buy a home. For those looking for alternatives to a traditional mortgage, there are also other options, such as rent-to-buy or a purchase with a retention of title clause, which can be combined with family help. Knowledge of the deductions and tax benefits related to mortgages can also further optimize the transaction.

Conclusions

Parental help for a home purchase is a precious resource, rooted in Italian culture and made even more relevant by current economic conditions. Choosing the form of an indirect gift often proves to be the most effective strategy, as it combines procedural simplicity, cost savings, and tax security. It is crucial, however, to always act with maximum transparency, using traceable payments and formalizing the origin of the money in the deed of sale. Relying on the advice of a notary allows you to manage every aspect correctly, protecting both parents and children from possible future unforeseen events and ensuring that this important gesture of generosity achieves its purpose without obstacles.

Frequently Asked Questions

What happens if I buy a house with my parents’ money and I am in a community property regime?

Assets acquired through a gift, even an indirect one, are considered personal property and therefore do not fall under the legal community of property between spouses. This means that even if you are married under a community property regime, the house purchased with money gifted by your parents remains the exclusive property of the child who receives it. In the event of separation or divorce, the property will not have to be divided with the spouse. However, it is essential that the origin of the money is clearly documented in the purchase deed to avoid disputes.

Can siblings challenge the gift for the home purchase?

Yes, other forced heirs (such as siblings) can challenge a gift if they believe it has infringed upon their reserved portion of the inheritance (quota di legittima), which is the part of the estate the law reserves for them. The action for reduction can be taken after the death of the donor parent. However, an indirect gift offers greater protection for the buyer compared to a direct gift of a property. In the event of a resale of the property, third-party buyers are more protected, and any claims from other heirs will primarily be directed towards the one who benefited from the gift in monetary terms.

Is it mandatory to mention the gift in the purchase deed?

Although it is not a legal requirement for the validity of the deed, it is strongly recommended and considered an essential practice. Declaring in the deed of sale that the price was paid with money from a gift from the parents serves to justify the buyer’s financial means in the event of audits by the Italian Revenue Agency. This transparency prevents tax assessments for “unjustified wealth increase” and provides clear proof of the origin of the funds, protecting the child from future disputes.

Frequently Asked Questions