Italy is one of the most attractive countries in Europe for buying property. Its favourable climate, rich history, developed infrastructure and high standard of living attract both investors and those looking for a second home on the coast or in a picturesque village. But before buying it is important to understand the tax system: in Italy property taxes depend on many factors – from the location of the object to the status of the owner.
Main property taxes in Italy
The Italian property tax system includes both one-off purchase taxes and annual ownership taxes.
- IMU (Imposta Municipale Unica) – municipal property tax
- is the main annual tax for owners of second homes and for foreigners who are not registered as permanent residents. If the property is the only dwelling in which the owner resides permanently, IMU is not levied.
The IMU rate is set by local authorities and ranges from 0.46% to 1.06% of the cadastral value of the property.
The base for calculation is the cadastral value (rendita catastale) multiplied by a correction factor (usually 160 or 168), after which the rate is applied.
- TARI (Tassa sui Rifiuti) is a tax on rubbish collection.
- This tax is paid by the person who actually lives in the property, regardless of ownership. The amount depends on the area of the property and the number of residents. On average, from 200 to 500 euros per year.
- TASI (Tributo per i Servizi Indivisibili) – cancelled in 2020.
- previously supplemented the IMU tax and was used to pay for local services such as lighting and roads. From 2020 its functions are included in the IMU.
- taxes on the purchase of property
- The amount of tax depends on the seller (natural or legal person) and whether the dwelling will be the main residence:
When buying from a private individual:
- 2% of the cadastral value – if it is a primary residence for a resident buyer.
- 9% if it is a secondary or investment property.
- When buying from a property developer:
- 10% VAT, plus fixed registration fees (€200 each).
Also pay cadastral and mortgage fees – 50 euros each.
Features for non-residents
Foreigners are free to buy property in Italy. However, there are a few important nuances:
If you are not registered as a resident, the IMU tax is charged even on a single object.
Property status is not determined by citizenship, but by the fact of registration in the municipality (residenza anagrafica).
If the property is rented out, rental income is subject to mandatory declaration and taxation:
Under the simplified scheme cedolare secca – 21%,
Or at the progressive income tax rate: from 23% to 43%.
Examples of calculation
A flat in Rome bought by a German citizen for holiday purposes:
- Cadastral value:80,000 Euros
- IMU at a rate of 1%: approx. 1,280 Euros per year
- House in Tuscany, rented out:
- IMU + TARI:€1,500 to €2,000 per year
- Plus tax on rental income:21% or scale
Conclusion
Italy’s property tax system requires attention and calculation. The main annual costs are IMU and TARI, and there are significant one-off charges on purchases. In the case of renting or resale – additional income taxes. It is therefore advisable to consult an Italian lawyer or accountant before agreeing to a contract to avoid surprises and penalties.