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PROPERTY TAX IN ITALY: THE ULTIMATE GUIDE FOR 2020

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Do you have a property in Italy? Or are you planning to buy one?
Italian real estate sector has boomed in the past years due to the rise of airlines coming to Italy, the decrease in travel prices, and a railway system that has been improved a lot in the last decade making traveling through cities fast and affordable.
Here in this article you can find useful tips and suggestions of what you can expect when buying and maintaining a house in Italy.

Buying a house in Italy: which taxes should you pay?

When buying a property there are several taxes to be considered. They may vary according to the type of property, its condition, and its purpose; some of them modify the costs and therefore they should not be ignored.
We will list them here for you.

1. Stamp Duty

This tax is between 2% and 9% of the cadastral value of the house. However it will never be less than 1000€ regardless of the value of the property.
If you are buying from a private person you do not pay any VAT.
In addition if this property is your primary residence in Italy and you spend here more than 6 months per year, the tax will only be 2% of the cadastral value.
On the other hand, if this is your second property and you are not a permanent resident this tax rises up to 9% of the cadastral value.
In case the purchase has been provided by a registered company in Italy the tax will only amount to 200€.
You also have the option to declare to the Revenue Agency that you will become resident within 18 months from the purchase.

Here is a useful scheme provided by Gateaway:

Foto Do you have a property in Italy? Or are you planning to buy one?  Italian real estate sector has boomed in the past years due to the rise of airlines coming to Italy, the decrease in travel prices, and a railway system that has been improved a lot in the last decade making traveling through cities fast and affordable. Here in this article you can find useful tips and suggestions of what you can expect when buying and maintaining a house in Italy. Buying a house in Italy: which taxes should you pay? When buying a property there are several taxes to be considered. They may vary according to the type of property, its condition, and its purpose; some of them modify the costs and therefore they should not be ignored.  We will list them here for you. 1. Stamp Duty This tax is between 2% and 9% of the cadastral value of the house. However it will never be less than 1000€ regardless of the value of the property. If you are buying from a private person you do not pay any VAT. In addition if this property is your primary residence in Italy and you spend here more than 6 months per year, the tax will only be 2% of the cadastral value. On the other hand, if this is your second property and you are not a permanent resident this tax rises up to 9% of the cadastral value.  In case the purchase has been provided by a registered company in Italy the tax will only amount to 200€.  You also have the option to declare to the Revenue Agency that you will become resident within 18 months from the purchase.   Here is a useful scheme provided by Gateaway: Foto The cadastral value of many Italian properties is still much lower than the actual market value, since the calculation is actually re-done when it is time for the property to be sold, and many houses have had the same owner since decades. The cadastral value is set up in the deed of sale of the house. The deed (in italian “rogito”), or public deed of sale, is basically the contract by which the transfer of ownership of the house is formalized and the price that the buyer paid to the seller to insure it. 2. Land registry Tax The land registry tax or in Italian “imposta catastale” is a fixed fee that varies from 50€ (if you purchase a house from a private seller) to 200€ (if you purchase the house from a registered company in Italy).  This is due in order to change the ownership of the property in the cadastral lists. 3. The Mortgage Tax ​ The mortgage tax or in Italian “imposta ipotecaria” is also a fixed that varies from 50€ (if you purchase a house from a private seller) to 200€ (if you purchase the house from a registered company in Italy). ​ 4. VAT Tax The VAT (value added tax) or IVA, as it is called in Italian, is due on every purchase, and house is no exception.  If you’re buying from a private seller, no VAT is due; however varies from 4% to 22% in case you purchase from a registered company. This tax varies according to the fact whether you are buying a primary house (4%) a secondary one (10%) or a luxury one (22%). 5. Capital gain Tax The capital gain tax or plusvalenza is proportional to the capital gains you the seller receive from selling the property. It is a tax that only affects the seller.  Here are three aspects to consider about this tax: This tax is not due if you have owned the place for more than 5 years. If you are not resident in Italy you may have to pay this tax in your country. In all the other cases, you will have to pay around 26% on the net profit of the house; to calculate this you should detract from the profit the taxes, agency and building works you have done on this house. You may need an accountant to help you calculate those.   There are many exemptions on this tax and in most of the cases you will not have to worry about it. This taxation of capital gains from the sale of properties, was applied to avoid the purchase of a house for speculative purposes only. 6. Notary costs In Italy, as in many countries you need a notary to validate the purchasing contract and check that everything is 100% legally compliant. It is not a tax, but it is a cost you have to take into consideration. Notary costs can vary according to the type of purchase you make. Is the property residential, commercial or are you changing the destination of usage of the property before the purchase? Is there any lease on the property? This may affect the costs related to hiring a notary. For registering the purchase of a house the costs of a notary, in general are no less than 1000€ or 1% of the transaction value. 7. Agency fee ​ If you are purchasing the house from a real estate agency, keep in mind you will have to pay a certain percentage of the transactions to the real estate agency which negotiates the deal. On average the percentages of real estate agencies in Italy for the buyer, vary from 1% to 5% depending on the company.   A useful scheme to understand all the taxesHere in this table you can find all the costs connected with the purchase of a property in Italy. Foto Cost and Taxes ​related to owning a house in Italy The cost of maintaining a property in Italy is much easier to calculate. They are: IMU, Tasi e Tari and together are called IUC, “imposta unica comunale” or in English single municipal tax. 1. IMU Once called ICI, IMU is the regular property Italian tax, like in many other countries.  If your property in Italy is your main residence, and you live here for more than 6 months in a year then you do not have to pay this tax. However if the house is categorized as luxury, you should pay it anyway, regardless the fact that is your main residence.So, also if the property in Italy is your second house, you should pay this tax.  It is around 5% of the catastral value of the house plus a 5% multiplied by a coefficient that varies from city to city.  In general on average it is 1,06% of the cadastral value revalued. The municipality where your property is located will not send you a bill at home but they will only notify you of the deadline and the coefficient used. To perform the calculation and the actual payment you may need to discuss that with your accountant. 2. TASI ​ This is the tax regarding the services provided by the town hall or in Italian “municipio”. It varies from town to town and it does not exist in the autonomous province of Trento and Bolzano. Even if you decide to rent your place for the time you do not live in your house in Italy, this tax is still your responsibility. Therefore you may want to include these costs inside the rent. 3. TARI This is the tax regarding the waste collection. It should be paid only once in a year and it includes a fixed fee based on the square meters of the house, and the number of people living in that place. For this tax you will receive a letter straight at your house address. When to pay them IMU should be two times per year. The first deadline is in June while the second is in December. As IMU also TASI needs to be paid both in June and December. ​ Useful tips Consider also that those taxes may vary according to the type of property you have.  ​In the table below, you can find more about this specifics. Foto Final consideration These are the main taxes you should know about in Italy. Relax, Do not panic and study them!  Furthermore, there may be many exemptions and state incentives when buying as well as maintaining a house in Italy depending on the type of property and its conditions.  Ask always the type of property your house is classified with to your accountant and what is the most convenient use of your property, taking into account your situation.  If you are buying a house in Italy, we strongly advise you to ask about these taxes to your seller. Most of the taxes mentioned here, can now be paid online without much hustle. If you are planning to rent your property in Italy or running a short term rental business in Italy, check also my article about how to run an airbnb in Italy.  If you want to learn more about this topic I suggest you to check out my book “The Italian Home buyer’s guide: the definitive guide for English speakers, expats, and non-Italian residents to owning property in Italy".   Check out also our articles about filing your taxes in Italy, or airbnb taxes in Italy, or our guide for retiring in Italy.
The cadastral value of many Italian properties is still much lower than the actual market value, since the calculation is actually re-done when it is time for the property to be sold, and many houses have had the same owner since decades. The cadastral value is set up in the deed of sale of the house.
The deed (in italian “rogito”), or public deed of sale, is basically the contract by which the transfer of ownership of the house is formalized and the price that the buyer paid to the seller to insure it.

2. Land registry Tax

The land registry tax or in Italian “imposta catastale” is a fixed fee that varies from 50€ (if you purchase a house from a private seller) to 200€ (if you purchase the house from a registered company in Italy).
This is due in order to change the ownership of the property in the cadastral lists.

3. The Mortgage Tax ​

The mortgage tax or in Italian “imposta ipotecaria” is also a fixed that varies from 50€ (if you purchase a house from a private seller) to 200€ (if you purchase the house from a registered company in Italy). ​

4. VAT Tax

The VAT (value added tax) or IVA, as it is called in Italian, is due on every purchase, and house is no exception.
If you’re buying from a private seller, no VAT is due; however varies from 4% to 22% in case you purchase from a registered company. This tax varies according to the fact whether you are buying a primary house (4%) a secondary one (10%) or a luxury one (22%).

5. Capital gain Tax

The capital gain tax or plusvalenza is proportional to the capital gains you the seller receive from selling the property. It is a tax that only affects the seller.
Here are three aspects to consider about this tax:

  1. This tax is not due if you have owned the place for more than 5 years.
  2. If you are not resident in Italy you may have to pay this tax in your country.
  3. In all the other cases, you will have to pay around 26% on the net profit of the house; to calculate this you should detract from the profit the taxes, agency and building works you have done on this house. You may need an accountant to help you calculate those.
  4. There are many exemptions on this tax and in most of the cases you will not have to worry about it.
  5. This taxation of capital gains from the sale of properties, was applied to avoid the purchase of a house for speculative purposes only.

6. Notary costs

In Italy, as in many countries you need a notary to validate the purchasing contract and check that everything is 100% legally compliant.
It is not a tax, but it is a cost you have to take into consideration.
Notary costs can vary according to the type of purchase you make. Is the property residential, commercial or are you changing the destination of usage of the property before the purchase? Is there any lease on the property? This may affect the costs related to hiring a notary. For registering the purchase of a house the costs of a notary, in general are no less than 1000€ or 1% of the transaction value.

7. Agency fee ​

If you are purchasing the house from a real estate agency, keep in mind you will have to pay a certain percentage of the transactions to the real estate agency which negotiates the deal. On average the percentages of real estate agencies in Italy for the buyer, vary from 1% to 5% depending on the company.

A useful scheme to understand all the taxesHere in this table you can find all the costs connected with the purchase of a property in Italy.

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Cost and Taxes ​related to owning a house in Italy

The cost of maintaining a property in Italy is much easier to calculate. They are: IMU, Tasi e Tari and together are called IUC, “imposta unica comunale” or in English single municipal tax.

1. IMU

Once called ICI, IMU is the regular property Italian tax, like in many other countries.
If your property in Italy is your main residence, and you live here for more than 6 months in a year then you do not have to pay this tax.
However if the house is categorized as luxury, you should pay it anyway, regardless the fact that is your main residence.So, also if the property in Italy is your second house, you should pay this tax.
It is around 5% of the catastral value of the house plus a 5% multiplied by a coefficient that varies from city to city.
In general on average it is 1,06% of the cadastral value revalued.
The municipality where your property is located will not send you a bill at home but they will only notify you of the deadline and the coefficient used.
To perform the calculation and the actual payment you may need to discuss that with your accountant.

2. TASI ​

This is the tax regarding the services provided by the town hall or in Italian “municipio”. It varies from town to town and it does not exist in the autonomous province of Trento and Bolzano.
Even if you decide to rent your place for the time you do not live in your house in Italy, this tax is still your responsibility. Therefore you may want to include these costs inside the rent.

3. TARI

This is the tax regarding the waste collection. It should be paid only once in a year and it includes a fixed fee based on the square meters of the house, and the number of people living in that place.
For this tax you will receive a letter straight at your house address.

When to pay them

IMU should be two times per year. The first deadline is in June while the second is in December.
As IMU also TASI needs to be paid both in June and December. ​

Useful tips

Consider also that those taxes may vary according to the type of property you have.
​In the table below, you can find more about this specifics.
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Final consideration

These are the main taxes you should know about in Italy.
Relax, Do not panic and study them!

Furthermore, there may be many exemptions and state incentives when buying as well as maintaining a house in Italy depending on the type of property and its conditions.
Ask always the type of property your house is classified with to your accountant and what is the most convenient use of your property, taking into account your situation.
If you are buying a house in Italy, we strongly advise you to ask about these taxes to your seller.
Most of the taxes mentioned here, can now be paid online without much hustle.
If you are planning to rent your property in Italy or running a short term rental business in Italy, check also my article about how to run an airbnb in Italy.

If you want to learn more about this topic I suggest you to check out my book “The Italian Home buyer’s guide: the definitive guide for English speakers, expats, and non-Italian residents to owning property in Italy”.

Check out also our articles about filing your taxes in Italy, or airbnb taxes in Italy, or our guide for retiring in Italy.

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