The fictitious sale of a property occurs most frequently within the family sphere. It is a particular real estate transaction, in which an actual exchange of money is often lacking. Being informed on this topic is essential to avoid legal or tax problems.

What is a Bogus Sale and When Does It Happen?

A simulated sale is a transfer of ownership that is only apparent, without actual payment of the agreed price. It typically occurs between family members, as in the case where a parent “sells” a property to a child, or between siblings.

Why Do You Do a Simulated Sale?

This path is often chosen to avoid resorting to donation, which can be subject to disputes by other heirs or banks, in the event of future mortgage requests. Other reasons may be related to tax considerations, such as avoiding higher taxes.

Protections and Regulations

Italian law provides tools to combat simulated sales. There are time limits beyond which the deed becomes final, but before then it can be contested.

Relative and Absolute Simulation

Relative simulation: A sale is faked to disguise a donation. This can happen when the seller receives money and returns it, or when a payment is declared that never actually occurred.

Absolute simulation: the change of ownership is recorded in the registers, but in practice nothing changes. The property remains at the disposal of the old owner and there is no real change of money. In these cases, a notary may refuse to draw up the deed in the absence of concrete proof of payment.

Sale at a symbolic price

Another form of simulated sale is one carried out at a price much lower than the market value, also called a “symbolic price sale”. This can be configured as a disguised donation and can harm the rights of other heirs, who could challenge the deed.

What the Law Provides

The law does not limit itself to considering the form of the contract, but also analyses the substantial content. If there is no real transfer of money, or if the price is negligible, it is a donation, even if the act is formally a sale. The legitimate heirs can therefore challenge the operation.

How to Prove It's a Fictitious Sale

Anyone who believes they have been damaged (such as creditors or other heirs) can demonstrate the non-existence of the payment through testimonies, the absence of bank transfers, or the continued use of the property by the seller after the deed.

Voidability and Nullity

A contract can be:

Null, when it presents serious defects and is invalid from the beginning, even without the intervention of the judge.
Voidable, if it contains less serious irregularities. In this case, judicial intervention is necessary.

When is it possible to challenge a bill of sale?

Anyone who feels harmed can challenge the act. The terms vary:

Up to 10 years for family members.
5 years in the case of creditors acting with a revocation action.

How to Register a Property in Your Children's Name

The most common case of fictitious sale is that related to the registration of a house to the children. The motivations are different: to prevent inheritance conflicts, to access tax benefits or to anticipate the succession.

The Possible Ways

• Donation: the only legitimate option if the child is a minor. It can be done in the form of:
• Direct, with two separate acts (purchase and subsequent donation).
• Indirect, simpler, with direct purchase in the name of the child.
• Sale: is allowed only if the child is of age. It is essential that the price is appropriate to avoid disputes by other heirs or actions by creditors.
• Usufruct: allows parents to maintain the right to live in the property, while transferring bare ownership to their children. Useful for protection from any unilateral decisions by the child.
  
  

Legitimate Shares: Pay Attention to the Law

The law requires that a portion of the inheritance be reserved for the legitimate heirs (spouse and children). For example:

With a child and a spouse: each is entitled to a third.
With more than one child: 50% is divided between them, while the spouse receives 25%.

Heading with Mortgage

It is possible for the parent to take out a mortgage to purchase the property and register it in the name of the child. However, in this case, he or she cannot benefit from tax deductions on passive interests, since these are only available to the owner of the property.

Costs to Consider

Taxes: land registry and mortgage at 3% of the value (reduced to €258.23 for first home).
Technical and notary fees: approximately €300 for stamps and transcriptions, plus the notary's fee, which varies from case to case.

Pros and Cons of Heading

Advantages:

Tax savings: reduced taxes for first home purchases.
Foreclosure protection (except for luxury properties).

Disadvantages:

Risk of family conflicts: for example, an adult child can legally evict his parents.
Possible appeals by other heirs.