Property ownership is taxed at purchase, at ownership, and at sale. It is therefore essential to understand the various taxes involving the properties in Italy and how to pay them.
Property tax at purchase
Once you buy a property in Italy you are required to pay property tax. There are different taxes involved in the house purchase, and they are all administered by the notary who acts on behalf of the tax office (being jointly liable with the buyer to pay the taxes).
Before digging deeper into the property taxes at purchase, it is important to understand on which value the property tax is assessed.
Normally taxes are assessed on the transaction value, however if you buy a residential property as an individual the value to calculate the property taxes is based on the Rendita Catastale (cadastral value) multiplied by a coefficient of 120 (or 110 if the house is your primary residence).
This value is normally lower than the market value, thus resulting in a cheaper outlay of capital to cope with the taxes. The standard registrar tax rate is 9%, which is then reduced to 2% in case of primary residence purchase.
If the seller is a company, and the house has been completed for less than 5 years, VAT is applicable. The standard rate of 10% is reduced to 4% in case of primary residence. If the house is 5 years or older, the buyer can elect to pay registrar tax instead of VAT.
In order to benefit from the reduced primary residence rate, you must make the election in the notary deed, and transfer your residency in the municipality (not necessarily your home) where the property is located within 18 months from the deed date. If you can’t make it in time, you can send a PEC to the tax office, notifying your intent of availing of the higher 9% rate within the 18 months period.
In this case, no penalties are applied, and the 7% difference will be mailed by the tax office to you and you can pay it via F24.
Property tax at possession
Once you own the property you might be required to pay property tax. If you are registered in your primary residence, you do not need to pay any property tax.
Alternatively, you need to self assess your property tax and pay via F24 each year on/before June 16th and on/before December 16th.
The local municipality is in charge of such tax, and they do not mail any bill to your home, nor provide notice of the upcoming tax payment deadlines. You need to be vigilant and
Late payment fines accrue on 30% of the property tax due.
The property tax value is calculated from the Rendita Catastale multiplied by 165. On this value, the council approved property tax band is applicable.
Taxes on property sales
If you sell your property, you might be liable to pay 26% capital gains tax. If the property you sell is a residential unit (or home) and it has been owned for 5 years or more, the capital gain is non taxable, nor reportable in your tax return.
