Property tax in Italy

Whether you’re an Italian citizen, expat or simply a UK resident looking for a holiday home - there’ll be a number of bills to pay the government

What is property tax in Italy?

Generally speaking, property tax is any tax paid on real estate. It can be split into two broad categories :

Sales taxes: one-off costs paid when a property changes hands

• Registration tax/stamp duty (imposta di registro)

• Land registry tax (imposta catastale)

• Mortgage tax (imposta ipotecaria)

• VAT (IVA)

• Capital gains tax (Plusvalenza )- only affecting the seller

Maintenance taxes: property tax paid regularly by the owner or occupier.

• Property ownership tax (Imposta Municipale Unica or IMU)

• Waste collection tax (TARI)

Who must pay property tax in Italy?

Buyers pay most sales taxes in Italy, although sellers may have to pay capital gains tax as well as VAT on some fees. Maintenance taxes are generally in the hands of the owner.

There are no restrictions on foreigners buying property in Italy, but all property owners need to pay taxes.

Italian property taxes for foreigners tend to be higher in some categories, and also vary depending on other factors such as:

• Whether you live in the municipality your property is located in

• Whether the property is a first or second home, holiday home or investment, or your main residence.

• What type of property you’re purchasing and its value.

What’s the cadastral value of a property?

Before looking at property taxes in Italy, it’s important to familiarise yourself with the concept of ‘cadastral value’ (valore catastale)

Every property is given an official “valore catastale” based on a valuation by the local council or Comune. It’s drawn up based on the size, location and quality of the property, and will also vary according to whether the property is used as a main residence or a second home.

The “valore catastale” usually ends up being lower than the real sale or market value price of the property.

What should I know about paying sales tax for my property in Italy?

If you’re buying a property in Italy, you’ll be responsible for most of the sales taxes: 

Registration tax (Stamp Duty)

The Italian equivalent of the English Stamp Duty is Imposta di Registro.                 In a nutshell, this is a tax on registering a property.

• This tax is paid by the buyer.

• It’s usually calculated according to the property’s cadastral value - see above to find out how that works.

• Registration tax only applies to older properties. If you’re buying a new build, you’ll pay VAT instead.

• The rate is lower if the property will be your main home and is in your current or future “Comune” of residence. To qualify for a lower tax rate, the property can’t be classed as a ‘luxury’ home

• You’ll pay a higher rate as a non-resident, or if you’re buying the property as your second home.

• Registration tax is also due when buying land to build on, or agricultural land.

See the table below for a full breakdown of these costs.

Purchase details	Registration tax
Buying a new build property	None - pay VAT instead
Buying non-luxury property as main residence	3%
Buying second/holiday home or investment as a non-resident	7%
Buying land to build on	8%
Buying agricultural land	10%

Land registry tax

• The “imposta catastale “ (cadastral tax) is a fixed fee

• It’s payable for all property transactions, including both new builds and older properties

• The fee is between €50 & €200 for residents buying their first home

• The fee is 1% of the cadastral value for non-residents and purchases of second homes.

VAT (IVA)

Known as IVA in Italy, value-added tax is payable on some of the fees involved with property sales. If you’re buying from a private seller who isn’t registered for IVA, you won’t need to pay this tax.

But if you buy your property from an IVA-registered company or property developer, the following tax rates will be payable:

Purchase details - buying from a IVA-registered company	IVA/VAT rate
Buying your first home as a resident	4%
Buying a property as a second home, or as a non-resident	10%
Buying a property classed as a ‘luxury’ home	22%

You may also have to pay VAT on estate agency and legal fees when buying property in Italy.

Capital gains tax (Plusvalenza)

The Italian plusvalenza tax is equivalent to capital gains tax on property sales. It’s a tax paid on profits over a certain threshold made from selling a property.

• In Italy, you never have to pay capital gains tax if you’ve owned the place for more than 5 years.

• If you do sell a property that you’ve owned for less than 5 years, you should be exempt from capital gains tax if that property was your primary residence.

• If you sell a second home, rental or investment property after owning it for less than 5 years, you have to pay up to 26% on your net profit - that’s your profit minus tax and other fees, including agency fees and building works.

• If you’re not an Italian resident, it’s a good idea to check whether you have to pay UK tax on Italian property you’ve sold, even if you don’t have to pay it in Italy.

Paying maintenance taxes for your property in Italy

Unlike other one-off property taxes in Italy that are payable when a house is sold, maintenance taxes are ongoing charges that all property owners must pay.

There are two main types of annual property tax in Italy you need to know about: 

IMU (Imposta Municipale Unica)

The principal maintenance tax in Italy is known as Imposta municipale unica, or IMU.

• IMU is a property ownership tax, so it’s the owner’s responsibility (unlike, for example, UK council tax).

• If the property is your main residence, you don’t have to pay IMU.

• The exception to this is if the property is a luxury residence - then, you still have to pay.

• The rate is determined by the cadastral value of the property.

• The IMU rate is approximately 0.4- 0.76%, although the exact percentage can be set by the local municipality.

• It’s payable twice a year - in June and December.

Waste collection tax (Tassa sui rifiuti or TARI)

This tax covers the cost of services like rubbish collection and street cleaning.

• Unlike the maintenance tax above, this one is the responsibility of the occupier rather than the owner.

• The rate is set by the municipality and depends on the size of the property, as well as the number of people living there.

• You should receive a bill for this tax.

What other fees are there when buying property in Italy?

This is just a selection of the other fees you’ll face when buying, selling or maintaining a property in Italy. The whole set of fees will vary from case to case.

Notary fees

The notary (Notaio) is a crucial figure in Italian property transactions, facilitating the entire sale and working with both buyer and seller. They take a fee of around 1% - 2.5%.

Agency fees

Both the buyer and the seller generally have to pay the estate agent. The fees are around 1.5% to 4% on each side, plus VAT in most cases.

Other fees

You may face a range of other fees, especially at the buying stage. For example, you could rack up legal fees, costs for technical reports and surveys, and additional registration fees. 

Are there any property tax deductions I can claim in Italy?

Here are a few cases where you might be able to pay less tax:

• As explained above, buying from a private seller rather than a company means not having to pay VAT on the sale price. However, you will still pay stamp duty instead.

• You don’t have to pay plusvalenza (capital gains tax) on a sale if you’ve owned the property for more than 5 years when the sale is completed, or if the property is your primary residence.

• If you’re going to be a resident in the property, you’ll usually pay lower tax rates when buying. And you’ll also have to pay a lot less in maintenance taxes if the property is your primary residence.