Property Taxes in Italy [streamlined]

“Oh, mamma mia” these are the words I hear most frequently in Italy when discussing property taxes!

By the end of this article, I promise you that, I’ll turn this tax madness into something you’ll understand in no time—without even needing a glass of wine to cope.

Whether you’re buying, selling, renting, donating, or inheriting property, one thing is guaranteed: the Italian government will always want its cut.

But don’t worry, I’ve got you covered. To make things crystal clear, I’ve broken down property taxes by activity:

•  Taxes on owning property (IMU, TASI, TARI and IUC) asset-related taxes
•  Income-related taxes (rental income)
•  Tax on buying property in Italy (Stamp duty, Land registry, Mortgage, VAT)
•  Tax on selling property in Italy (Capital gain)
•  Tax on inheritance
•  Tax on donation
•  Property taxes in Italy for non-residents (IMU, TARI, Rental income)
•  Luxury property Tax

Taxes on owning property

Owning property in Italy comes with its fair share of taxes, but don’t worry—I’m here to make it (almost) painless. Here’s what you need to know if you're lucky enough to own a slice of Italy:

• IMU “Municipal tax” this delightful fee is paid to your local municipality just for owning property. Good news if it’s your primary residence—no IMU! Well, unless your home falls into the luxurious A1, A8, or A9 cadastral categories (mansions, villas, castles). The amount depends on the cadastral value of your property and the rate your municipality decides to slap on it.
• TARI “Waste tax” is paid to finance the costs of waste collection and disposal services. It’s based on the size of your property and the number of people occupying it. If you’re renting out the property, lucky for you—the tenant gets to pay for this one!

Example: if you own a flat in Milan with a cadastral income of € 1,000, your IMU bill will be € 1,915.20 in 2024.

TASI was a tax on municipal services such as street lighting. I speak of it in the past tense, because from 2020 TASI has been included in IMU.

“First home”: if you have moved your official residence to your property in Italy, you do not pay IMU, unless you live in a luxury house (cadastral category A/1 luxury homes, A/8 dwellings in villas and A/9 castles, palaces of eminent artistic or historical value).

“Second home”: IMU, TASI, and TARI are always payable.

Landowners: if you own land, IMU applies unless you are a farmer or agriculture entrepreneurs.

When are property taxes due in Italy?

IMU has to be paid twice, usually in June and December of each year, via Form F24, postal bulletin, or online.

For TARI, each Italian municipality decides on the deadlines; there are usually two installments every six months.

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Income-related taxes

If your property is bringing in some cash—say, by renting it out—get ready to deal with taxes. And like everything in Italy, it depends on whether you're an individual or a company. Here's the breakdown:

1. IRES (Imposta sul Reddito delle Società) – This is the corporate income tax, and companies pay a flat 24%. Simple, right?
2. IRPEF (Imposta sul Reddito delle Persone Fisiche) – If you’re an individual (whether you’re a resident or not), any income from property ownership—houses, buildings, or land—is subject to IRPEF. Unfortunately, IRPEF rates can be a bit hefty.
3. Cedolare secca – Now, here’s where things get interesting! Instead of IRPEF, you can choose the cedolare secca, a flat 21% tax on rental income from residential properties (even short-term leases). With the IRPEF rate often much higher, 99.9% of Italians—and yes, including me—go with this option for their rental properties. This option can save you money and simplify your tax situation.

Pros and cons of “cedolare secca”:

• Lower tax rate on rental income
• No registration tax or stamp duty
• Your rental income doesn’t count toward your overall taxable income for IRPEF
• You have to waive any rent increases during the lease term, even if your contract says otherwise. So, no mid-lease rent hikes, sorry!

Tax on buying property in Italy

When you transfer ownership of a property in Italy —whether you’re selling, buying, inheriting, or donating it—brace yourself, because taxes are coming your way.

Here’s a quick guide to the taxes you’ll face if you decide to buy a property in Italy:

1. Imposta di registro (Stamp Duty): This tax is paid to register the contract and give it legal certainty. It’s an alternative to VAT—you’ll pay one or the other, not both.
2. IVA (VAT): VAT applies, if the seller is a building company. The rate depends on the type of property: 4% for a "first home", 10% for a "second home", 22% for luxury properties (like those in cadastral categories A/1, A/8, and A/9).
3. Imposta ipotecaria (Mortgage Tax): This is paid to register the contract in public registers (known as “Conservatoria”).
4. Imposta catastale (Land Registry Tax): This covers the transfer of data in the Land Registry offices.

And here’s the kicker: all these taxes are paid to the notary, who then hands them over to the Italian State on your behalf. So yes, your notary is more than just a signature witness—they’re your official tax collector too!

Tip: Be prepared for more than just taxes—quite a few hidden costs are involved in buying a home in Italy. Here’s what you might face: notary's fee (from 1,500 euro up to 1% of the property price), real estate agency's commission (usually 2-5% of the property price), translation costs and possibly proxy costs, due diligence (Property Survey), lawyer.

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Tax on selling property in Italy

When you sell a property for more than you originally bought it, you’ve made a capital gain—and in some cases, this gain is subject to tax.

• If the seller is a company, the capital gain is always taxed. No exceptions.
• If the seller is an individual and the property has been owned for more than five years, here's the best part: no taxes on the capital gain! Yes, you read that right—zero tax.
• If the seller is an individual and sells the property within five years of buying it, the capital gain will be taxed. You’ll either pay tax under the IRPEF income tax system or a flat substitute tax of 26%.

Let’s break it down with an example:

• Property sold in 2024 for €300,000.00
• Property bought in 2021 for €250,000.00
• Ancillary costs (e.g., notary, agency fees, etc.): €23,000.00
• Capital gain: €300,000.00 - €250,000.00 - €23,000.00 = €27,000.00 taxable capital gain

If you’re reselling within the five-year window, that €27,000 capital gain would be taxed at the applicable rate.

The Agenzia delle Entrate (National Tax Bureau) allows you to reduce your taxable capital gain by deducting various ancillary costs. These can include notary fees, real estate agency commissions, registration fees, property taxes, insurance policies, and any extraordinary condominium expenses. Once you’ve calculated the taxable amount—in our example, €27,000—you have two options:

1. Pay a substitute tax of 26% (which in this case would be €7,020), or
2. Add the profit to your IRPEF (personal income tax) and pay according to your tax bracket.

Usually, the 26% substitute tax is the more affordable option. But if you’re a foreign investor with no income in Italy, you might want to consider your IRPEF situation carefully.

No Capital Gains Tax is Due When:

• 5-year rule: no capital gains tax is payable if you’ve owned the property for more than five years.
• First home: If the property was your (or a relative’s) primary residence for most of the time between purchase and sale.
• Other exemptions: No capital gain tax if the property was acquired through: Inheritance, Usucaption (ownership by continuous possession), or Property assignment between spouses during separation or divorce.
• Donation: The capital gain is still due, but the five-year rule starts from the date the donor purchased the property, not the date of the donation.

So, if you’re navigating Italy’s property tax system, these exceptions might just save you a tidy sum!

Taxes on inheritance

If you inherit property from a relative, inheritance tax in Italy is based on the cadastral value of the property and your relationship to the dearly departed.

Rate and deductible table according to degree of relationship

• For direct relatives (e.g., parents, children), the rate is 4% on the cadastral value, with a €1,000,000 deductible.
• For siblings, the rate jumps to 6% with a €100,000 deductible.
• For other relatives up to the 4th degree (like cousins) and the 3rd degree in a collateral line, it’s 6% with zero deductible.
• And for non-relatives, you’re looking at a steep 8% rate with no deductions.

Example: If you inherit a villa from your parent with a cadastral value of €1,200,000, the inheritance tax would be calculated as follows:

1. Cadastral value: €1,200,000
2. Deductible: €1,000,000
3. Taxable amount: €200,000
4. Tax rate (4%): €8,000

Taxes on donation

Just like inheritance taxes, gift taxes in Italy depend on the relationship between the donor and the recipient. The rates and deductibles are identical to those for inheritance, but with a few extra taxes to keep in mind. Here’s the breakdown for taxes to pay on a gift:

• Stamp duty: €230
• Fixed registration tax: €200
• Mortgage tax: 2% of the cadastral value
• Land registry tax: 1% of the cadastral value
• Fixed mortgage tax: €90
• Gift tax: Based on the relationship, as outlined in the table for inheritance.

Example: Let’s take the case of a father gifting a villa with a cadastral value of €1,200,000 to his son. Here’s how the taxes break down:

• Stamp duty: €230
• Fixed registration tax: €200
• Mortgage tax: €1,200,000 × 2% = €24,000
• Land registry tax: €1,200,000 × 1% = €12,000
• Fixed mortgage tax: €90
• Gift tax: Calculated based on the €200,000 taxable amount after the €1,000,000 deductible (4%), which is €8,000.

1st Home: If the property gifted is the recipient’s first home, some concessions and discounts can significantly reduce the amount owed on registration, mortgage, and land registry taxes.

So, while gifting property might seem generous, make sure you’re prepared for the costs involved—or take advantage of those first-home discounts!

Property taxes in Italy for non-residents

Suppose you’re a non-resident property owner in Italy, no matter your nationality; the main taxes you’ll need to handle are IMU (Municipal Property Tax), TARI (Waste Tax), and taxes on rental income (if you rent the property and generate profits).

TARI Tip: Some Italian municipalities offer discounts or even exemptions on TARI if the property is uninhabited—meaning it has no connected utilities and isn’t furnished. However, getting the details right is essential since each city has specific rules.

Luxury property Tax

Let us start with the definition of luxury real estate.

A property is considered luxurious if it falls under the cadastral categories A/1 (luxury homes), A/8 (dwellings in villas), or A/9 (castles, palaces of eminent artistic or historical value).

Owning a luxurious property in Italy might sound like a hefty financial commitment, but the taxes aren’t as daunting compared to other countries. Here’s a quick breakdown of

• Taxes on owning property (IMU): always due, even if it is your primary residence.
• Income-related taxes: no differences.
• Tax on buying property: 9% of cadastral value + 100 euros if you buy from a private individual, 22% on agreed price + 600 euros if you buy from builder.
• Tax on selling property: no differences.
• Inheritance: no differences.
• Donation: no differences.

While there are additional costs when owning or buying a luxury property, particularly with IMU and the higher VAT rate when purchasing from a builder, Italy's luxury property tax system is still relatively moderate compared to many other countries. So, owning a luxury home in Italy? Not as expensive as you might think!

Elena Manzhos: Mother of two beautiful children, wife, and real estate agent for over 15 years. Frankly, I don't know what is more complicated. More than 20 years ago,  I moved to Italy from Eastern Europe, where I taught English. I have always had a deep-seated passion for houses; as a child for the Barbie house, and now as a real estate professional, my love for luxurious properties is unwavering.
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