Selling property in Italy: Taxes for Americans

If you're selling your Italian property, you're right to wonder about taxes and how much you'll have to pay. Knowing what to expect helps you plan accurately and avoid surprises come tax season.

The main tax you'll face is capital gains tax, but there are also other costs that come with the transaction, such as notary fees. Plus, don't forget about your US tax obligations—you may need to pay taxes there too, depending on your situation.

This guide breaks down everything you need to know about the taxes and costs involved in selling your Italian property.

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Table of contents
What types of taxes do you have to pay when selling property in Italy? US tax requirements when selling property in Italy How to avoid double taxation when selling property in Italy Special considerations What are the tax filing deadlines in Italy and the US?

What types of taxes do you have to pay when selling property in Italy?

Capital gains tax is the primary tax you'll pay when selling property in Italy, but you'll also need to budget for professional fees. Lawyers, notaries, and real estate agents all take their cut.

On the bright side, once you sell, you'll no longer pay Italy's annual property tax (IMU), rental income tax if you were renting it out, and the other recurring costs that come with Italian property ownership.

Capital gains tax

Capital gains tax (Imposta sulle Plusvalenze) applies when you sell your property for more than you originally paid for it. The tax rate in 2025 is 26% on your profit.¹

However, you might not have to pay it at all.

There are 2 major exemptions that can save you from this tax:

• Primary residence exemption: If the property was your main home for most of the time you owned it, you're generally exempt from capital gains tax.
• 5-year ownership rule: If you've owned the property for more than 5 years, you typically don't owe capital gains tax when you sell.¹

If you're a non-resident property owner, it's usually virtually impossible to qualify for the primary residence exemption. But if you moved to Italy from the US and actually lived in your property, then you have a good chance of qualifying.

💡 Learn more about the Italian Golden Visa and the Elective Residency Visa if you're still planning your move.

Other costs and fees

In addition to the capital gains tax, you should also budget for professional and administrative fees when selling your Italian property. You won't pay these to the Italian tax authorities, but they're still a part of your total cost, so it's good to be aware of them:

Fee	Estimated amont¹
Real estate agent fees	2% to 5% of sale price per party (buyer and seller)
Notary fees	1% to 2.5% of sale price (shared between buyer and seller)
Legal fees	1% to 2% of sale price or flat fee
Energy Performance Certificate (APE)	100 EUR to 300 EUR
Property valuation	200 EUR to 600 EUR
Mortgage cancellation fees	500 EUR to 2,000 EUR

Some of these costs may not apply to your situation. For example, if you don't have a mortgage or choose to sell without a real estate agent, you naturally won't have to cover those costs. Having or not having a property valuation is also a personal choice.

But legal fees will likely be required, since you'll need a knowledgeable lawyer to navigate the process smoothly, especially if you're selling from the US.

The Energy Performance Certificate (APE) is also required.

US tax requirements when selling property in Italy

As a US citizen or resident, you're taxed on your worldwide income. This is true even if you don't live in the US anymore, and your income includes the profit from selling your property in Italy.

You must report the sale to the IRS on your US tax return, even if you already paid taxes in Italy. However, whether you'll actually owe US capital gains tax depends on a few different factors.

Since the US and Italy have a tax treaty, you'll likely be able to claim the Foreign Tax Credit to reduce your US tax bill dollar-for-dollar by the amount you paid to Italy.²

Additionally, if your Italian property was your primary residence and you meet certain requirements, you may qualify for the primary residence exclusion. This lets you exclude up to 250,000 USD of profit if you're single, or 500,000 USD if you're married filing jointly.³

How to avoid double taxation when selling property in Italy

The US and Italy have a tax treaty, and it can help you avoid paying capital gains tax twice on the same property sale.² The main way to do that is by claiming the Foreign Tax Credit on your US tax return.

With this exception, the IRS essentially gives you credit for your Italian tax payment, which lowers your US tax bill by that same amount. If you paid enough tax in Italy, you may end up owing little to nothing in the US on that same income.

To claim this credit, you'll need to file Form 1116 with your US tax return and provide documentation of the Italian taxes you paid.⁴ So, it's important to keep all your receipts and payment records from your Italian tax payments because you'll also need them for the IRS.

Special considerations

Non-resident vs resident tax implications

💡 If you're a non-resident in Italy, you'll pay the same capital gains tax when selling your property as Italian residents—26% on your profit.¹

However, you likely won't qualify for certain exemptions, such as the primary residence exemption. Other than that, you'll follow the same rules as Italian residents.

Inherited property sale

If you inherited your Italian property, you might be on the hook for the inheritance tax. The amount you pay depends on your relationship to the deceased and the property's value:⁵

• Close relatives like spouses and children pay 4% on inherited assets above 1 million EUR per person
• Siblings pay 6% on amounts over 100,000 EUR, and other relatives (up to 4th degree) also pay 6%, but there's no tax-free allowance like there is with siblings
• Non-relatives face higher rates—up to 8% with no exemption threshold

When you later sell that inherited property, capital gains tax still applies. However, your "purchase price" for calculating gains is the property's value at the time you inherited it, not what the original owner paid.

Property held through a company

Some property owners hold their Italian real estate through a company structure, not their personal name. This can make the sale a bit more complicated, since it may trigger corporate tax obligations both in Italy and the US.

Depending on how your company is structured, you might face different tax rates or reporting requirements. It's a good idea to consult with a lawyer or a tax professional to pay all the right taxes and stay compliant.

FATCA and FBAR reporting

When you sell property in Italy, the sale proceeds will likely go into your Italian bank account before you transfer them to the US.

This will likely trigger additional reporting requirements with the US government:

• FBAR (FinCEN Form 114): You must file this form if your foreign bank accounts combined exceed 10,000 USD at any time during the year, even for a single day⁶
• FATCA (Form 8938): You need to file this form if your foreign financial assets exceed 200,000 USD at year-end or 300,000 USD at any point during the year (double those amounts if you're married filing jointly)⁷

You don't have to pay anything to the US government, but make sure to file these on time to avoid penalties.

What are the tax filing deadlines in Italy and the US?

Italy deadlines

If you owe capital gains tax in Italy, you typically need to report it on your Italian tax return by November 30 of the year following the sale. For example, if you sold your property in 2025, your Italian tax return would be due by November 30, 2026.⁸

There are 2 payment deadlines, June 30th and November 30th.⁸

US deadlines

In the US, your tax return is due on April 15 of the year after the sale. If you're based outside the US, the filing deadline extends automatically to June 15.⁹

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Your main tax liability when selling Italian property is the capital gains tax. Most non-residents will pay it unless you've owned the property for more than 5 years or if it qualifies as your primary residence.¹

You also have US tax obligations, and you must report your property sale to the IRS. However, you can typically avoid paying tax twice thanks to the US-Italy tax treaty and the Foreign Tax Credit. Just make sure to consult with a tax professional to handle this correctly.

Taxes are one cost, but you'll also have to pay for things like notary fees, real estate agent commissions, and legal fees. Surprisingly, one of the highest expenses is the cost of transferring the proceeds from your sale.

If you're sending money from Italy to the US, you may lose money on transfer fees and currency exchange rate markups. Currency exchange markups are especially expensive because they don't have a cap or limit. The more you transfer, the more you lose.

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Sources

1. Idealista - The cost of selling property in Italy in 2025
2. IRS - Italy tax treaty documents
3. TurboTax - Tax Aspects of Home Ownership
4. IRS - Foreign Tax Credit
5. The Italian Lawyer - Italian Inheritance Tax
6. IRS - Report of Foreign Bank and Financial Accounts (FBAR)
7. Tax Samaritan - Owning a Foreign Property
8. Experts for Expats - Taxes in Italy for expats and non-residents
9. IRS - Frequently asked questions (FAQs) about international individual tax matters

Sources checked 12/01/2025