GUIDE: yearly taxation of your house in Italy

Lake Como, Rome, Venice, Tuscany, Milan... You have just bought a house in Italy and now you may be thinking what the tax implications are. What are the annual tax fulfilments and payments to be carried out according to the Italian fiscal regulations with regards to real estate properties?

These are some simple questions that foreign clients often ask us, so we have created a brief guideline, in which we outline the Italian yearly tax obligations on your Property, that you may find useful.

REAL ESTATE PROPERTIES TAXES OF YOUR HOUSE IN ITALY

A) Secondary houses (e.g. for holidays): 

• IMU TAX: this is the main tax on real estate properties. It is calculated on the appreciated cadastral value, applying a tax rate that varies from town to town, set by the local municipality each year. Payment is shared in two instalments, the first in June and the second during December. Since the beginning of 2020 IMU Tax has also incorporated the previous TASI tax, which therefore no longer has to be paid.
  
• TARI TAX: this is the tax for the waste collection. It is calculated considering the square meters of the house but also the number of the family members living in that house. Even in this case TARI may vary from town to town. There are special rules in case of rent of the house. 
  

B) Primary houses (e.g. relocation of residence and life in Italy): 

• IMU TAX: this tax remains only for luxury houses (A/1, A/8, A/9 cadastral categories). For these luxury real estate properties rules are the same briefly explained above, with some specific differences stated by each local Municipality. There is a general exemption for not luxury primary houses.  
  
• TARI TAX: the tax for the waste collection remains for all the types of houses, luxury and not luxury. 

And what about taxes if you rent your house in Italy to other people (tourists or others)?

INCOME TAXATION OF PRIVATE INDIVIDUALS OWNERS

According to the tax treaties between Italy and the most part of the other Countries, incomes from renting of an Italian house must be taxed in Italy (and sometimes also in the residence Country of the foreign owner).

Renting of houses produces an income that can be taxed according to two different systems:

A) Ordinary income tax system:

this income is taxed with the Italian direct income tax (IRPEF) that is progressive as follow **:

        up to 28.000 euros = 23%

        28.001 up to 50.000 euros = 35%

        over 50.000 euros = 43%

But also two additional local income taxes (about 1,5-2,5% in total) must be paid.

B) Special “Cedolare secca” tax system (if tenants are private individuals) 

The owner must opt for this special substitutive flat tax in the rent contract. The income flat tax rate is 21% and normally foreign owners opt for this kind of taxation in fact the ordinary system is not attractive, because they don’t have deductions to lower tax burden (as is normally the case for Italian citizens).

In both cases a tax return must be prepared and filed to the Tax Authority.

OUR SERVICES:

Our tax consulting firm, based in Como - Italy, can assist international clients to fulfil all the described tax obligations related to all their real estate properties in Italy, relieving them completely from having to learn Italian cadastral and taxation systems, to calculate taxation, to prepare and file documents etc. If needed, we offer also a full first class service including payment of taxes on clients’ behalf, if they don’t have an Italian bank account.

We have many foreign clients, fell free to contact or write us, we can professionally assist You.