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For $1, or less than a pizza slice, you can buy a house in Italy

CBS Report

January 18, 2019

297

For $1, or less than a pizza slice, you can buy a house in Italy

By Megan Cerullo

Updated on: January 18, 2019 / 4:36 PM / MoneyWatch

Earthquake rattles eastern Sicily

A semi-abandoned town in Italy is selling homes for just over $1 in hopes of luring foreigners to renovate the properties and reviving its local economy.

Sambuca, a hilltop town in Sicily with sweeping views of the Mediterranean, is selling dozens of bargain basement-priced homes after other Italian towns and villages have made similar offers. Sambuca — no relation to the liqueur of the same name — has a population of fewer than 6,000 residents and is located about 40 miles south of Palermo.

Gangi, also in Sicily, started selling vacant homes for €1 in 2015, and Ollolai, in Sardinia, followed suit. At the heart of those efforts are attempts to revive their economies and preserve their cultures as young residents flocked to big cities and older inhabitants passed away, leaving a stock of abandoned homes in their wake.

Home-rental company Airbnb is also offering to pay four foreigners to spend three months in Grottole, located in the southern province of Matera, through its Italian Sabbatical program. Participants will "help the local community revitalize" the village.

"The small village of Grottole, with only 300 inhabitants and more than 600 empty homes, is at risk of disappearing and is asking for your help!" the program's description reads.

An aging population

Italy's birth rate has been trending downward for years. "The Italians a few years ago set records for having the lowest birth rate recorded in history, at 1.1 children," said Steven Mosher, president of the Population Research Institute.

He said he's witnessed a number of initiatives aimed at encouraging procreation, none of which have been effective.

"There are villages and towns where they are offering bonuses for every child born there because the birth rate is so low," he said. "But there seems to be no combination — around the world — of economic incentives, at least in developed countries, to bring the birth rate up to be replacement, which would be 2.1 children," he said. "I don't know if there is anything Italy can do."

Younger residents of Sambuca have moved to urban environments, while its elderly inhabitants generally are not equipped to maintain a modern economy.

"Older populations don't innovate and invest for the future, they just draw down resources they have already accumulated," Mosher said. "Some countries have years of inventory of homes that may never be occupied again because there simply aren't people to occupy them. It's a drag on the economy."

Thousands of emails

But global interest in the newly listed Sambucan homes suggests the tactic is already working.

"It's amazing I have had thousands of people expressing interest all the way from Dubai, Barcelona, and I have had tons of requests from New York," Giuseppe Cacioppo, Sambuca's deputy mayor and tourist councilor, told CBS MoneyWatch. He said he hasn't come up for air since the international community got word of the deal after CNN initially wrote about the plan.

"I didn't sleep last night because I was getting so many phone calls," he said. "I received 39,000 emails in response to the offer, including people who want to buy whole blocks of houses."

Strings attached

The homes — which cost less than a slice of pizza — are enticing, but do come with strings attached.

Buyers must make a €5,000 (or $5,682) security deposit and commit to spending upwards of €15,000 (about $17,000) to revamp them within three years. The security deposit will be returned once the renovations are complete, CNN reported.

Potential homebuyers should also come armed with a plan to keep themselves busy.

"These places are small and very skewed toward older generations. Life is very quiet and simple and basic. There wouldn't be much to do beyond renovating your property and gardening," said Kathleen Peddicord, publisher and founder of Live and Invest Overseas.

And fluency in Italian is a must, according to travel and retirement experts.

"You definitely need to be comfortable in Italian if you are going to undertake any kind of labor project," said Kat Kalashian, editor of Live and Invest Overseas. "You will need to speak Italian to get referrals and find labor, and you will need to speak Italian to work with them."

Property taxes

Buyers can avoid paying property tax on the homes if Sambuca becomes their principal residence. Otherwise, a tax rate of up to 0.76 percent applies. A secondary tax, that varies across municipalities, also applies, in the range of zero to 3.3 percent. "You could have zero point zero taxes depending on the municipality," Kalashian said.

Max Dilendorf, a New York-based attorney who last year responded to a similar initiative, ultimately decided the offer didn't make sense after weighing the cost of a gut renovation against renting.

"At the end of the day, if you are only going to end up being there once or twice a year, I think you are better off just getting an Airbnb," he said. "But if someone is willing to relocate and live there, maybe it does make sense."

Peddicord agrees that while it's a unique opportunity, it's not for everyone.

"It would mostly be a labor of love and a life adventure. These properties really make sense for someone who is in love with the romantic idea of it," she said.

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