Paying property tax in Italy? Here’s your 2021-2022 guide

Who wouldn’t want to live in Italy? The incredible food and wine may be the main attraction for you, or the warm, Mediterranean climate. Whether you’re drawn to Italy’s beautiful countryside, its sparkling Riviera coastline or one of its vibrant, historic cities - there’s something here for everyone.

Italy isn’t all sunshine and pasta, though. If you’re thinking about buying property in Italy, or are already in the process of doing so, you’ll need to wrap your head around Italian property taxes.

Whether you’re an Italian citizen, expat or simply a UK resident looking for a holiday home - there’ll be a number of bills to pay the government. Here’s your essential guide to paying property tax in Italy in 2021-2022.

What is property tax in Italy?

Generally speaking, property tax is any tax paid on real estate. It can be split into two broad categories - sales taxes, which are one-off costs paid when a property changes hands, and maintenance taxes. This second type of property tax is paid regularly by the owner or occupier.

Italy has its fair share of both sales and property taxes. There are also likely to be a number of other fees that come into play when buying or selling property.

What kinds of property taxes are there in Italy?¹

Taxes form a substantial part of costs associated with buying and maintaining a property.

The main sales taxes in Italy are as follows:

• Registration tax/stamp duty (imposta di registro)
• Land registry tax (imposta catastale)
• Mortgage tax (imposta ipotecaria)
• VAT (IVA)
• Capital gains tax (only affecting the seller)

And the maintenance taxes are:

• Property ownership tax (Imposta Municipale Unica or IMU)
• Waste collection tax

All these taxes are explained in detail below.

Who has to pay property tax in Italy?³

Buyers pay the majority of sales taxes in Italy, although sellers may have to pay capital gains tax as well as VAT on some fees. Maintenance taxes are generally in the hands of the owner.

There are no restrictions on foreigners buying property in Italy, but all property owners need to pay taxes.

Italian property taxes for foreigners tend to be higher in some categories, and also vary depending on other factors such as:

• Whether you live in the municipality your property is located in
• Whether the property is a first or second home, holiday home or investment, or your main residence.
• What type of property you’re purchasing and its value.

What’s the cadastral value of a property?²

Before looking at property taxes in Italy, it’s important to familiarise yourself with the concept of ‘cadastral value’ (valore catastale)

Every property is given an official valore catastale based on a valuation by the local council or comune. It’s drawn up based on the size, location and quality of the property, and will also vary according to whether the property is used as a main residence or a second home.

The valore catastale usually ends up being lower than the real sale or market value price of the property.

What should I know about paying sales tax for my property in Italy?

If you’re buying a property in Italy, you’ll be responsible for the majority of the sales taxes. It’s important to factor all of these into your overall budget, to avoid any unpleasant surprises later on.

Let’s take a look at each of the initial property taxes in Italy in more detail:

Registration tax (stamp duty)³

What tends to be called stamp duty in English is imposta di registro in Italian. In a nutshell, this is a tax on registering a property.

• This tax is paid by the buyer.
• It’s usually calculated according to the property’s cadastral value - see above to find out how that works.
• Registration tax only applies to older properties. If you’re buying a new build, you’ll pay VAT instead.
• The rate is lower if the property will be your main home and is in your current or future comune of residence. To qualify for a lower tax rate, the property can’t be classed as a ‘luxury’ home.
• You’ll pay a higher rate as a non-resident, or if you’re buying the property as your second home.
• Registration tax is also due when buying land to build on, or agricultural land.

See the table below for a full breakdown of these costs.

Purchase details	Registration tax
Buying a new build property	None - pay VAT instead
Buying non-luxury property as main residence	3%
Buying second/holiday home or investment as a non-resident	7%
Buying land to build on	8%
Buying agricultural land	10%

Land registry tax³

• The imposta catastale (cadastral tax) is a fixed fee
• It’s payable for all property transactions, including both new builds and older properties
• The fee is €129.11 for residents buying their first home
• The fee is 1% of the cadastral value for non-residents and purchases of second homes.

VAT (IVA)³

Known as IVA in Italy, value-added tax is payable on some of the fees involved with property sales. If you’re buying from a private seller who isn’t registered for IVA, you won’t need to pay this tax⁴.

But if you buy your property from an IVA-registered company or property developer, the following tax rates will be payable:

Purchase details - buying from a IVA-registered company	IVA/VAT rate
Buying your first home as a resident	4%
Buying a property as a second home, or as a non-resident	10%
Buying a property classed as a ‘luxury’ home	22%

You may also have to pay VAT on estate agency and legal fees when buying property in Italy.

Capital gains tax (Plusvalenza)

The Italian plusvalenza tax is equivalent to capital gains tax on property sales. It’s a tax paid on profits over a certain threshold made from selling a property.

• In Italy, you never have to pay capital gains tax if you’ve owned the place for more than 5 years.
• If you do sell a property that you’ve owned for less than 5 years, you should be exempt from capital gains tax if that property was your primary residence.
• If you sell a second home, rental or investment property after owning it for less than 5 years, you have to pay up to 26% on your net profit - that’s your profit minus tax and other fees, including agency fees and building works.
• If you’re not an Italian resident, it’s a good idea to check whether you have to pay UK tax on Italian property you’ve sold, even if you don’t have to pay it in Italy.

Paying maintenance taxes for your property in Italy

Unlike other one-off property taxes in Italy that are payable when a house is sold, maintenance taxes are ongoing charges that all property owners must pay.

There are two main types of annual property tax in Italy you need to know about - IMU, and waste collection tax. Here’s a little more info on each:

IMU (Imposta municipale unica)

The principal maintenance tax in Italy is known as Imposta municipale unica, or IMU.

• IMU is a property ownership tax, so it’s the owner’s responsibility (unlike, for example, UK council tax).
• If the property is your main residence, you don’t have to pay IMU.
• The exception to this is if the property is a luxury residence - then, you still have to pay.
• The rate is determined by the cadastral value of the property.
• The IMU rate is approximately 0.4- 0.76%⁷, although the exact percentage can be set by the local municipality.
• It’s payable twice a year - in June and December.

Waste collection tax (Tassa sui rifiuti or TARI)⁸

TARI is another Italian maintenance tax, this time for waste collection. This covers the cost of services like rubbish collection and street cleaning.

• Unlike the maintenance tax above, this one is the responsibility of the occupier rather than the owner.
• The rate is set by the municipality and depends on the size of the property, as well as the number of people living there.
• You should receive a bill for this tax.

What other fees are there when buying property in Italy?³

This is just a selection of the other fees you’ll face when buying, selling or maintaining a property in Italy. The whole set of fees will vary from case to case.

Notary fees

The notary (notaio) is a crucial figure in Italian property transactions, facilitating the entire sale and working with both buyer and seller. They take a fee of around 1% - 2.5%.

Agency fees

Both the buyer and the seller generally have to pay the estate agent. The fees are around 1.5% to 4% on each side, plus VAT in most cases.

Other fees

You may face a range of other fees, especially at the buying stage. For example, you could rack up legal fees, costs for technical reports and surveys, and additional registration fees. You’ll also have to pay for a translator if your Italian is a little rusty.

Are there any property tax deductions I can claim in Italy for 2021-2022?

Here are a few cases where you might be able to pay less tax:

• As explained above, buying from a private seller rather than a company means not having to pay VAT on the sale price. However, you will still pay stamp duty instead.
• You don’t have to pay plusvalenza (capital gains tax) on a sale if you’ve owned the property for more than 5 years when the sale is completed, or if the property is your primary residence.
• If you’re going to be a resident in the property, you’ll usually pay lower tax rates when buying. And you’ll also have to pay a lot less in maintenance taxes if the property is your primary residence.

When do I pay my property taxes in Italy?

The notary is the person to talk to about sales fees, or your conveyancing solicitor. They should be able to give you a schedule.

For maintenance fees, mostly they're due twice a year, in June and December. Confirm with your local council, and mark your diary - as you might not get a reminder through the post.

How do I pay my property taxes in Italy?⁹

Some regular bills in Italy are most often paid through the post office, and this includes the maintenance taxes on your property. Check with your local bank branch to see if online payments or direct debits are possible.

The notary, or your solicitor or accountant, should be able to talk you through paying other fees.

Paying property taxes online - save money using Wise

For some of the fees you’ll face when paying for your Italian property, you’ll probably be able to make online payments. However, you’ll need to check whether you can pay from an international account or if you’ll need to make the payment from an Italian bank account.

Either way, you’re likely to need to move a substantial amount of your money into Italy, whether it initially goes into your account, or straight to the government or an estate agent. When this happens, it’s really important to check you’re getting the best possible rate on the transfer.

Many banks and traditional money transfer services tend to mark up the currency exchange rate, meaning that less of your money makes it to its destination. But Wise always gives you the mid-market rate - the only fair exchange rate there is - and only charges a small fee, always stated clearly upfront.

A multi-currency account from Wise makes things even easier, allowing you to hold money in 50+ different currencies, including euros - so you can send and receive money without having to worry about the exchange rate at all.

Join Wise today

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Taxes are always complicated, whether you’re buying a house or getting a job. And if you’re operating internationally, things can get very complicated indeed. That’s why it’s important to know what you have to pay, and when - and how to make the payments in the most efficient way.

Hopefully, after reading this guide, you should have a much better idea of how property tax in Italy works. Good luck with your property purchase!

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Sources used for this article:

1. Property Showrooms - guide to property in Italy
2. Experts for expats - complexities of buying property in Italy
3. Global Property Guide - buying property in Italy
4. Advocate Abroad - legal guide to buying property in Italy
5. PWC tax summaries - income determination
6. Fiat Lux Legal - exemptions and discounts
7. Studio Legale Capecchi - property tax in Italy
8. Idealista - TARI tax
9. Italian Inheritance - how to calculate and pay IMU tax

Sources checked on 22-Oct-2021.