Thursday, 02 October 2025
Italy’s allure for property buyers stretches far beyond charming architecture and Mediterranean sunshine. In the first half of 2025, the share of homes sold to international buyers rose from 11.3 percent to nearly 19.6 percent, a clear sign of growing foreign interest. Buyers are drawn to Italy’s exceptional quality of life, rich culture, and lifestyle centred around wellbeing.
Market dynamics also favor non-residents: house prices are rising steadily but remain relatively affordable in many regions, especially in southern Italy, where prices can be as low as €948 per square metre compared to over €5,532 in Milan. Meanwhile, mortgage rates have dropped to around 3.2–3.8 percent, improving accessibility for foreign buyers.
But navigating Italy’s property landscape requires more than enthusiasm; it demands a clear understanding of taxes. Knowing the taxes involved helps avoid unexpected costs and ensures informed, financially safe decisions.
Foreign buyers of Italian property should understand that taxes fall into two main types: one-off transaction taxes and recurring ownership taxes. The main categories of taxes for property owners include:
National-level taxes, such as VAT, are applied uniformly across Italy. However, the rate or application can change depending on the property’s type and intended use.
Local taxes, like IMU and TARI, are decided by individual municipalities within national guidelines. This means two properties of the same size and value could have different tax obligations simply because they are in different towns.
Buying a property in Italy involves more than just agreeing on a purchase price. For non-residents in particular, the Italian tax system imposes several transaction-related charges that must be paid before the sale is finalized. These include registration tax (stamp duty), mortgage tax, land registry tax, and, in some cases, value-added tax (VAT).
The primary tax on a property transaction in Italy is the registration tax, commonly referred to as the imposta di registro. When buying from a private seller, non-residents purchasing a second home usually pay 9% of the property’s cadastral value, with a legal minimum of €1,000. Italian tax residents purchasing a primary residence benefit from a reduced rate of 2%, again with a minimum of €1,000.
Alongside registration tax, buyers must also pay a mortgage tax (imposta ipotecaria) and a land registry tax (imposta catastale). When purchasing from a private seller, both of these are charged as fixed amounts of €50 each. If the purchase is from a registered company, the amounts increase to €200 each.
For purchases from a registered company, VAT often applies instead of the standard registration tax. VAT is charged at different rates depending on the property’s classification: 4% for a primary residence, 10% for most second or holiday homes, and 22% for luxury properties.
The difference between cadastral value and market value plays a central role in the Italian property tax system. While market value reflects the actual price paid between buyer and seller, cadastral value is calculated using official coefficients applied to cadastral income.
The taxes and fees due at the time of purchase can significantly increase the total cost of buying property in Italy. Depending on the property type, location, and whether VAT or registration tax applies, upfront costs may range from 2% to 9% of the cadastral value, or even up to 22% of the purchase price for high-end properties.
The property’s intended use also has a strong impact on costs. Buyers of primary residences often enjoy lower tax rates, exemptions from certain annual property taxes, and, in some cases, reduced VAT. Second homes, holiday homes, and luxury properties, by contrast, attract higher registration or VAT rates and will incur ongoing annual charges such as IMU and the waste collection tax (TARI).
Inheritance taxes may apply if the property is transferred to heirs, while wealth taxes could be relevant for high-value holdings. For Italian tax residents, additional obligations such as foreign asset reporting and taxes on overseas real estate or financial assets (IVIE and IVAFE) must be factored into overall tax planning.
Owning property in Italy comes with ongoing financial obligations, especially for non-resident property owners. Two of the most important annual charges are IMU and TARI. These are calculated based on the property’s cadastral value, classification, and the local tax rate set by the municipality.
IMU applies to second homes, luxury properties, commercial buildings, and land. Primary residences are generally exempt unless they fall into luxury categories A1, A8, or A9. For non-resident owners, such as those with a holiday home, IMU is often the largest annual property tax.
The calculation starts with the property’s cadastral income, which is increased by 5%. This figure is then multiplied by a coefficient determined by the property type, for example, 160 for standard residential buildings or between 55 and 140 for commercial or industrial properties. The result is multiplied by the municipal IMU rate, which typically ranges from 0.46% to 1.06%. The formula can be expressed as:
Cadastral income × 1.05 × coefficient × municipal IMU rate = IMU due
Non-residents must pay IMU regardless of where they live. Late payments can lead to penalties from the Italian tax authorities. This is a wealth-based tax, meaning exemptions related to income or tax residency do not apply.
TARI covers municipal waste disposal services and is payable by anyone occupying or owning the property, regardless of whether it is a primary residence, rental, or holiday home. The tax is generally made up of a fixed component per occupant and a variable rate based on the property’s floor area. Some municipalities adjust TARI based on waste volume or collection frequency.
IMU and TARI are billed directly by the municipality. Payment schedules, methods, and calculation rules can differ from one location to another. Non-resident property owners should ensure they are registered with their Comune and consider engaging a tax professional to manage deadlines and avoid penalties.
IMU is typically paid in two instalments, half by mid-June and the remainder by mid-December. Payments are usually made using the national F24 form or local payment slips. Deadlines are set at the national level but may vary slightly depending on the municipality.
Whether you ownproperty in Italy, be it a primary residence or a second home, can significantly affect your tax obligations. This distinction determines if you must pay the municipal property tax (IMU) and at what rate.
If a property is your primary residence and you are an Italian tax resident, you are generally exempt from IMU unless the home falls into a luxury category such as A/1, A/8, or A/9. To qualify, you must register the property as your main address with the local registry (Anagrafe) and ensure it is correctly reported in your tax return. Residency status is key. Non-residents cannot claim this exemption even if they consider the property their main home. Establishing local residency is, therefore, an important part of tax planning for those seeking these benefits.
Renting out property in Italy comes with specific tax obligations for non-resident owners. These include income tax on rental earnings and ongoing local property taxes such as IMU and TARI.
All rental income from Italian property, whether from short-term or long-term leases, must be declared to the Italian tax authorities. This is done through the annual tax return (Modello Redditi PF), where you also choose the applicable taxation method.
Non-residents can opt for the Cedolare Secca flat tax regime, which applies a rate of 21% on most long-term residential leases. Short-term rentals may be taxed at 26% under certain conditions. If Cedolare Secca does not apply, the income is taxed under Italy’s progressive IRPEF system, which ranges from 23% to 43% plus regional and municipal surcharges.
When using platforms like Airbnb or Booking.com, a 21% withholding tax is often deducted and paid directly to the Italian Revenue Agency. This withheld amount must still be reported in your Italian tax return. If your home country has a tax treaty with Italy, you may be able to claim a credit to avoid double taxation.
Rental properties are also subject to IMU and TARI, as explained above, with specific rules depending on the lease agreement.
Understanding when you must pay capital gains tax in Italy and how much is due can significantly influence the tax implications of selling your property. This section explains when capital gains become taxable for non-resident property owners and how treaties or residency status can affect the amount you pay.
In Italy, a capital gain is the profit made by selling a property, calculated as the difference between the sale price and the original purchase cost plus eligible expenses such as notary fees, agent commissions, and transaction costs. If you sell within five years of purchasing property, the capital gain is generally taxable unless the property was your main residence for most of that period or was inherited.
For non-resident property owners, capital gains from sales after five years are typically exempt under Italian tax law. The same exemption often applies when selling a primary residence. For companies or foreign entities, different rules may apply. Corporate capital gains are usually taxed under IRES, the Italian corporate income tax, rather than the personal flat rate. These differences reflect how Italian tax residency affects the classification and treatment of capital gains.
When capital gains are taxable in Italy, the standard flat rate for individuals, whether resident or non-resident, is 26% of the gain amount. This rate is applied to the difference between the sale and purchase prices after deducting documented acquisition costs.
Tax treaties between Italy and other countries may reduce or eliminate double taxation. In some cases, Italian property gains are taxed only in Italy, while in others they are taxed only in the seller’s home country, depending on the treaty terms.
Non-resident property owners in Italy are taxed only on income and assets sourced within Italy, unlike Italian tax residents who are taxed on worldwide income. Common obligations for non-residents include paying Italian municipal property tax on owned real estate, income tax on rental earnings, and any other applicable annual property taxes.
Foreign asset reporting requirements, such as declaring overseas financial accounts or properties, generally apply only to Italian tax residents. Non-residents are usually not required to file the RW section of the Italian tax return.
When a tax return is required, it must be filed according to deadlines set by the Italian Revenue Agency, typically in November of the year following the tax year. Key taxes to monitor include IMU, rental income tax, and any capital gains tax from property sales.
There are also regional incentives. Retirees who move to certain municipalities in Southern Italy with fewer than 20,000 inhabitants may qualify for a 7 percent flat tax on foreign pension income for up to 10 years, which can significantly reduce the overall tax paid.
In addition, the flat tax regime offers exemptions from gift and inheritance tax on assets held abroad, as well as relief from reporting obligations and wealth taxes such as IVIE and IVAFE.
The land registry tax, known in Italian as imposta catastale, is required to officially record property ownership in the national cadastral system managed by local Catasto offices. This registry is essential for determining property tax assessments and ensuring clear legal ownership. The mortgage tax (imposta ipotecaria) records any mortgage or encumbrance on the property, helping establish the legal chain of title. The cadastral value recorded in the registry is a key figure in calculating transaction taxes and future annual property taxes, as it reflects an assigned fiscal value rather than the market price.
Foreign buyers must account for both one-time purchase taxes like registration, land registry, mortgage, or VAT, and ongoing obligations like IMU and TARI, when purchasing property in Italy. Careful tax planning helps avoid fines, interest charges, or other penalties that can arise from non-payment or late filing. For non-resident property owners, staying compliant and informed about tax obligations is essential for protecting investments, ensuring smooth ownership transitions, and making the most of available tax benefits within the Italian legal framework.
Owning property in Italy is more than a financial investment; it is a step into a lifestyle shaped by history, culture, and opportunity. Understanding the Italian tax system is essential for making that step wisely. From purchase taxes to ongoing obligations like IMU and TARI, careful planning ensures that your ownership experience remains smooth and compliant. Each regulation, calculation, and deadline plays a role in protecting your rights and avoiding costly surprises.
Aprigliano International Law Firm is committed to helping foreign buyers navigate every stage of purchasing and owning property in Italy. Our team provides precise, up-to-date guidance on tax obligations, legal requirements, and strategic planning, ensuring you can enjoy your Italian property with peace of mind.
Contact Aprigliano Law Firm for tailored advice on property taxes in Italy.
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