PROPERTY TAX IN ITALY
There are certain inevitable duties to keep in mind when looking into purchasing property in Italy. Taxes on real estate, for instance. How much is property tax in Italy? Are there additional real estate taxes in Italy? Whether you’re looking at seafront cottages to spend the holidays in, or seeking a good investment for commercial purposes, you need to know the facts and figures of property tax in Italy. Having full, clear, unambiguous data and information in advance is crucial, if you want to make a safe (and smart) choice. So, let’s get the basics straight. In Italy there are two basic types of taxes applied on property ownership: property tax, called IMU, and waste collection tax, called TARI. Both these levies are municipal taxes, not state taxes. This means they are both demanded and collected by the authority in charge in the municipality where the property is located.
The TARI – acronym for Tassa sui Rifiuti, meaning Tax on Waste – varies from area to area and town to town, depending on each municipality’s legislation, and depends on the property’s size and specific characteristics. Owners are sent a letter exacting the due TARI payment directly at their home address, i.e. at the taxed property’s address. The TARI tax is due once a year but very often may be settled by installments.
The IMU – acronym for Imposta Municipale Unica, which translates as Sole Municipal Tax – is the actual tax on the property ownership. Owners who select the property they possess as their main residence are exempt from IMU. In detail: if one purchases a property and designates it as his main residence, formalizing this decision with the municipal authorities within a maximum of 18 months from date of purchase, the IMU property tax will not be due. Consequently if a foreigner buys a home in Italy, decides to move for good and chooses this Italian home as his/her main residence he/she will not have to pay the tax. The IMU tax will, however, be due:
- if the property owned is a “second home”, i.e. not the main residence of the owner
- if the property owned is classified as a “luxury property”, notwithstanding whether it is a main residence or a second home
The IMU tax is also charged in case a non-resident owner rents the home or property he/she possesses toa third party. In this case the owner is required to fill in and submit a tax return to the Agenzia delle Entrate (Italian Revenue Office) to declare his/her income on this rental and correctly comply with the tax duties implied. The calculation of the IMU tax amount due on a specific property is based on a variety of diverse factors, and ascertaining these is a complex (and sometimes obscure) process.
The main variables implied are the cadastral value of the property, the house’s and/or land’s location and its overall surface. The base of the tax computation is the cadastral value of the property. The cadastral value is a taxable value established by the Catasto, the Italian Land Registry Office, which depends on factors such as year of building, location, type of property, surface and size.
Real estate properties registered at the Catasto, Land Registry Office, are assigned a value obtained by multiplying the cadastral value (as listed in the Land Registry records) revalued by 5% by one of the following coefficients :
- 60 for buildings included in cadastral group A (excluding those A / 10) and in categories C / 2, C / 6 and C / 7
- 140 for the buildings registered in cadastral group B and in categories C / 3, C / 4 and C / 5
- 80 for buildings included in cadastral categories A / 10 and D / 5
- 60 for buildings belonging to cadastral group D (excluding category D / 5). The multiplier is raised to 65 as of 1 January 2013
- 55 for buildings included in cadastral category C1
Is there any way a prospective foreign purchaser not aiming to fix his main residence in Italy can get a reliable forecast on the amount of taxes he/she will be due? Can a non-resident foreign national who wishes to purchase property to rent determine the income taxes that will be demanded?
Yes, but this necessarily entails having skilled, trustworthy, long-practiced dependable professional assistance on-site, in Italy.
Buying property in Italy involves being aware of taxation. Mastering, and handling all details from afar may prove challenging. Broad expertise, extensive proficiency in the legal and fiscal fields and familiarity with the Italian bureaucratic apparatus and red tape enable us to see you through the somewhat cryptic labyrinth of Italian property taxes and rental income taxation. And ensure you have a full, all-round view of your investment in advance. In detail what we can do for you is:
- calculate the IMU Property Tax and TARI Waste Tax on the house/property/estate a prospective purchaser wishes to buy in advance, before he/she actually purchases it;
- provide trustworthy fiscal advice, bookkeeping and full professional accounting services to a non-resident owner who wishes to rent his/her Italian property;
- prepare and submit the non-resident owner’s tax return;
- where and if applicable, calculate the non-resident owner’s implied income tax on rental based on standing treaties against double taxation (as currently in force between Italy and the foreign buyer’s country of residence);