Buying a property in Italy is a dream for many, drawn by the incomparable lifestyle, rich culture, and attractive opportunities. However, for this investment to be truly successful, it is crucial to understand the local tax system. Understanding the various property taxes in Italy is not just a formality but a key element of financial planning that can save you thousands of euros and future headaches. Whether you are buying a holiday home, a buy-to-let apartment, or a villa for permanent residence, this guide will walk you through all the stages – from the initial fees at acquisition to the annual obligations as an owner.
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Taxes on Buying a Property in Italy
The first step towards your property in Italy involves one-off taxes and fees paid at the time of the transaction. Their amount primarily depends on two factors: whether you are buying from a private individual or a construction company, and whether the property will be your main residence (“prima casa”) or a second/holiday home (“seconda casa”).
Imposta di Registro, Ipotecaria e Catastale: The Standard Transfer Taxes
This is the most common scenario when buying a property from a private individual. The liabilities are calculated on the property’s cadastral value (Valore Catastale), which is usually significantly lower than the market price.
- Imposta di Registro (Registration Tax):
- 2% of the cadastral value if the property is a “prima casa” (first home). To benefit from this rate, you must register your residency in the municipality within 18 months of purchase.
- 9% of the cadastral value if the property is a “seconda casa” (second home).
- Imposta Ipotecaria (Mortgage Tax): A fixed fee of €50.
- Imposta Catastale (Cadastral Tax): A fixed fee of €50.
These fees are paid to the notary at the time of signing the final deed of sale (Rogito). You can find more information on the necessary paperwork in our complete guide to the documents needed to buy property in Italy.
VAT (IVA) when Buying from a Developer
If you are buying a new build or a property that has been substantially renovated by a construction company within the last 5 years, you will have to pay VAT (IVA) instead of the Imposta di Registro. In this case, the tax is calculated on the sale price, not the cadastral value.
- VAT (IVA):
- 4% of the sale price if the property is a “prima casa”.
- 10% of the sale price if the property is a “seconda casa”.
- 22% for luxury properties (cadastral categories A/1, A/8, A/9).
In this scenario, the Imposta di Registro, Ipotecaria, and Catastale are fixed at €200 each.
Annual Property Ownership Taxes
Once you become an owner, annual obligations arise that are the responsibility of every property holder in Italy.
IMU (Imposta Municipale Unica): Property Tax
IMU is the municipal property tax, similar to council tax in the UK. The most important thing to know is:
- Exemption: Properties declared as “prima casa” (main residence) are completely exempt from IMU, unless they fall into the luxury categories.
- Payment: For all other properties (“seconda casa”), IMU is mandatory.
- Rate: The base rate is 0.86%, but each municipality has the right to adjust it, typically within a range of 0.76% – 1.06%. The tax is calculated on the cadastral value, revalued by 5%.
Payment is made in two installments – by June 16th and December 16th.
TARI (Tassa sui Rifiuti): Waste Tax
TARI is the tax for waste collection and disposal and is mandatory for all property owners, regardless of whether it is a “prima casa” or “seconda casa”.
- Calculation: The amount of TARI depends on the municipality and is based on the property’s square footage and the number of occupants.
- Payment: It is usually paid in several installments throughout the year, according to a notice sent by the municipality.
Tax on Rental Income (Cedolare Secca)
If you decide to rent out your property, you must pay tax on the income generated. Italy offers an extremely favorable flat-rate tax regime called “Cedolare Secca”. This is a substitute tax that replaces all other taxes on rental income.
- Rate:
- 21% for standard rental contracts.
- 10% for certain contracts in municipalities with high population density.
- Benefits: By choosing this regime, you do not pay the Imposta di Registro and Imposta di Bollo when registering the rental contract.
This simplified regime makes investing in a buy-to-let property in Italy particularly attractive. For more information on the sales process and related taxes, you can read our article on how to sell a property in Italy as a foreigner.
Conclusion: Plan Smartly for a Secure Investment
Navigating the system of property taxes in Italy may seem complex at first, but with the right preparation, it is entirely manageable. The key points are to distinguish between buying from a private party and a company, to be clear about your property’s status (“prima casa” or “seconda casa”), and to budget for the annual IMU and TARI expenses. Italy offers significant relief for main homes and an attractive regime for rental income, making it a stable and predictable market for foreign investors. Always consult with a local accountant (commercialista) or notary to ensure you comply with all legal requirements.
For more information on the general process, check out our guide Buying a Property in Italy: What You Need to Know.
This post is also available in: Български
