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How Much Is Property Tax in Italy? A Guide with Deep-Dive Links to Each Tax
Understanding the ins and outs of property tax can be a complex task for expats and retirees. The mission of Expatax is to demystify these taxes, making them more understandable for those considering a move to Italy. This guide provides a brief overview of the various taxes associated with purchasing, building, owning, and living in a property in Italy. While we endeavour to cover the main points in this article, we also invite you to use our TAX AI at the bottom of the article to ask further questions or delve into more detail.
From purchase taxes to taxes related to renovations, and annual property taxes such as IMU and TARI, our aim is to provide a succinct yet comprehensive guide. We'll also touch on IVIE, the tax on foreign properties for Italian residents, and highlight some key exemptions. Finally, we'll discuss what is due (if anything) when you sell your property. Remember, this is a brief overview, and we have in-depth articles on each tax type for you to explore at your leisure.
Just keep in mind: while the sheer amount of different taxes can be off-putting, there are often reductions and way to minimise these taxes. Doing your homework properly is certain to help. If we may be so direct: buying property in Italy without familiarising yourself with these taxes may cost you dearly.
The Day You Buy: Property Taxes Due When Buying
In Italy, purchasing a property involves certain taxes. The amount depends on whether the property is a new build (VAT applies), a resale (registration tax), or agricultural (agricultural land tax). Additionally, mortgage and cadastral taxes apply on the legal value of the property. The registration tax is generally 9% (resale) or 4% (primary residence), but differences exist, and it's essential to check these with a tax expert. [Read the full guide on property transfer taxes here]
Taxes You Pay When Renovating and Building
When renovating or building in Italy, you may be required to pay VAT (22% generally, but 10% on certain renovations). Furthermore, you may be required to pay the urbanisation charge, a municipal tax based on the property's size, location, and the type of work performed. It's always advised to consult with a tax expert before undertaking any significant renovations or construction projects. [Read about the construction contribution and urbanisation charges here]
Property Ownership Taxes: IMU (Municipal Property Tax)
IMU is an annual property tax applicable to all property types. It is calculated based on the cadastral value, adjusted with coefficients and multipliers. The standard rate is 0.76%, but each municipality has the discretion to adjust this rate between 0.46% and 1.06%. In most cases, you're IMU exempt on the home where you live. [Read more on IMU here]
The Waste Disposal Tax
TARI is a tax for waste disposal services, based on the property's size and the number of inhabitants. It's mandatory for every property liable for waste production, whether residential or commercial. [More on TARI here]
IVIE: Tax On Properties You Own Outside Italy
IVIE applies when an Italian resident inherits or is gifted a property located in Italy or abroad. The tax rate (4-8%) varies depending on the relationship between the donor and the recipient. [We have written a deep-dive on IVIE here] Note that, obviously, IVIE is only owed on properties you own outside Italy if you are an Italian tax resident, not if you merely own a second home in Italy.
Tax When You Sell a Property in Italy
Capital Gains Tax (CGT) applies to the profit made when selling a property in Italy. This tax is calculated as 26% of the gain made, defined as the difference between the purchase price and the selling price. However, there are several exemptions applicable. For example, if the property was the seller's primary residence for most of the ownership period, or if the sale occurs after five years of ownership, the capital gain may be exempt from taxation.
Main Tax Exemptions
There are notable exemptions in Italian property tax regulations. For instance, primary residences (excluding luxury homes) are generally exempt from IMU. First home buyers can benefit from reduced registration tax (2%), and certain renovation works can attract a reduced VAT rate (10%). You are welcome to ask TAX AI at the bottom of the article for specific exemptions to certain types of tax.
