Buying a property in Italy, whether a charming trullo in Puglia or a seaside apartment in Sicily, is an exciting investment for young professionals, families, and digital nomads. However, owning property in Italy comes with tax obligations that foreign buyers need to understand. From one-time purchase taxes to recurring property taxes like IMU and TASI, this guide explains the key taxes foreign buyers face, offering practical insights to help you budget and optimize your investment.

Overview of Property Taxes in Italy

When you buy a property in Italy, you’ll encounter both one-time taxes at purchase and ongoing taxes as an owner. These taxes apply to both residents and non-residents, but certain exemptions and benefits can reduce your costs, especially if the property is your main residence (prima casa). Understanding these taxes is crucial for young families relocating to Italy or digital nomads establishing a home base in the Italian boot.

One-Time Taxes at Purchase

When purchasing a property, foreign buyers face the following one-time taxes:

1. Registration Tax (Imposta di Registro)

This tax applies to the property’s cadastral value (a government-assessed value, often lower than the market price). The rate depends on whether the property is your primary residence:

• Primary Residence (Prima Casa): 2% of the cadastral value, provided you register as a resident in the municipality within 18 months.
• Second Home: 9% of the cadastral value.
• Eligibility: Non-residents can claim prima casa benefits if they commit to making the property their main home.

Example: A UK family buys a €200,000 villa in Puglia as their prima casa. The cadastral value is €100,000, so the registration tax is €2,000 (2%) instead of €9,000 (9%), saving €7,000.

2. Mortgage and Cadastral Taxes

These fixed or percentage-based taxes apply at purchase:

• Mortgage Tax (Imposta Ipotecaria): €50 for prima casa purchases; otherwise, 2% of the property value.
• Cadastral Tax (Imposta Catastale): €50 for prima casa; otherwise, 1% of the property value.

Example: For the same Puglia villa, a prima casa purchase incurs €50 each for mortgage and cadastral taxes, totalling €100, versus €6,000 (3%) for a second home.

3. VAT (IVA) for New Properties

If you buy a newly built property from a developer, you’ll pay VAT instead of registration tax:

• Prima Casa: 4% of the purchase price.
• Second Home: 10% (or 22% for luxury properties).
• Note: VAT applies only to new builds; existing properties follow the registration tax rules.

Example: A US digital nomad buys a €300,000 new-build apartment in Sicily as their prima casa. The VAT is €12,000 (4%) instead of €30,000 (10%), saving €18,000.

Recurring Property Taxes

Once you own a property, you’ll face annual or periodic taxes, primarily IMU and TASI, which vary by municipality and property use.

1. IMU (Imposta Municipale Unica)

The IMU is Italy’s municipal property tax, calculated on the cadastral value adjusted by a coefficient (e.g., 160 for residential properties). Rates typically range from 0.4% to 1.06%, depending on the municipality (Puglia and Sicily often have lower rates).

• Exemption: Prima casa properties are exempt from IMU if you’re a tax resident and use the property as your main home.
• Non-Residents or Second Homes: Pay IMU annually, due in two instalments (June and December).
• Calculation: Cadastral value × coefficient × municipal rate.

Example: A Northern European expat owns a €150,000 second home in Sicily with a cadastral value of €80,000. The IMU rate is 0.76%. The tax is €80,000 × 160 × 0.0076 = €972.80 per year. If it were their prima casa, they’d pay €0.

2. TASI (Tassa sui Servizi Indivisibili)

The TASI covers municipal services like street lighting and road maintenance. It’s also based on the cadastral value, with rates typically 0.1–0.33%.

• Exemption: Often waived for prima casa properties in many municipalities.
• Non-Residents or Second Homes: Pay TASI alongside IMU, depending on local rules.
• Note: Some municipalities in Puglia and Sicily combine or eliminate TASI for simplicity.

Example: For the same Sicilian second home, if the TASI rate is 0.2%, the tax is €80,000 × 160 × 0.002 = €256 annually. As a prima casa, it may be exempt.

Taxes on Rental Income

If you rent out your Italian property (e.g., via Airbnb), you’ll face taxes on rental income. Foreign buyers can opt for the cedolare secca to simplify taxation:

• Cedolare Secca: A flat 21% tax on rental income (a more favorable 10% rate is also available for regulated, long-term leases in high populated cities), replacing progressive income tax rates (23–43%).
• Standard Regime: Without cedolare secca, rental income is added to your global income and taxed at progressive rates (23%-43%)

Example: A UK expat who resides in Italy rents out their Puglia apartment for €10,000 annually. With cedolare secca, they pay €2,100 (21%) instead of up to €4,300 (43% progressive rate), saving €2,200.

Practical Tips for Managing Property Taxes

To minimize your tax burden as a foreign buyer:

• Claim Prima Casa Benefits: If relocating, whenever it’s a legit option, register the property as your primary residence to access reduced purchase taxes and IMU/TASI exemptions.
• Opt for Cedolare Secca: If renting out your property, choose the flat tax to simplify reporting and reduce costs.
• Check Municipal Rates: Puglia and Sicily municipalities vary in IMU and TASI rates. Research local rules or consult a tax advisor.
• Budget for Notary Fees: While not tax-deductible, notary fees (1–2% of property value) are a significant purchase cost.
• Monitor Tax Residency: Non-residents only pay taxes on Italian-sourced income (e.g., rental income), but spending over 183 days in Italy may make you a tax resident, affecting your obligations.

Next Steps: Budget Smartly for Your Italian Property

Navigating Italy’s tax rules is key to making your relocation financially sound. Whether you’re a young professional, a family, or a digital nomad drawn to Italy’s vibrant culture and pleasant climate, understanding these rules ensures you maximize benefits and avoid pitfalls. Contact Tax4Expats through our website’s contact form to access ad-hoc, tailor-made support from our expert advisors, helping you settle into Italy with confidence.

Disclaimer: This article provides general information on Italy’s tax residency rules for expatriates. For tailored advice specific to your situation, we recommend contacting Tax4Expats via our contact form to schedule a consultation with our professional tax advisors.