Italy – Property Taxes

What taxes and fees apply when buying a property in Italy?

Italy’s approach to purchase taxation differs fundamentally from systems such as UK stamp duty land tax or Australian stamp duty, which are calculated solely on the agreed sale price. In Italy, the majority of transfer taxes are instead applied to the property’s cadastral value — an official figure recorded in the national land registry (Catasto) that is almost invariably lower than the price actually paid in the market. This mechanism, known as prezzo-valore, is accessible to private individuals purchasing residential property and means the effective tax base is frequently far below the real transaction figure. Always verify the latest applicable rates directly with the Agenzia delle Entrate (Italian Revenue Agency).

Registration tax (Imposta di Registro) is the principal transfer levy. When acquiring a property that will serve as your primary residence (prima casa), the rate is 2% of the cadastral value if buying from a private individual, or 4% VAT if buying from a developer. For a second home or investment purchase, the rate rises to 9% when transacting with a private seller, or 10% VAT when dealing with a developer. Properties classified as luxury under land registry categories A/1, A/8, or A/9 attract VAT at 22%.

Mortgage tax (Imposta Ipotecaria) and cadastral tax (Imposta Catastale) are both charged at the point of purchase. When buying from a private seller, each is levied as a flat fee of €50; when buying from a registered company, each rises to €200. These therefore represent modest, fixed additional charges rather than percentage-based costs.

Notary fees are compulsory throughout Italy — every property transfer must be executed before a public notary (notaio). The notary is an independent public official rather than a private lawyer, and the associated fees are regulated rather than freely negotiable. These typically amount to between 1% and 2% of the purchase price.

Agent fees (mediazione) in Italy are conventionally shared between buyer and seller — in contrast to some markets where the vendor bears the full commission. A typical combined rate falls between 3% and 5%, though there is often room for negotiation, particularly where a buyer also retains an independent legal adviser. It is important to agree clearly in advance which party is responsible for which portion.

Legal fees for an independent property lawyer, if engaged separately from the notary, constitute an additional expense. While not obligatory, retaining a legal expert is advisable, particularly for complex transactions. Such fees generally amount to approximately 1%–2% of the property’s value.

Administrative charges covering title searches, cadastral document updates, and registration stamps represent a further minor cost, typically adding between €300 and €600 to the overall bill.

Preliminary contract (Compromesso) tax: where a preliminary purchase agreement is signed prior to completion, this stage also attracts its own tax. From 1 January 2025, registration tax on preliminary contracts is levied at 0.50% of any sums paid as a confirmatory deposit. Critically, the amount paid at this stage is credited against the tax owed on final completion, so there is no double taxation.

Worked example: Buying a €250,000 resale apartment as a primary residence (as of 2025)

In 2025, the total cost of purchasing property in Italy typically adds between 9% and 15% to the headline price. The single biggest variable is whether the property qualifies as your prima casa. On a €250,000 resale property, registration tax comes to roughly €5,000 under the reduced 2% primary-residence rate; if the property does not qualify, the standard 9% rate pushes this figure to approximately €11,250. Always have all figures and calculations reviewed by your notary or a qualified tax adviser before exchanging contracts.

To be eligible for the prima casa reduced rate, a number of conditions must be satisfied. The property must be located in the municipality where the buyer is currently registered as resident, or where they commit to establishing residence within 18 months of completion — the municipality of employment also qualifies. The buyer must not already hold rights over another residential property in the same municipality, and must not have previously used the prima casa relief on any other property anywhere in Italy, unless they commit to disposing of the earlier property.

What taxes and fees apply when selling a property in Italy?

From a vendor’s perspective, Italy’s tax position at the point of sale is comparatively straightforward. Most transaction-based levies fall on the buyer rather than the seller — a notable contrast to markets such as France, where both parties shoulder heavier transactional costs.

The seller’s principal concern is capital gains tax (plusvalenza) on any profit realised from the sale, which is addressed in full in the section that follows. Beyond this exposure, sellers are not liable for registration tax or the other transfer charges that are borne by the purchaser.

Sellers do, however, typically bear their share of the estate agent’s commission. Agency fees generally range from 3% to 5% and are often open to negotiation. In Italy, it is customary for both parties to pay their respective portion of the agent’s fee directly, so sellers should factor this into their net proceeds calculation.

Where a seller engages their own notary or independent legal adviser — separate from the buyer’s notary who handles the official transfer deed — additional fees will arise. This is relatively uncommon but may be advisable in particularly complex transactions.

Vendors should also ensure that all outstanding IMU or TARI liabilities are discharged before completion, since unpaid municipal taxes can create complications at handover. The seller is additionally responsible for providing the energy performance certificate (APE) and any other mandatory compliance documentation.

Is capital gains tax payable on property sales in Italy?

Italy does levy capital gains tax on property disposals, referred to as imposta sulle plusvalenze or simply plusvalenza. In practice, however, generous exemptions mean that a large proportion of sellers — especially those who have held a property for a number of years — owe nothing at all. The structure bears some resemblance to capital gains tax on property in countries such as Ireland or Australia, though the key exemption trigger is the duration of ownership rather than an annual tax-free allowance.

Capital gains tax on Italian property becomes relevant only where the sale occurs within five years of the original purchase date. The applicable rate is 26% on the net profit — being the difference between the sale price and the acquisition cost together with all documented expenses. Once the five-year threshold has been crossed, any gain is fully exempt from tax. An equally important exemption applies where the property served as the seller’s primary home (abitazione principale), regardless of how long it has been owned.

The taxable gain is computed by deducting from the sale price not only the original purchase price but also all verifiable acquisition costs — including notary fees and taxes paid on purchase — and any qualifying expenditure on improvements. Many sellers inadvertently overstate their gain by failing to claim all permissible deductions, such as renovation costs and professional fees incurred during ownership. Retaining receipts and invoices for significant works throughout the ownership period is therefore essential.

Where tax is payable, sellers may choose between two routes: declaring the gain on their annual income tax return and paying at their marginal IRPEF rate, or electing a substitute tax (imposta sostitutiva) at a flat 26%, settled directly through the notary at the point of signing the transfer deed. The flat-rate option is generally simpler and tends to be the preferred choice where the gain is substantial.

Practical example (as of 2025)

Suppose you purchased a holiday apartment in 2022 for €150,000, with purchase costs of €10,000, and sell it in 2025 for €200,000. Your documented gain is €200,000 minus €160,000 (purchase price plus costs) = €40,000. At the 26% flat rate, the resulting tax liability is €10,400. Had you held the property beyond five years, or had it been your primary residence throughout the ownership period, the entire gain would have been exempt.

The 26% rate applies with the same exemptions irrespective of whether the seller is a resident or non-resident — the determining factors are the length of ownership and whether the property was a main residence, not the seller’s tax status. Always confirm your individual position with the Agenzia delle Entrate or a qualified Italian tax adviser before proceeding with any sale.

Are there annual property taxes in Italy?

Holding property in Italy gives rise to recurring annual obligations, though the extent of these depends considerably on how the property is used. Those for whom their Italian home is their registered primary residence benefit from meaningful exemptions that have no direct equivalent in countries such as France, where the taxe foncière applies to all property owners regardless of occupation.

IMU (Imposta Municipale Unica) is Italy’s primary recurring property ownership tax. It is charged on second homes and luxury-category properties, and the base for calculation is the property’s cadastral income, increased by 5% and then multiplied by a fixed coefficient before the local rate is applied. The rate itself is set by each individual comune, generally falling within a band of 0.40% to 1.06%. Primary residences are entirely exempt from IMU unless they carry a luxury classification (categories A/1, A/8, or A/9).

To arrive at the IMU due on a residential second home, the formula is: cadastral income × 1.05 × 160 × IMU rate. Start with the property’s cadastral income as recorded in the land registry; uplift this figure by 5%; multiply the result by 160 (the standard multiplier for residential properties); then apply the rate published by the relevant comune.

Because IMU rates and administrative rules are determined locally rather than nationally, they vary across Italy’s thousands of municipalities. Applying a generic national rate or missing a locally mandated deadline can lead to incorrect payments and potential penalties — what is compliant in one city may not be in another. Consult your specific comune’s website or the Ministry of Economy and Finance portal for current rates and deadlines. IMU falls due in two instalments: the first by 16 June and the second by 16 December each year.

TARI (Tassa Rifiuti) is a waste collection and disposal charge levied on whoever occupies the property — whether owner or tenant. It may be structured as a fixed amount determined by property size and the number of occupants, or as a variable charge set by the municipality to cover waste collection, transportation, and disposal. As a rough illustration, a two-person household permanently residing in a 120 sqm apartment might pay approximately €305 in TARI annually, while the same household occupying the property on a temporary basis might benefit from a reduced charge of around €205.

For a typical second home, the combined annual tax burden — principally IMU and TARI — generally amounts to approximately €1,200–€1,400, though this figure will vary with property size, location, and prevailing municipal rates. Depending on the municipality, modest supplementary charges may also apply, such as contributions to street lighting — usually below €100 per year — or, for those letting short-term, a tourist tax.

How is rental income from property taxed in Italy?

Italian landlords have two main options for declaring rental income: the standard progressive IRPEF income tax system, or the widely used cedolare secca flat-tax regime. The choice between them carries significant financial consequences, and selecting the wrong regime can prove a costly mistake year after year.

Cedolare secca (flat-rate tax) is available to private individuals — not companies — letting residential property. It is a substitute tax charged at a flat rate of 21% for standard rental contracts, or 10% for long-term regulated leases under a canone concordato arrangement. By opting for this regime, the landlord replaces IRPEF on rental income, as well as registration tax and stamp duty on the lease, with a single flat charge. For short-term rentals not exceeding 30 days, the 21% cedolare secca rate is applied automatically and is often withheld directly at source by booking platforms such as Airbnb or Booking.com. Importantly, this substitute tax does not permit any deduction of expenses.

From 2024, the cedolare secca rules governing short-term rentals were revised. From 1 January 2024, the flat tax rate on income from short-term rental of real estate (up to 30 days) increased from 21% to 26% for those who rent out several properties. For short-term lets, the 21% rate generally applies to one designated property only; any additional properties let on short-term terms are subject to the higher 26% rate. Always confirm the current applicable threshold with the Agenzia delle Entrate.

Standard IRPEF regime: landlords who do not elect the cedolare secca must include rental income in their total taxable income, which is then subject to Italy’s progressive IRPEF rates, ranging from 23% to 43%. Under the standard regime, income tax is generally applied to 95% of gross rental receipts for long-term lets. Registration tax and stamp duty on the lease contract must also be paid separately.

Lease registration obligations apply to all longer-term rental arrangements. A tenancy agreement running for more than 30 days is subject to registration tax of 2% of the gross annual rent upon first registration and at each subsequent annual renewal. Stamp duty of €16 per four pages of the contract also applies. Neither registration tax nor stamp duty is payable on short-term or holiday lets where cedolare secca has been elected.

Short-term rental compliance requirements have been substantially strengthened in recent years. Landlords must register with the local municipality and secure a regional rental identification code (CIR). It is now additionally mandatory to obtain a National Identification Code (CIN), which must be displayed visibly outside the property and in all promotional material. Guests must be met in person to have their identity verified on arrival; as of 18 November 2024, leaving directions to a key box as an alternative to in-person check-in is no longer permitted.

Non-resident landlords earning rental income from Italian property are required to file an Italian tax return, regardless of their country of residence. The cedolare secca flat-tax option is accessible to non-residents on the same terms as residents. Failure to file can result in penalties and the recovery of back taxes. Non-residents can opt for a substitute tax of 21% (for standard contracts) or 10% (for canone concordato agreements).

Does inheritance tax apply to property in Italy?

Italy’s succession tax regime stands out as one of the most favourable in Europe — a striking contrast to countries such as France, where rates can reach 45% for more distant relatives, Belgium, or the UK, where the standard rate is 40% above the nil-rate band. Property passing on death in Italy is subject to imposta sulle successioni e donazioni, but the combination of low rates and generous thresholds means that immediate family members frequently face little or no liability.

The rate applicable to transfers to children or a surviving spouse is 4%, with a €1 million per-heir exemption. Siblings and other relatives inherit at 6%, subject to lower individual exemptions. For more distant relatives and unrelated beneficiaries, the rate is 8%, with no significant tax-free threshold.

These thresholds apply on a per-heir basis across the entire inherited estate, not solely to the property element. A child inheriting a property worth €600,000 from a parent would therefore owe no inheritance tax whatsoever, as the value remains below the €1 million exemption. Only amounts exceeding the relevant threshold are taxed at the applicable rate.

Non-residents and foreign nationals are subject to precisely the same succession tax rules as Italian residents when inheriting property located in Italy — no surcharge applies by reason of nationality or non-residency, and the same rates and thresholds govern the transaction equally. Where the deceased was also subject to inheritance or estate tax in another country on the same assets, there is a risk of double taxation. Italy maintains a network of bilateral double taxation treaties, but the interaction between Italian succession tax and equivalent levies elsewhere can be intricate — cross-border professional advice is essential where an estate spans more than one jurisdiction.

It is also important to note that Italian succession law may override the provisions of a will drafted in another country. Italy operates forced heirship rules that guarantee certain family members a protected share of the estate, regardless of what a will may specify. EU Regulation 650/2012 gives EU nationals the option to elect for the law of their country of habitual residence or nationality to govern their succession, but doing so requires deliberate advance planning.

Does gift tax apply to property transfers in Italy?

Transferring property as a gift during your lifetime in Italy — a donazione — falls within the same tax framework as a succession, governed by imposta sulle successioni e donazioni. The rates and exemption thresholds mirror those applied on death, meaning that lifetime transfers and inherited transfers are broadly equivalent from a tax perspective.

The applicable rates are: 4% for gifts to spouses and direct descendants (children and grandchildren), with a €1 million exemption per recipient; 6% for gifts to siblings — with a €100,000 per-recipient exemption — and to other relatives within the fourth degree; and 8% for gifts to persons with no familial connection, with no meaningful exemption threshold. Only the value of the gift above the relevant threshold attracts tax.

Italy’s tax structure clearly favours the transmission of property within families, reflecting the country’s deep-rooted tradition of generational ownership. Where a property owner is considering making a gift to intended heirs during their lifetime, the same tax applies as would on death — but structured planning through a notarial deed or appropriate legal vehicle can help reduce the overall fiscal impact.

Beyond gift tax itself, a transfer by way of gift also triggers cadastral and mortgage taxes in the same manner as a standard sale. These costs are ordinarily borne by the recipient — the donee. The transfer must be formalised before a notary and registered with the land registry. Because gifting removes the asset from the donor’s estate with immediate effect, it is sometimes used as an estate planning mechanism; however, Italy’s forced heirship rules mean that gifts made to non-heirs can be challenged by legitimate heirs following the donor’s death if those gifts have diminished the heirs’ legally protected shares. Professional legal and tax advice is strongly recommended before proceeding with any gift of Italian property.

Are there any tax advantages or incentives for buying property in Italy?

Italy provides a range of tax reliefs and incentive schemes that can make a material difference to the cost of acquiring and maintaining property. Some are broadly available to all purchasers; others are especially relevant to those relocating from overseas. The conditions governing eligibility shift frequently — always verify the current terms with the Agenzia delle Entrate or a qualified adviser before relying on any specific scheme.

Prima casa relief is the most widely applicable incentive and benefits any buyer designating their purchase as a primary home. As outlined earlier, this designation reduces the registration tax from 9% to 2% on resale properties, and VAT from 10% to 4% on new-builds acquired from a developer. From 2025, buyers who already own a property acquired under the first-home relief can still access the 2% rate on a subsequent purchase, provided the earlier property is sold within two years — an extension from the previous one-year deadline.

Renovation bonus (Bonus Ristrutturazioni): owners can benefit from a tax deduction of up to 50% on qualifying restoration and renovation expenditure, spread across ten years. This incentive is available to both resident and non-resident owners, subject to applicable limits and conditions. For buyers targeting older rural or historic properties, which frequently require substantial work, this relief can represent a very significant financial benefit.

Ecobonus: energy-efficiency improvements — including upgrades to heating systems, thermal insulation, and windows — attract a deduction of between 50% and 65%, again distributed over ten years. Given the age and condition of much of Italy’s existing housing stock, this scheme can materially reduce the net cost of bringing properties up to modern energy standards.

Furnishing bonus: buyers undertaking eligible renovation work may also claim a deduction on expenditure for furniture and major household appliances purchased as part of the same project.

Flat tax regime for new residents: Italy offers an optional lump-sum tax arrangement for individuals who become Italian tax residents having been resident elsewhere for at least nine of the preceding ten years. Under this scheme, qualifying individuals pay a fixed annual sum in lieu of Italian tax on worldwide income. According to the current draft reform, anyone who becomes an Italian tax resident and opts for the flat tax before 31 December 2025 should continue benefiting from the existing €200,000 rate for the full 15-year duration of the regime, though proposed changes may increase this rate from 2026 onwards. Italian-source income — including rental income from Italian property — remains subject to normal domestic taxation under this regime. The scheme is open to both EU and non-EU nationals who satisfy the residency history requirement; there are no restrictions based on nationality.

Southern Italy and rural incentive schemes: a variety of locally administered programmes have offered properties in depopulating southern villages at heavily discounted or purely symbolic prices — including the well-known €1 house initiatives — sometimes accompanied by grants for renovation work. These are run at municipal level and availability fluctuates considerably; interested buyers should contact the relevant comune directly for current information.

Do different rules apply to foreign buyers or non-residents purchasing property in Italy?

Italy is a relatively welcoming market for foreign purchasers, and there is no general additional tax or surcharge imposed solely on the basis that a buyer is not an Italian citizen or resident. This distinguishes Italy from jurisdictions such as Canada or Australia, which have in recent years introduced targeted levies on non-resident or foreign buyers. That said, there are important practical and compliance obligations that non-resident buyers must understand from the outset.

Codice fiscale: every property transaction in Italy requires all parties to hold an Italian tax identification number. Before proceeding with any purchase, foreign buyers must obtain a codice fiscale, which is essential for the transaction itself and for all subsequent tax compliance obligations. This number can be obtained at an Italian consulate abroad, at an Agenzia delle Entrate office in Italy, or sometimes through the notary handling the transaction.

No nationality-based surcharges: Italy imposes no property taxes specifically directed at foreign nationals. However, buyers must comply with Italian requirements relating to the reporting of foreign-held assets and income, and non-compliance can attract penalties.

Prima casa eligibility for non-residents: non-residents can still access the reduced prima casa registration tax rate, provided they undertake to transfer their official residence to the municipality where the property is located within 18 months of completing the purchase. Non-EU nationals with long-term residency intentions are equally eligible to apply for this benefit.

Annual tax returns: non-residents who receive rental income from Italian property, or who hold several Italian properties, are required to file an annual Italian tax return (Modello Redditi NR). Where platforms such as Airbnb withhold cedolare secca at source on behalf of non-resident landlords, this does not remove the obligation to confirm compliance through the annual filing process.

Ownership via a company: some foreign purchasers acquire Italian property through an SRL (a limited liability company) for reasons of privacy, inheritance planning, or investment management. In such cases, the property falls under corporate taxation — IRES and IRAP — rather than personal tax rules. While this structure can offer advantages such as deductibility of renovation costs and simplified ownership transfer, it also carries higher ongoing compliance and accounting obligations. The long-term consequences of this choice are significant and should be thoroughly examined with specialist legal and tax advisers before proceeding.

Reciprocity rules: Italy applies a reciprocity principle for property purchases by nationals of non-EU countries — in theory requiring that Italian nationals enjoy equivalent property purchase rights in the buyer’s country of origin. In practice, this restriction is very rarely invoked and the vast majority of nationalities have an implicit or explicit reciprocal arrangement with Italy; however, if there is any doubt about your specific nationality’s position, it is worth confirming this in advance.

Frequently asked questions

Do I need an Italian bank account to pay property taxes?

There is no legal requirement to hold an Italian bank account in order to complete a property purchase. Payments can be made from a foreign account or routed through the notary’s dedicated escrow account, which ensures the safe movement of funds. In practical terms, however, having an Italian account greatly simplifies the management of utility bills and recurring property tax obligations, and is strongly advisable for meeting ongoing IMU and TARI commitments.

Is there a wealth tax on Italian property for non-residents?

No specific wealth tax targets non-resident property owners in Italy. The principal annual levy is IMU, which applies to second homes and is calculated on the cadastral value of the property rather than its market price. Italian residents who hold property abroad may be liable for IVIE — Italy’s tax on foreign-held property — but this is entirely separate from the position of non-residents owning property in Italy. Confirm the latest position with the Agenzia delle Entrate.

Can I avoid capital gains tax if I sell an inherited property in Italy?

Capital gains tax does not apply to sellers who have held the property for more than five years, or who used it as their principal residence for a sustained period. For inherited property, the relevant ownership period for CGT purposes generally begins from the date on which the original owner first acquired the property — though the rules in this area can be nuanced and fact-specific. Always obtain guidance from a qualified Italian tax adviser before selling inherited real estate.

What happens if I rent out my Italian property without registering?

Letting a property without completing the required registrations can expose a landlord to financial penalties and, in serious cases, criminal liability. For short-term lettings, this means notifying the local municipality, obtaining the regional rental identification code (CIR), and securing the National Identification Code (CIN), which must be displayed on the property itself and in all advertising. While platforms such as Airbnb are required to withhold taxes at source, this does not substitute for the owner’s independent registration obligations.

Are there any restrictions on how many properties I can buy in Italy as a foreigner?

Italy imposes no general ceiling on the number of properties that a foreign buyer may acquire. However, the tax implications shift considerably with each additional purchase — the prima casa relief applies to only one property at a time, and the elevated 26% cedolare secca rate takes effect from the second property let on short-term terms. Decisions about how to structure the ownership of multiple properties should be taken with specialist tax advice.

How is the cadastral value determined, and why does it matter?

The rendita catastale (cadastral income) is a government-assigned taxable value allocated to every building registered in Italy. It serves as the tax base for calculating both purchase taxes and annual property levies such as IMU. It is derived from the property’s physical size, geographic location, and land registry category — not its open-market price — and is almost invariably lower than the actual transaction value, which generally benefits buyers and owners. It is important to keep your property’s cadastral record current, as an outdated or incorrect category classification can result in an unnecessarily inflated IMU liability.

Do Italy’s double taxation treaties affect my property tax position?

Italy has concluded double taxation agreements (DTAs) with a large number of countries, many of which cover income taxes including rental income earned in Italy. These treaties are designed to prevent the same income from being taxed in both Italy and your home country. However, IMU — as an annual property ownership tax rather than an income tax — is generally not covered by income tax treaties. The precise interaction between Italian tax obligations and those of your country of residence is highly specific to your individual nationality, residency status, and circumstances — always consult a specialist with cross-border expertise.

Where can I find official, up-to-date information on Italian property taxes?

The primary official resource is the Agenzia delle Entrate (Italian Revenue Agency), which publishes guidance covering all nationally administered taxes including registration tax, capital gains tax, and cedolare secca. For IMU and TARI, the appropriate contact is your local comune or the Ministry of Economy and Finance (MEF) portal. Italian tax legislation is subject to frequent revision, and a locally qualified commercialista (tax accountant) or property lawyer remains the most reliable source of personalised and current advice.