PROPERTY TAXES

Before purchasing any property, it is very important to be aware of the impact of taxation at purchase, on property and on the income generated. I made this brief guide to explain the main taxes to be paid
TAXATION AT PURCHASE

The impact of taxation at purchase varies whether the seller is a company or a private individual, and whether the buyer elects the property as his/her main residency.
In case the residential property is purchased from a private individual and the buyer elects the property as his/her main residence, the following taxes are due:

  • Imposta di registro € 50
  • Imposta ipotecaria € 50
  • Imposta catastale € 50

The purchase is VAT exempt.
If the the residential property purchased cannot be elected as main residency, the same taxes apply, but in different amounts:

  • Imposta di registro 9% of the value
  • Imposta ipotecaria € 50
  • Imposta catastale € 50

This purchase is also VAT exempt.

PROPERTY PURCHASED FROM A COMPANY
If the residential property will be elected as main residency, the taxes due are as follows:

  • VAT 4%
  • Imposta di registro € 50
  • Imposta ipotecaria € 50
  • Imposta catastale € 50

The VAT is then augmented if the the residential property purchased cannot be elected as main residency, the same taxes apply, but in different amounts:

  • VAT 10% (22% for luxury properties)
  • Imposta di registro € 200
  • Imposta ipotecaria € 200
  • Imposta catastale € 200

REMEMBER!
In Italy any residential property can be transferred only via a notary act, thus the buyer has to pay the notary fees that can vary depending on the notary chosen. Non residential properties (up to € 100,000) can be sold through an Avvocato or a Dottore Commercialista.

TAXATION ON POSSESSION

The taxes due at possession are mainly:

  • IMU
  • TASI
  • TARI

IMU shall be paid on any property (residential or not) every year, main residency residential property are exempt from that.
TASI is paid on general services performed by the Comune, and some Comune can decide to exempt it.
Finally, TARI is the tax due on the trash collection.
IMU and TASI must be self assessed, while TARI is calculated by the Comune and sent to your address via mail.

TAXATION ON RENTAL

Taxes on rental are self-assessed in the annual return to be filed before September 30th of the following tax year.
Residential property allow two taxation option:

  • IRPEF
  • Cedolare secca

The IRPEF regime taxes the rent based on the normal brackets, allowing a 5% deduction (i.e. if your rental income in 2016 was € 12,000, you pay taxes on €11,400).
Furthermore, these contracts should pay the Imposta di bollo and Imposta di registro at the contract registration, and a yearly 2% Imposta di registro.
The Cedolare Secca tax regime is optional and shall be indicated and signed in the lease contract; this regime allows a flat 21% tax on rental income (deducted to 10% in some areas for “Canone Concordato”).
This tax regime is free of any tax at registration, can be applied only to residential properties, but disallows any tax deduction while filing taxes.

FINAL NOTE

If you decide to buy a property in Italy, I strongly suggest to get your Codice Fiscale first (click here to read about that).
In order to benefit the “Prima Casa” tax regime, you have to set your main residency in the Comune where the house is purchased and avoid to sell it within 5 years of the purchase (otherwise further taxes and penalties apply).

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