Luigi Costa also swore at and threatened to kill police, racially abused "Anglo-Saxons", and proclaimed his innocence, telling an officer he was a "lover not a fighter", after he was arrested at his Red Hill home.

Costa is on trial in the ACT Supreme Court accused of murdering his neighbour Terrence Freebody on July 22, 2012.

He has pleaded not guilty.

The Crown alleges Costa pushed Mr Freebody off a chair, breaking his back, and then stomped on his face and neck, rendering him unconscious.

Prosecutor Shane Drumgold alleges Costa then fatally stabbed his neighbour in a panicked bid to dispose of his body before police arrived.

But Costa's defence team says their client suffers from dementia and has no memory of the alleged murder.

On day two of the trial, one of the first officers on scene gave evidence that he found Mr Freebody dead in the dining room of Costa 's Mugga Way – often referred to as the Golden Mile – home shortly after 5.30pm.

Mr Freebody had been stabbed multiple times and was covered in blood.

The sergeant said he located Costa in a nearby toilet wiping himself, with faeces on his legs and pants, and blood on his hands.

A blood-stained knife lay in a nearby sink.

Police handcuffed Costa and detained him in a nearby bedroom while they awaited backup.

A police recording of the following hour of conversation was played in court on Wednesday.

During the exchange, Costa appeared confused why police were in his house and asked why he had been arrested.

He repeatedly swung between telling police he respected them for doing their jobs and threatening to kill them.

Costa also asked if he could pull his pants up, spoke of his wealth and the jealousy that brought, his education, important people he knew, and the mistreatment he suffered from white Australians when he arrived from Sicily.

At two points during the recording, Costa sang lyrics from the Beatles hit I Saw Her Standing There.

But Costa also remembered his lawyer's phone number and a conversation with police about the legal office being unstaffed on a Sunday evening.

Earlier in the day, Mr Freebody's widow told the court, from the witness box, that the accused had invited them over for a drink about 1pm.

She reported he had been a good mood during the afternoon, including singing Italian opera while fetching a fresh wine bottle.

But she left shortly before 5pm after he became angry when she asked Costa to stop using bad language.

She told the court his eyes "bulged" with anger and he told her to "get out" in a guttural voice.

The court was played a triple zero call from Costa about 5.06pm saying he had been attacked and the intruder was still in the house.

Groans could be heard in the background during the call.

The accused hung up and the operator called back, but Costa put him on hold before becoming aggressive.

The trial continues on Thursday.