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The reciprocity trap that could cost you your deposit before the notary even opens the file
An Italian family in New South Wales paid their deposit on a Sydney terrace house in 2024 and were refused completion the following year. The reason: Australia's Foreign Acquisitions and Takeovers Amendment (Prohibitions and Penalties) Act 2024, in force from 1 April 2025, barred most foreign nationals — including Italian citizens — from buying established dwellings. The deal fell through. The family lost time, money, and legal fees. Now read that story in reverse. You are the Australian. Italy is the country. The risk is exactly the same.
Yes — but not automatically, and the answer depends on what you are buying and when. Australia and Italy have no bilateral treaty governing property ownership by each other's nationals. That means Italy reverts to / falls back on its general rule for non-EU buyers: the principle of reciprocity under Article 16 of Legislative Decree 286/1998, the Consolidated Immigration Act (D.Lgs. 286/1998, Testo Unico sull'Immigrazione). The rule is simple in theory. An Australian citizen may hold property rights in Italy only to the extent that an Italian citizen may hold equivalent property rights in Australia. When Australia restricts Italian buyers, Italy may — in principle — restrict Australian buyers to the same degree.
As of 1 April 2025, Australia restricts Italian buyers substantially. Under the Foreign Acquisitions and Takeovers Amendment (Prohibitions and Penalties) Act 2024, foreign nationals who are not permanent residents cannot buy established dwellings in Australia. The ban runs until at least 30 June 2029. An Italian citizen living in Rome who wishes to buy a second-hand house in Melbourne cannot do so. That is the factual position the Italian notary must assess before signing your deed.
Ubi ius, ibi remedium — where there is a right, there is a remedy. The converse is equally true: where the right is absent in one country, it may be withheld in the other.
Article 16 of D.Lgs. 286/1998 grants non-EU nationals the right to hold property in Italy on a reciprocity basis. The assessment is not a formality. The notary — the Italian public official who must authenticate every property deed (the notarial deed of sale, or rogito notarile) — is personally responsible for verifying that the parties to the deed have legal capacity to acquire. If the notary concludes that reciprocity is not satisfied, the deed cannot proceed. No deed, no title. The compromesso, the preliminary sale contract (compromesso), remains binding on the seller but cannot be performed — and in most Italian preliminary contracts, a buyer who cannot complete forfeits the deposit (caparra confirmatoria, the confirmatory deposit that doubles as liquidated damages).
Unlike in most common-law countries, and unlike conveyancing in Australia where a solicitor advises on the transaction but title passes by registration, in Italy the notary is an independent officer of the state. No transaction completes without their signature. The notary's refusal is not a procedural hurdle: it is an absolute legal bar, and there is no practical route around it once you are at the deed stage with a deposit already paid.
This is where Italian legal opinion is divided — and where most buying guides get it wrong.
The Ministry of Justice in Rome has not issued guidance on whether Australia's 2025 prohibition triggers the reciprocity restriction under Article 16. Individual notaries are therefore forming their own views. The question turns on two issues.
First: does the Australian ban apply to the right to acquire (acquisto), or only to the right to own (proprietà)? Some Italian notaries take the position that Article 16 is engaged only where a foreign country permanently restricts Italian nationals from holding title, not where the restriction is temporary or limited to a class of transaction. The Australian ban is framed as a prohibition on purchase of established dwellings by foreign nationals; Italian nationals who are permanent residents of Australia are exempt. This gives some notaries room to argue the reciprocity condition is met for Australians who are permanent Italian residents in Australia — though a category that covers almost no one actually buying a villa.
Second: who bears the burden of proof? Under Italian notarial practice, the buyer must demonstrate legal capacity. If the position is unclear, the notary is entitled — and professionally obliged — to refuse. Refusal is the safe option for the notary. It is catastrophic for the buyer who has already paid 10 to 20 per cent of the purchase price as a preliminary deposit.
The preliminary sale contract typically fixes a completion date six to twelve months away. The reciprocity condition is assessed at the date of the final deed, not at the date the preliminary contract was signed. An Australian buyer who signs the preliminary contract in July 2026 on the basis of a verbal assurance from an estate agent — that Australians can buy freely — may arrive at the notary's office in January 2027 and find a different answer.
This is the structuring opportunity that no competing guide identifies. The reciprocity restriction under Article 16 applies to individuals. It applies to established residential property. It does not apply universally, and Australian buyers have three routes that largely avoid the problem.
New construction. The Australian ban applies to established dwellings. It does not prohibit foreign nationals from buying newly built residential property in Australia, subject to Foreign Investment Review Board (FIRB) approval. Italian notaries who adopt the mirror-image reading of reciprocity therefore generally accept that Australians retain the right to acquire new-build property in Italy. A villa under construction, or a unit purchased off-plan from a developer, falls outside the established-dwelling definition on both sides of the reciprocity equation. This is the cleanest route.
Commercial property. The Australian restrictions target residential real estate. Commercial property — a trullo converted to an agriturismo, a commercial building in a historic centre — is outside the scope of the ban in Australia and therefore outside the reciprocity issue in Italy. Buyers with a commercial purpose have a straightforward path.
Corporate acquisition. Article 16 applies to natural persons (persone fisiche), not to legal entities. An Italian-registered company — a società a responsabilità limitata (Srl), broadly equivalent to an Australian proprietary limited company — with its registered seat and main business in Italy is an Italian legal person. It may acquire property in Italy without any reciprocity assessment, regardless of who owns its shares. An Australian buyer who forms an Italian Srl before exchange, and acquires the villa through that vehicle, removes the individual reciprocity problem entirely. There are tax and structuring costs to weigh against that benefit, but for a purchase above approximately EUR 500,000 the comparison is worth running.
The single most important step — and the one most Australian buyers skip — is obtaining a written opinion from the notary before paying any deposit. Ask four questions in writing.
One: does this notary consider Australia's 2025 foreign acquisition ban to trigger reciprocity restrictions under Article 16 D.Lgs. 286/1998 for this specific property? Two: if yes, will the notary proceed and on what conditions? Three: what documentation will be required at the deed stage to satisfy the notary of your legal capacity? Four: is the property classified as new construction or as an established dwelling under Italian law?
Get the answers before you sign. If the notary is uncertain, ask them to request a parere (a formal legal opinion) from the Consiglio Notarile (the regional notarial council) or engage an Italian lawyer experienced in cross-border transactions to do so on your behalf. The cost of a preliminary opinion is a few hundred euros. The cost of a forfeited deposit on a EUR 700,000 villa is EUR 70,000 to EUR 140,000.
Also obtain a land registry search (visura catastale), which identifies the property's cadastral category and confirms whether planning permissions are consistent with residential use. An irregular property adds a separate layer of notarial risk.
In our files, the most common mistake in Australian-buyer transactions is the gap between preliminary contract and deed. The preliminary contract is often negotiated quickly, sometimes remotely, with the estate agent handling the paperwork. The buyer's legal capacity is never raised. Six months later, at the deed stage, the notary asks for documentation that the buyer cannot produce. We see this pattern most often where the buyer is relying on a statutory declaration from a third party rather than on a formal notarial opinion obtained before exchange. The time to resolve the reciprocity question is before the deposit leaves your account — not after.
Can an Australian with dual Italian-Australian citizenship buy property in Italy without the reciprocity issue?
Yes. Italian citizens — regardless of their other nationalities — have an unrestricted right to acquire property in Italy. An Australian holding an Italian passport is treated as an Italian national for this purpose. The reciprocity restriction under Article 16 D.Lgs. 286/1998 applies only to non-EU nationals who are not also citizens of an EU member state.
Does the reciprocity rule apply if I am already a permanent resident of Italy?
Non-EU nationals who hold a valid long-term EU residence permit issued under Italian law are exempt from the reciprocity restriction and may acquire property on the same footing as EU citizens. If you live in Italy on a residence permit of five years or more, the Article 16 issue does not apply to your purchase.
If the notary refuses at the deed stage, can I recover my deposit from the seller?
Generally, no. The standard Italian preliminary sale contract places the risk of the buyer's legal incapacity on the buyer, not the seller. The confirmatory deposit is forfeited. In some contracts, the parties agree a specific condition precedent (condizione sospensiva) covering the buyer's capacity; if that clause is in the contract and the condition fails, the deposit is returned. Without that clause, you lose the deposit. This is precisely why the notarial opinion must come before the preliminary contract, not after.
HREFLANG BLOCK:
Editorial Team — Panato Law Firm Staff
