Buying property in Italy for foreigners in 2024: everything you need to know about taxes, expenses, income

Italy is, without exaggeration, a country that has everything. Beach holidays near warm, clean seas and ski resorts, a rich cultural heritage and a developed fashion and shopping industry.

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Tax on the purchase of real estate (L'imposta di Registro)

If both the buyer and the seller are two individuals and the property being sold is real estate for residential purposes, then the buyer must pay tax to the government department.

The real estate purchase tax is calculated based on the cadastral value of the property, which is usually less than the actual purchase price or its market value.

There is a tax calculation formula to determine the taxable base.

The percentage tax rate depends on the status of the buyer: resident in Italy or non-resident.

If the buyer plans to become a resident of Italy and make the property his main place of residence within 18 months from the date of purchase, then the tax is 2% of the cadastral value.

If the property will be used as a “second home”, the tax is 9%.

Typically, your real estate agent will tell you the amount of tax due.

Cost of translator services

If the buyer does not speak Italian, according to Italian law, the “notarial deed” must be translated into his native language by a licensed translator. In addition, it may be necessary to have a translator present during notarization.

Often the notary will recommend a trusted translator, and the cost of translation services will be included in the notary's estimate.

Real estate agency commission

Estate agents typically charge a commission of between 3% and 5% of the actual sale price of the property, the most common being a commission of 4% plus 22% VAT.

Annual property tax - Imposta Municipale Unica (IMU)

Property tax is paid to the local government - the "commune" - at the location. According to Italian law, local authorities can independently set the amount of tax.

If you are a resident of a "commune" or plan to become a resident within the first 18 months of purchasing the property, and the house is not a luxury property and will be used as your main residence, then no annual tax will be charged.

If the property is a luxury residence (code A1, A8 or A9) and is your main residence, you pay 60% tax.

If the property is a "second home", you pay the full tax amount.

You can ask your real estate agent to find out the IMU tax rate.

VAT (value added tax): only for new buildings (seller is a legal entity)

Buyers of new buildings are exempt from paying the L'Imposta di Registro tax, instead they pay VAT - Imposta sul Valore Aggiunto (value added tax) on the actual sale price of the property.

For buyers who will use the property as their primary residence, the tax is 4%, for non-resident buyers and those who will use the property as a second home, the tax is 10%.

If the property belongs to the elite category (code A1, A8 or A9) VAT will be 22%.

Cost of notary services
The notary's fee depends on the value of the property and the complexity of the sales contract. The cost of notary services also includes tax fees, which the notary is obliged to pay on behalf of the buyer.

As a rule, notary services for the purchase of real estate range from 800 to 5,000 euros.

When selling a home, the owner pays capital gains tax, the basis of which is the difference between the sale price and the original cost of the property.

The tax rate can be calculated according to the standard IRPEF income tax scale – 23–43%. In this case, the profit received by the owner is indicated in the tax return by including capital gains in the “other income” item.

In the second case, profits from the sale of real estate are taxed at a flat rate of 26%.

However, there are exceptions in which payment of capital gains tax is not required:

if you have owned the property for more than five years;

if you have owned the property for less than five years but served as your primary residence for most of the ownership period.

The size of utility bills in Italy varies depending on a number of factors:

Region: The cost of living, and therefore utility bills, varies significantly in different regions of Italy. For example, the cost of living in the northern regions (Lombardy, Venice) is significantly higher than in the south (Sicily, Calabria).

Size and type of housing: A small apartment in Calabria will cost you much less than an apartment in a luxury complex in Tuscany or Abruzzo.

Infrastructure: The presence of elements such as a swimming pool, concierge, garden, children's playground will significantly increase your costs.

Condominium fee:

In Italy, if you purchased an apartment in a complex, you will receive a “condominio” - an analogue of an owners’ partnership. This organization manages the common space: elevators, stairs, local area, swimming pool.

Condominium fees are divided equally among all owners.

Examples of annual payment:

Small complex (1-3 floors): 0 - 30 euros (in the absence of a swimming pool, green area, children's playground, and residents clean themselves or hire staff).

Medium complex (with minimal infrastructure): from 150 euros (elevators, green area, parking).

Developed multi-storey complex (swimming pool, concierge, garden, playground, elevators): from 500 euros

Profitability. According to the analytical publication Global Property Guide, the average yield from long-term rental housing is 6–8% per annum. However, these figures may seem somewhat optimistic.

Rent. Rental rates depend on the region, rental period and type of housing. For example, you can rent an apartment on the coast with one or two bedrooms for €600–1000 per month. Housing rates in Rome or Milan are higher – in the range of €1300–1700.

Registration tax

Paid upon registration of the lease agreement. The fee is 2% of the rental price per year. The minimum tax amount must not be less than €67. The home owner and tenant pay the fee in half.

Tax on rental income

In Italy, there are two ways of calculating taxes on rental housing: regular regime and flat rate.

In 2024, the country has three standard tax rates, which depend on the amount of income received.

Persons renting out up to four apartments for short-term rental (for a period of no more than 30 days) can choose a flat tax rate (cedolare secca) of 26%. If the owner rents out just one property for short-term rent, the tax rate is reduced to 21%.

VAT

Owner-managers who rent out four or more properties for short-term rent are required to pay value added tax (VAT) - 10% of profits.