Confirmatory deposit (caparra confirmatoria): when it becomes a payment on account and whether you need an invoice
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What a confirmatory deposit is in plain termsWhen the deposit becomes a payment on accountWhat happens if the sale falls throughDo you need an invoice?Common mistakesFrequently asked questionsIn practiceSourcesWhen the notarial deed (rogito) is signed and the sale goes through, the confirmatory deposit (caparra confirmatoria) becomes a payment on account: the notary deducts it from the price you pay. If the sale falls through because of the person who paid the deposit, the person who received it keeps it. If the fault lies with the person who received it, they must return it twice over.
What a confirmatory deposit is in plain terms
A confirmatory deposit is a sum of money you pay when you sign the preliminary contract (compromesso), the agreement by which you commit to buy the home at an agreed price. It is a guarantee: it tells both parties that the agreement is serious. The Civil Code governs it in Article 1385.
The preliminary contract is the first contract you sign, before the notarial deed. We cover it in detail in Preliminary contract (compromesso): what it is and what it must contain.
Example: price €150,000, deposit €10,000 paid by bank transfer when the preliminary contract is signed.
When the deposit becomes a payment on account
If the contract reaches the notarial deed, the deposit is neither lost nor returned: it counts as part of the price. This is the point at which the deposit becomes a payment on account (acconto). At the notarial deed you pay only the difference.
Example, with round numbers:
- Price of the home: €150,000.
- Deposit already paid: €10,000.
- To pay at the notarial deed: €140,000.
- Total paid: €150,000.
Check in the preliminary contract how the sum is stated and make sure it is deducted from the price at the notarial deed. If the contract says nothing about it, ask the notary to clarify before you sign.
What happens if the sale falls through
Here the confirmatory deposit makes the difference. Two rules apply:
- If the person who paid the deposit does not go ahead (for example the buyer backs out), the other party may withdraw from the contract and keep the deposit.
- If the person who received the deposit does not go ahead (for example the seller backs out), the other party may withdraw and demand double the deposit.
Example: deposit €10,000. If you back out as buyer, the seller keeps the €10,000. If the seller backs out, they must give you €20,000.
In some cases you can also ask the court to enforce the contract, instead of withdrawing. If you want to understand the difference from the other type of deposit, read Confirmatory and penitential deposit: the differences. For a sum paid as a simple advance, see Payment on account or deposit: what changes if the sale falls through.
Do you need an invoice?
This question is very common, and the answer depends on who is selling.
If the seller is a private individual, as a rule no invoice is issued for the deposit. The proof of the sum is the signed preliminary contract and the bank transfer. For this reason the transfer should be made with a clear reason, stating that it is a deposit (caparra) and naming the property.
If the seller is a company, for example a builder, VAT comes into play and the treatment of the sum may be different. In this case ask the notary or accountant how to document the deposit before signing, and do so in writing.
There is no single rule that applies in every case: the tax treatment depends on the type of seller and on the contract. The notary will explain how the deposit is handled at the time of the notarial deed.
The preliminary contract must also be registered within 30 days of signing, and the tax paid on the preliminary contract is deducted from the tax due on the notarial deed. How it works and what it costs can be found in Registering the preliminary contract: costs and timing.
Common mistakes
- Paying the deposit in cash. Without a bank transfer you cannot prove how much you paid and when.
- Not stating in the preliminary contract what kind of sum it is. If it is not clear whether it is a deposit or a payment on account, the problem only emerges when the sale falls through.
- Confusing deposit and payment on account. If the contract treats the sum as a simple payment on account, it must be returned if the notarial deed does not go ahead, save for any damages.
- Paying before reading the terms. Read the preliminary contract calmly, and have any clauses you do not understand explained to you.
Frequently asked questions
Can I keep the deposit if I don't sign the notarial deed?
No: if you are the one not signing, without a reason provided for in the contract, as a rule the deposit stays with the seller. If the preliminary contract provides for a condition that has not been met, the situation may change. Read what the contract says.
If the seller no longer wants to sell, how much must they give back?
Under Article 1385 of the Civil Code, double the deposit you paid. Example: a €10,000 deposit becomes €20,000 to be returned.
Can I get my deposit back if the mortgage is not granted?
It depends on what the preliminary contract says. There is often a clause that makes the contract conditional on obtaining a mortgage. Read it before signing: without that clause, the risk of the mortgage not being granted remains with you.
In practice
- Check in the preliminary contract whether the deposit is confirmatory or penitential: it changes everything when something goes wrong.
- Pay the deposit by bank transfer with a clear reason stating the property, and keep the receipt.
- Ask the notary how the deposit will be deducted at the notarial deed, and check that the total equals the agreed price.
- If the seller is a company, ask in writing how the sum and VAT are treated.
Sources
In the same chapter
- Payment on account (acconto) or deposit (caparra): what changes if the sale falls throughIf the sale falls through, the payment on account is usually refunded to you, but the confirmatory deposit may cost you the amount paid or cost you double.
- Bare ownership: is it worth buying?Bare ownership costs less than full ownership, but it does not give you the use of the home while the usufructuary is alive. Here is what to check before you sign.
General information, not legal or tax advice: the law and the notice of sale prevail.
