Importing currency to buy Italian real estate

How and when you do that can make a difference to how much you end up paying. Few of us are interested in playing the currency exchange markets with all the uncertainty that entails, so we need to make as simple as possible what can be a fiddly business.

In theory it should all be a lot simpler than in the old days. Back in the Sixties and early Seventies, in the days of foreign exchange controls, there were strict limits on the quantity of foreign currency one could take abroad (older readers may remember foreign holidays with a shudder here). The amount was certainly far less than the purchase price of your villa for sale in Tuscany or apartment for sale in Rome. The answer was simply to stuff a valise with banknotes and pay cash.

Transfer money to Italy to buy your villa

Thankfully we can now take as much cash abroad as we like, though we certainly don’t advise going to complete your purchase with suitcases full of hard cash, far too risky. These days shipping large amounts of cash aren’t going to see you fall foul of currency controls … more likely of suspicion of money laundering or being a drug dealer. Any amount in cash in excess of €10,300 must be declared to Customs, while letting it be known that you’re carrying large amounts of banknotes makes you an obvious target for thieves. But with modern banking systems, electronic banking, Swift, BACS and the rest it should be simple to do it the modern way, shouldn’t it? Well yes and no.

The systems are in place. Swift has become the system of choice between countries, and your bank will be able to arrange this for you, attaching the Swift number of the sending and receiving banks. There is a charge at each end (and by identifying who’s sending and receiving, the banks fulfill the anti-laundering demands of ’Know your customer’ legislation). It should be simple to flick a switch and electronically transfer cash, but many of us have encountered frustrations with the time these transfers take to go through. There is also the additional charge for currency exchange, and the possibility that you might get a nasty shock with the exchange rate, should the euro have strengthened against the dollar or pound in the interim.

Buy real estate in Italy — interest rate fluctuations

Beware fluctuations in interest rates. You may look at the relative values of the dollar, the pound and the euro and decide it makes more sense just now to take out an Italian mortgage. At some point you have to convert from your home currency anyway, whether you take a euro mortgage direct (converting your £s or $s to €s each month), or mortgage at home and then buy a house in Italy for cash (converting your £s or $s to €s in one go).

You may have a long-term view on how rates are going to go, but that’s too much for most of us to constantly monitor. What you must consider is the uncertainty that monthly exchange rate fluctuations build into your mortgage payments – not just base rates to worry about but the relative values of £, $ and €.

Suffice to say, you should do things in good time — you don’t want to risk getting to the signing of the contracts and discover the money is not in place. You should also transfer more than you need, to guard against unexpected costs. You may decide that it pays to deal with one of the specialist currency transfer firms rather than a high street bank: it will be no surprise to learn that the big banks do not tend to offer the most competitive rates … Shop around! Solicitors or lawyers may also be able to arrange the money transfer, as they will already be set up for fund transfers for conveyancing and handling real estate purchases.

Real estate in Italy — offshore bank accounts

Consider too an offshore bank account. The Channel Islands of Guernsey and Jersey, The Isle of Man, Liechtenstein, Switzerland and Luxembourg all have banks competing eagerly for the financial accounts of expats. The savings here tend to be from tax efficiency rather than in preferential interest rates.