Property tax in Italy

Property tax in Italy

Purchasing real estate in a foreign country entails being well aware of what you’re looking at in terms of investment. That is, what your expenses, in addition to the property’s own cost, will be. Namely? Taxes. Buying property in Italy makes no exception: having a clear vision, unequivocal information about the local rules, and a good set of close-to-definite figures is crucial. 

Whatever your dream Italian abode looks like, independently of whether you’re buying a vacation home for your family or you’re in for a business venture, you need to be able to have a comprehensive view of Italian property taxes. And possibly know the facts about rental income taxation too.

As concerns property ownership in Italy Italian taxes are municipal taxes, not state taxes. In detail these are:

1)TARI, i.e. Tassa sui Rifiuti, literally Tax on Waste

  • Who – anyone who owns property anywhere in Italy
  • How much – the amount due for this are subject to variables – different areas, towns, city center, countryside etc.. – as it is defined by single municipality’s legislation. In all cases the amount is calculated based on the property’s size and characteristics. How it is notified: the municipality in charge sends property owners a letter exacting the due TARI payment. The letter is sent by regular may to the taxed property’s address. 
  • How often – your TARI tax will be due in full once a year, but may often be paid by installments.

2) IMU, i.e. Imposta Municipale Unica, literally Sole Municipal Tax, which is an actual property ownership tax. 

  • Who – owners who do not select this home as their primary residence. All proprietors who decide the property in question is their main residence IMU exempt. In a nutshell? If you buy a home and designate it as your primary residence within 18 months from the date of purchase you will not be charged for the IMU tax. The tax will be charged if the property owned is a “second home”, if it is categorized as “luxury property” and/or in case the owner decides to rent the property out. 
  • How much – the total amount of IMU tax due is calculated taking a variety of diverse factors, some of which definitely quixotic, into consideration. This means that even the most discerning and careful Italian proprietors have a (very) hard time determining it on their own.

Let’s look the calculation process over.

The computation starts from a specific property’s cadastral value, i.e. the taxable value established by the Italian Land Registry Office (Catasto) assigned according to location, type of property, year of building, surface and size. Location and overall surface are also variables involved. All Italian properties are registered at the Catasto, the Land Registry Office,. As such each is given a specific numerical value. This number is determined multiplying the cadastral value (as per Land Registry records) revalued by 5% by one of the following coefficients:

  • 60 for buildings included in cadastral group A (excluding those A / 10) and in categories C / 2, C / 6 and C / 7
  • 140 for the buildings registered in cadastral group B and in categories C / 3, C / 4 and C / 5
  • 80 for buildings included in cadastral categories A / 10 and D / 5
  • 60 for buildings belonging to cadastral group D (excluding category D / 5). The multiplier is raised to 65 as of 1 January 2013
  • 55 for buildings included in cadastral category C1

This to say that ascertaining one’s prospective IMU tax duties is definitely not a piece of cake. Also, property owners aiming to purchase real estate in Italy to rent it out should keep in mind they will also be required to declare their rental income. This is done at the local Revenue Office, i.e. the Italian Agenzia delle Entrate. To declare his/her rental income the owner must fill in and submit a tax return, and, further to the submission, comply with tax duties as demanded. 

All will agree that guesstimates are no good. A foreign buyer who does not wish to appoint the Italian property as primary residence must have a reliable estimate of taxes that will be due. A prospective investor needs to be able to appraise his/her venture before signing up for it, just as a prospective landlord wants to have an idea of future income taxes due.

Being able to count on the proficient assistance of experienced, reliable, esteemed Italian professionals is essential.
Offering comprehensive expertise in all fiscal and legal aspects buying real estate involves, our team provides the local knowledge and insight a foreign buyer needs to get around the hazy Italian bureaucratic apparatus. Dedicated to our clients’ satisfaction we calculate IMU and TARI tax rates in advance, ensuring an all-round vision of their desired investments. If possible we also estimate income tax rates and ascertain for standing international agreements for double taxation relief. Our qualified accountants offer competent fiscal advice and bookkeeping services, draft and submit tax returns, allowing foreign proprietors to enjoy the profits of landlordship problem-free.

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