Local property and service taxes
This article aims to provide an overview of rules pertaining to Italian property tax and legislation. We outline aspects of legislation and certain taxes which are part of the Italian Stability Law. These measures aim to lower tax burdens and bolster the Italian property market.
While the government has announced the elimination of the local property and service taxes on principal residences in Italy and added the elimination of property and regional taxes on production and fixed machinery in the agricultural sector, those who own second and or holiday homes and real estate in Italy, will still pay local property and service taxes.
We recommend that you check your Italian property tax liabilities. If you need any assistance with your particular case, our legal and tax team are here to help.
Italian Tax on Property
Currently, cadastral values of Italian properties are still much lower than market values; appraisals in use date back some years. The declared cadastral value of a property on the deed of sale (Rogito) determines the calculation (base imponibile) of Stamp Duty, Land Registry and Cadastral taxes. VAT will apply to the property purchase price if you buy a property from a developer or a renovation company within 4 years following the end of building or renovation work.
Other than a luxury home or castle, if you purchase an Italian property to use as your principal residence:
– from a private seller or an entity that is not VAT registered and,
– you obtain Italian residency at the property within 18 months of signing the deed of sale and,
– you subsequently spend more than 6 months a year at that address,
stamp duty is 2% of the value of the property with € 1,000 as the minimum payment due. Land registry and Cadastral Taxes are €50 each.
If you buy your Italian property from a VAT Registered company, VAT is 4% of the declared property price. Stamp Duty, Land Registry and Cadastral Taxes are €200 each.
If you buy a second home from a private owner or a company that is not VAT registered, Stamp duty will amount to 9% of the property purchase price, with €1,000 as a minimum payment. Land Registry and Cadastral taxes are €50 each.
If you purchase a second home from a VAT registered entity, VAT is set at a standard rate of 10% (22% for properties classed as luxury homes or castles) of the purchase price, and you will pay €200 each for Stamp Duty, Land Registry and Cadastral taxes.
To summarise Italian property taxes:
Italian Capital Gains Tax
There is no Capital Gains Tax liability if you purchased the property more than 5 years prior to resale.
Italian property and related tax is quite complex. For over 55 years, De Tullio Law Firm has been providing international clients with independent legal advice. We offer services in all the major fields of Italian law with particular expertise in real estate, inheritance and family law matters. If you would like further clarifications regarding your situation, please contact us for a free consultation. We are here to help.