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Many people dream of becoming a property owner in Italy, but not everyone knows what taxes they will have to pay in the future. In Italy, the taxation system is quite complicated. The tax rates for the purchase, maintenance and sale of real estate in the country depend on a number of factors:
It should be noted that according to Italian tax legislation, the rate for second homes is much higher, and unlike the first, main houses, they are not subject to any benefits. In addition, when using real estate for its intended purpose, that is, as the main place of residence, a foreigner can obtain the status of a tax resident. What is its difference from a tax non-resident? We will consider further.
In general, in Italy there is no ban on the purchase of real estate by foreigners. But the very fact of buying a home does not automatically give you the right to a residence permit, although having your own home can speed up the process of obtaining it under other circumstances: marriage with an Italian, university studies, doing business, work, etc. The main difference between a tax resident and a non-resident is that non-residents are subject to taxation on income earned in Italy, and residents — for all income earned worldwide. The main tax that is paid when buying a property is the registration tax (imposta di registro), which is paid by the buyer himself when registering the property. The rates of this tax depend on many factors:
Additional fees may be: cadastral tax (50 euros — cadastral transfers or change of ownership in the cadastral chamber); stamp duty (when buying from an individual — 50 euros, from a developer — 200 euros); mortgage tax (when registering a transaction with a private person — 50 euros, from a developer — 200 euros) and notary fees fees (2-4% of the estimated value of the property). At the same time, when buying real estate from an individual, interest is calculated from the low cadastral value, and when buying from a developer, VAT is calculated from the sale amount. When applying for a residence permit or making a purchase as the main place of residence, the buyer can pay a preferential rate (Prima casa) — 2% instead of 9%. If, within 18 months after the purchase, the buyer does not register the object as the main place of residence, he is obliged to pay the difference in taxes plus a 20% fine.
Italy has a single communal property tax, which includes 2 main taxes: IMU and TARI.
IMU (Imposta municipale unica) is a single municipal tax for property owners. Its interest rate varies from 0.4% to 0.76% of the cadastral value. The rate depends on the municipality and the status of the taxpayer. The IMU size varies throughout Italy. So, its largest rate for 2023 is in Rome, Milan and Bologna — a little more than 2000 Euros, and the lowest is in Asti, Croton (from 580 Euros to 674 Euros). Note that this tax is paid by the owners of the second house, as well as the owners of various outbuildings such as a barn, basement, garage.
If the property is registered as your main place of residence, or you are the owner of luxury housing, then you do not pay municipal tax.
Despite the fairly high IMU rates, the government allocates a number of tax benefits when paying it:
The second house tax may not exceed the max rate of 10.6 per 1000;
when renting a second house, the IMU rate is reduced by a quarter, and when renting an old house — by half.
Please also pay attention to the fact that the coefficient may increase depending on the type of property purchased. Thus, buildings with historical and cultural value have a fairly high coefficient.
The state divides tax payments into two stages: the first installment — until June 16, the second installment — the remaining amount must be paid by December 16 of the current year.
Benefits in the payment of IMU are also provided to certain persons:
TARI (Tassa Rifiuti) is a tax for recycling and disposal of waste. Previously, there was also a TASI tax, which covered the costs of lighting, street cleaning and landscaping. Since 2020, it has been included in the IMU and is no longer calculated separately. The amount of the TARI tax depends on the category of the object, the area, as well as on the number of registered and living people in the house. If the owner uses this accommodation several times a year for a vacation, then he can be given a discount of up to 30%. Also, those who differentiate organic waste using special containers can receive tax benefits. As an example, a family of two people permanently residing in an apartment of 120 square meters pays a TARI of 305 euros, and the same family living in a similar apartment temporarily can pay for garbage collection — 205 euros, receiving a discount. In general, the TARI tax rate in the country depends on the regional location of housing: in the south of Italy the tax is higher, in the east it is the lowest rate. Municipalities themselves set the deadlines for paying this tax, dividing payments into three periods: I — until the end of April, II — until the end of July, III — paid by the end of the year. Many taxpayers make a one—time payment, paying the entire amount in full, but at the end of the year it is necessary to verify whether tax rates have changed, in case of such - to pay extra, since the obligation to calculate taxes and responsibility for possible errors or late payments lies entirely with the owner of the property. VelesClub Int clients. they can get detailed advice on this issue.
If the owner of the property plans to lease the property, then certain tax payments are waiting for him here. Since 2024, there are only 3 such IRPEF rates (according to the type of personal income tax) (in 2023 there were 4 of them). Let's consider two ways of calculating tax payments under a lease agreement: the standard mode and the fixed rate. In the standard mode, the rate varies from 23% to 43%. At the same time, for those who earned less than 8.5 thousand euros on rent, the tax-free zone was increased; and for those who earned more than 50,000 euros, the total tax rate was reduced by 260 euros.
The most profitable for payers is considered to be a fixed rate, at which there is no need to declare rent. In this case, the IRPEF rate does not change. However, on January 1, 2024, the law on a fixed tax on income from short-term (up to 30 days) rental of real estate (cedolare secca) came into force. The figure has increased from 21% to 26% and will affect those who rent out several properties. If you pay for rented housing according to the standard regime, then you will additionally be charged registration tax and stamp duty. There are no such fees at a fixed tax rate.
The registration tax is divided in half by the owner of the house and the tenant, and it is paid immediately upon registration of the lease agreement. The rate is 2% of the annual rent, which is multiplied over the years of the current contract. At the same time, the annual minimum tax must be at least 67 euros. Stamp duty is also paid upon registration of the lease agreement — 16 euros (the cost of a stamp) for each page of four.
Sale of property. The plusvalenza tax or replacement tax is paid on the profits earned from the sale of the property. It is equivalent to capital gains tax and therefore has a progressive rate of 26%. In the case of the standard tax regime (according to IRPEF rates), only capital gains indicated in the declaration are taxed. In addition, there are cases when capital gains tax is not paid at all:
Of course, with such fairly high tax rates, many Italians are considering tax benefits and discounts. In this case, it is allowed to deduct part of the expenses from the total annual income tax. To do this, you can use two options:
Deduct expenses from the total amount of income before the tax is formed. These are such as: expenses for household workers; contributions to pension savings and life insurance; alimony; charitable payments to NGOs
Deduct expenses from the tax amount already. Expenses such as: medical expenses (19% if they exceed 129 euros); property repair costs (36%); tuition fees at the university (19%); kindergarten (if the amount is more than 632 euros — 19%); subscription for training in the fitness room or in the pool (19%)
It is important that all these expenses must be confirmed by fiscal receipts and receipts indicating the buyer's details and the seller's VAT code. Each individual municipal committee of the region can expand the item of expenditure for preferential taxation.
To sum up: the taxation system in Italy is not immediately accessible and understandable to everyone, but our experts are always ready to give you detailed information on the topic you are interested in.
