Saturday, May 26, 2012

All the truth about Italy’s House Ownership Tax

Keep yourself informed, read the stories about the Italian IMU and try to read between the lines of the news stories. What you found out? A “strange” phenomenon.

Our Government provides contradictory information about the IMU [1] and those information are changing day by day. One day the tax rate blows you away, another day they are proportionate to the revenue. One day they are based upon equity, the following day they are clearly unfair. One day they hit the first home, the other the second. The thing is nobody knows how much we will have to pay for the IMU. Isn’t strange to you? Isn’t weird Real Estate companies are preparing financial plans without knowing how much taxes they will have to pay just in a few weeks? In fact it’s not weird to me. It’s simply a very manipulative form of (dis)information management. Those who are in charge, the government, the media, they are just toing and froing to exasperate those who invest in Real Estate in Italy. This is only aimed at creating panic and distrust among the Real Estate owners. Its name is psychological terrorism. It seems somebody wants us to lose trust in the housing market. 

Why? So that somebody and only that person will be able to buy for a knockdown price. 

Ask yourself why this technical government isn’t able to write a clear and definitive bill on a trivial subject like the real estate ownership tax? 

Anyone of us could write the text of a real estate tax, you just need a bit of common sense. So why the government of the super-professors, hasn’t done it yet? Why are they so hesitating about the IMU? Why this government is so resolute on the gas excise while so unsteady on the IMU? Why are they creating such mass panic among the Italian people? Why are they releasing contradictory information? 

If you are reading these pages it’s because you want answers. 

The answer is basically one: somebody wants to buy your properties at knockdown prices. If you read the stats on what the Italians think about investing, they are all extremely favourable to the bricks. About 80% of Italians they own the property where they live. This made Italy one of the richest countries in the world, despite the giant public debt created by our government officials in the past fifty years. 

In Europe and in the rest of the world only 30% of the population owns the property where they live. The rest they are on a rent. And who owns the 70% of the properties on rent? The big real estate funds. 

The pattern is very clear: if you exercise psychological terrorism among the Italian families you force them to sell their properties at lower prices and you make huge profits out of it. 

Isn’t possible that some dark forces are working behind the scenes to create some big real estate funds which eventually will be able to buy under-priced properties? 

This practice is called Monopsony, a market similar to a monopoly except that a large buyer, not seller, controls a large proportion of the market and drives the prices down or up. Sometimes referred to as the “buyer's monopoly”. 

This is what’s going on in the Italian real estate market. So we better start playing in the same ballpark of those hiding in the control room. 

In fact the counter-strategy would be that everyone of us should buy a property and rent it out. 

Luigi Foscale 

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