Whether you are relocating, buying a holiday home, or investing in Italian real estate, understanding the tax implications is essential for a smooth and cost-effective property purchase or sale. Italy’s property tax system involves several one-off and ongoing fees, with notable differences between residents, non-residents, and those qualifying for primary residence benefits. This guide demystifies the main taxes and fees, offering clarity for international buyers, expats, and non-resident owners.
Registration Taxes: What You Pay When Acquiring Property
- Purchase from a Private Seller or VAT-Exempt Company:
- Registration Tax (Imposta di Registro): 9% of the cadastral value (valore catastale), with a minimum of €1,000 due.
- Cadastral Tax (Imposta Catastale): €50 (fixed).
- Mortgage Tax (Imposta Ipotecaria): €50 (fixed).
- Purchase from a Company Where VAT Applies:
- VAT (IVA): 10% (or 22% for luxury properties: cadastral categories A/1, A/8, A/9).
- Registration, Cadastral, Mortgage Taxes: €200 each (fixed).
- Primary Residence (“First Home”) Incentives:
- Eligible buyers pay only 2% registration tax (min €1,000), with both mortgage and cadastral taxes at €50 each when buying from a private individual.
- If buying from a company subject to VAT, VAT is reduced to 4%.
Notary Fees in Italy: A Compulsory (and Negotiable) Cost
- Every Italian property purchase must be finalized by a notary (notaio), whose fees are paid by the buyer.
- Standard fee ranges: typically 1% to 2.5% of the declared purchase price, depending on property value, location, and notary complexity.
- VAT at 22% is added to the notary fee.
- You are free to select your own notary—comparing quotes can lead to considerable savings on overall transaction costs.
VAT Considerations: When Does VAT Apply on Italian Properties?
- VAT is only charged when purchasing new or substantially renovated properties from builders/developers who are subject to VAT. For resales by private individuals, only registration tax applies.
- Standard VAT Rates:
- 10% on most properties.
- 22% on luxury properties (A/1, A/8, A/9).
- 4% for “first home” purchases if all eligibility criteria are met.
Capital Gains Tax: What If You Sell Your Italian Property?
- Capital gains (plusvalenza) tax rate: 26% on any profit if you sell within 5 years of purchase, based on the difference between the sales price and the original purchase price (plus documented improvement costs).
- Exemptions:
- No capital gains tax if the property was your main residence for the majority of your ownership period, even if sold within 5 years.
- After 5 years, all sales are exempt from capital gains tax, regardless of residence status.
Primary Residence (“First Home”) Tax Benefits and Requirements
- You cannot own other homes in the same municipality or have previously used the “first home” benefit elsewhere unless you comply with timing rules for selling the previous one.
- You must establish residency in the municipality of your new property within 18 months.
- Luxury properties (A/1, A/8, A/9) are excluded from primary residence tax incentives.
- 2025 Update: The period allowed to sell a previous “first home” while preserving exemptions has been extended from 12 to 24 months, giving buyers more flexibility when moving or upgrading.
IMU – The Ongoing Municipal Property Tax
- The IMU (Imposta Municipale Unica) applies to second homes, rental properties, and luxury primary residences.
- Rates vary by municipality, generally from 0.76% to 1.14% of the cadastral value for second homes, and 0.5%–0.68% for luxury main residences.
- Most primary residences (not classified as luxury) are exempt from IMU.
Special Obligations for Non-Residents & Foreign Buyers
- Second Home Treatment: If you do not intend to move to Italy and establish residency, you will typically pay higher “second home” registration taxes and will be ineligible for first home benefits.
- Wealth Tax (IVIE): Some non-residents may need to declare Italian real estate as part of their home-country wealth tax filings.
- Translation Requirements: If you do not speak Italian, a sworn translator must be present when you sign the final deed. This costs approximately €250–€350.
- Currency Transfers: International money transfers to purchase property may incur costs of 2%–4% of the transferred amount.
- Reporting Abroad: Check your home country’s rules: you may be required to report your Italian property and income.
- Agency Fees: Italian estate agents (agenzia immobiliare) typically charge buyers 2%–5% of the purchase price plus VAT, with a similar fee expected from the seller.
Best Practices and Practical Advice for Foreign Buyers and Sellers
- Choose your notary wisely—they play a pivotal role in ensuring your purchase is watertight and can offer significant fee variations.
- Budget for “hidden” costs, including agent commissions, translator fees, utility activation, insurance, and regular maintenance—especially in apartment buildings where condominium fees (spese condominiali) may apply.
- Get tax advice early regarding IMU liability and the viability of securing first home tax relief as a new resident.
- Consider your selling timeline: If you sell before five years and haven’t used the property as your main residence, be prepared for a 26% capital gains tax on the profit.
Italian Property Taxes & Fees at a Glance (Updated)
- First Home Purchase (private seller): 2% registration tax (min €1,000), no VAT, €50 mortgage and cadastral taxes, notary 1–2.5% + VAT, capital gains exemption possible, most exempt from IMU.
- Second Home Purchase (private seller): 9% registration tax, €50 mortgage and cadastral taxes, notary 1–2.5% + VAT, 26% capital gains if not main home and sold within 5 years, subject to IMU.
- Purchase from Builder/Developer (non-luxury): €200 registration/cadastral/mortgage tax, 10% VAT, notary 1–2.5% + VAT, 26% capital gains (if <5 years and not main home), subject to IMU.
- Purchase from Builder/Developer (luxury): €200 registration/cadastral/mortgage tax, 22% VAT, notary 1–2.5% + VAT, 26% capital gains (if <5 years and not main home), subject to IMU.
Note: A fixed €50 cadastral and €50 mortgage tax applies in all private/secondary market transactions, or €200 each where VAT is paid.
Final Takeaway: Maximize Tax Savings and Peace of Mind
Whether you are looking to enjoy “la dolce vita” as a new resident, purchase a vacation property, or invest in Italy’s real estate market, understanding these taxes is only the beginning. Early planning is crucial to assess IMU liability, secure “first home” privileges, and avoid costly oversights—especially for non-resident and foreign buyers.
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