Italy is a dream destination for many seeking to own property, whether for personal use or as an investment. However, understanding the tax implications is crucial for foreign buyers who want to make informed decisions. This guide covers the essential aspects of property tax in Italy, helping you navigate the process with confidence.
Types of Property Taxes in Italy
When purchasing or owning property in Italy, there are several taxes to consider:
1. Purchase Taxes
These are one-time taxes paid when you acquire the property:
- Imposta di Registro (Registration Tax): The registration tax is calculated at 9% for non-residents, BUT be careful as there is quite a bit of misunderstanding about this amongst foreign buyers. The taxes are NOT calculated on the market value or the purchase price, but rather on this “cadastral value”. For example, a non-resident purchasing an A/3 property in Santa Margherita Ligure priced at €400,000 might assume they owe 9% of the purchase price (€36,000) as a registration tax. However, the tax is actually 9% of the cadastral value (€51,594 in this case), resulting in a much lower registration tax of €4,643.46.
This misunderstanding could cause a buyer to overestimate their closing costs by tens of thousands of euros. Similarly, for residents purchasing the property as their primary residence, the registration tax drops even further to 2% of the cadastral value (€1,031.88),
On top of your registration taxes, other one time fees include
- Mortgage Tax: this is a fixed cost of €50,
- Cadastral Tax: this is also a fixed cost of €50.
- Notary Fees: Notary fees depend on the purchase price and are typically 1–2% of the purchase price, plus VAT.
If you are buying from a company or a new development, there will also be VAT owing on the purchase price. This will be calculated at different percentages depending on the value and characteristics of the property, and on the buyer’s status as resident, non-resident, first-time buyer etc.
2. Annual Property Taxes
These are recurring taxes for owning property in Italy:
- IMU (Imposta Municipale Unica): Applies primarily to second homes, luxury properties, and investment properties. Primary residences are generally exempt unless classified as luxury homes. The rate varies by municipality and is calculated based on the cadastral value of the property.
- TARI (Tassa sui Rifiuti): This is the waste tax, calculated based on the size of the property and the number of occupants.
- TASI (Tassa sui Servizi Indivisibili): Covers municipal services such as street lighting and maintenance. This tax has been abolished in most cases but may still apply in some municipalities.
Tax Benefits for Foreign Buyers
Foreign buyers may benefit from certain tax advantages, depending on their residency status and how they intend to use the property:
- Primary Residence Benefits: If you obtain residency and declare the property as your primary residence, you may benefit from reduced registration tax and exemptions from IMU.
- Tax Treaties: Italy has agreements with many countries to avoid double taxation. This ensures you won’t pay property taxes twice if you’re already taxed in your home country.
Selling Your Property: Capital Gains Tax
When selling property in Italy, foreign owners may be subject to capital gains tax if the property is sold within five years of purchase.
How At Home Can Help
Navigating property taxes in Italy can be complex, but At Home is here to simplify the process. We have an excellent team of advisers who will be happy to assist you in understanding Italian real estate laws and tax regulations. We ensure a smooth experience for foreign buyers. From connecting you with tax advisors to managing every aspect of your property purchase, we’re committed to helping you make the most of your investment.
Understanding property taxes in Italy is an essential part of owning real estate as a foreign buyer. With the right guidance, you can enjoy the benefits of your investment without unexpected surprises. Contact At Home today to explore your options and take the first step toward owning your dream property in Italy.
