Do you have a property in Italy? Or are you planning to buy one?
Italian real estate sector has boomed in thepast yearsdue to the rise of airlines coming to Italy, the decrease in travel prices, and arailway systemthat has been improved a lot in the last decade making traveling through cities fast and affordable.
Here in this article you can find usefultipsandsuggestionsof what you can expect when buying and maintaining a house in Italy.
Table of Contents
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 thetypeofproperty, itscondition, and itspurpose; 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 isbetween 2% and 9%of thecadastral valueof 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 providedby a registered companyin Italy the tax will only amount to200€.
You also have the option to declare to theRevenue Agencythat you will become resident within 18 months from the purchase.
Here is a useful scheme provided byGateaway:
The cadastral value of many Italian properties is still much lower than theactual 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. Thecadastral valueis set up in the deed of sale of the house.
Thedeed(in italian “rogito”), orpublic deed of sale, is basically the contract by which the transfer of ownership of the house is formalized and the price that thebuyer paidto 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 theownership of the propertyin 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
TheVAT(value added tax) orIVA, as it is called in Italian, is due on every purchase, and house is no exception.
If you’re buying from a private seller, noVATis due; however varies from4% 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 aluxuryone (22%).
5. Capital gain Tax
Thecapital gain taxorplusvalenzais 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 isnot dueif you have owned the place formore 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 payaround 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 manyexemptionson 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 is100% legally compliant.
It is not a tax, but it is a cost you have to take into consideration.
Notary costs can vary according to thetype of purchaseyou make. Is the property residential, commercial or are you changing the destination of usage of the property before thepurchase? 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 than1000€ or 1% of the transaction value.
7. Agency fee
If you are purchasing the house from areal 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 from1% 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.
Cost and Taxesrelated to owning a house in Italy
The cost of maintaining a property in Italy is much easier to calculate. They are:IMU, Tasi e Tariand together are called IUC, “imposta unica comunale” or in English single municipal tax.
1. IMU
Once called ICI, IMU is theregular 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 asluxury,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 is1,06% of the cadastral value revalued.
The municipality where your property is located willnot send youa 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 thetown hallor 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 thewaste 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 inJunewhile the second is inDecember.
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.
Property taxes in Italy for non residents
Property taxes in Italy for non-residents who own property can be complex and vary based on the location and nature of the property. The main tax that non-resident property owners must pay is the Imposta Municipale Unica (IMU), which is a local property tax calculated based on the value of the property and the local tax rate. The IMU is due twice a year, in June and December, and the amount varies depending on the value of the property and the location.
Non-resident property owners may also be subject to the Tributo per i servizi indivisibili (TASI), a tax on services provided by the local government. The TASI is also calculated based on the value of the property and the local tax rate and is due in June and December.
In addition to the IMU and TASI, non-resident property owners who earn rental income from their property in Italy may be subject to income tax. This tax is levied on the net income earned from the rental property, and the rate varies depending on the amount of income earned.
It’s important for non-resident property owners in Italy to understand the tax laws and regulations, and it’s recommended to seek the advice of a tax professional to ensure compliance and minimize tax liability.
Final consideration
These are the main taxes you should know about in Italy.
Relax, Do not panic and study them!
Furthermore, there may be manyexemptionsand state incentives when buying as well as maintaining a house in Italy depending on the type of property and its conditions.
Ask always thetype of propertyyour house is classified with to your accountant and what is themost convenientuse of your property, taking into account your situation.
If you are buying a house in Italy, we strongly advise you toaskaboutthese taxesto yourseller.
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 abouthow to run an airbnb in Italy.
If you want to learn more about this topic I suggest you to check out my book“TheItalian 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 aboutfiling your taxes in Italy, orairbnb taxes in Italy, or our guide forretiring in Italy.
