ITALIAN PROPERTY TAX
When Purchasing a Property in Italy, these are the Taxes you will pay:
The total expenses incurred in the purchase should not, on average, exceed 12% of the purchase price. The individual expenses and fees are as follows:
STAMP DUTY - IMPOSTA DI REGISTRO There is no stamp duty threshold as in other countries, and you will therefore be required to pay at the appropriate rate. If the property is purchased from an individual, the rate is 11% of the government valuation. The value of the property assessed is not the purchase price itself, but the figure assessed by the local tax office from official tables.
LAND REGISTRY FEES ('Imposta di Registro', e Imposta Catastrale) The fees of the Property Registry for registering your scrittura in the register will be assessed on a scale fee according to the value. They vary from 3 to 7% depending on the declared value and the reason for purchase (residential, second home etc.). Most non-residents pay 7%.
NOTARIAL FEES A fee is charged by a notary to prepare and legalise the scrittura. This is also a scale fee based on the declared value.
MORTGAGE REGISTRATION FEE - Imposta Ipotecaria- this is 0.25% of the loan amount if the property is your main residence, or 2% if it's your second home.
VAT or 'Imposta sul Valora Aggiunto' (IVA) - this is only payable for new homes and varies from 10% up to 20% for luxury homes. It is usually included in the price, but always check.
ITALIAN PROPERTY TAXES - WHEN YOU ALREADY OWN AN ITALIAN PROPERTY
Taxation of Italian property - Local Taxes Tassas Comunales
There are two local property taxes in Italy which are both based on the property's theoretical rental value according to the local land registry, and is adjusted in line with inflation. The rates of tax will vary from region to region due to the varying rates of tax imposed by the regional and local governments.
There is a local municipal property tax called ICI (Imposta Comunale sugli Immobili), and is paid by anyone who owns property or land in Italy, whether they are a resident or non-resident. The amount of the tax is cal-
culated by reference to the "rendita catastrale" (official value of the property) registered in respect of all
properties in Italy. This is a property tax levied by the comune (the equivalent of your local council in the UK or US).
Some Municipalities raise additional taxation in relation to the services that they supply to people in the area. These may include rubbish collection, cleaning of the streets and beaches etc. Municipalities also have the right to raise a charge for the use of a vehicle in their area. Not all do so. The amounts of these charges are not generally high, and should be between €200 and €250 per year.
Personal Taxes
As a non-resident property owner in Italy, you may be liable for income tax, value added tax, capital gains
tax and inheritance tax. Individual situations vary considerably and it is best to seek specialist advice from a tax consultant who has knowledge of the Italian tax system.
Income tax (Imposta sul Reddito delle Persone Fisiche (IRPEF)
A person not resident in Italy for tax purposes must still make an annual declaration for income tax. The
Italian Authorities are only concerned with the income you derive from activities in Italy, not your world-wide income. Typical examples of this will be interest on any money you have on deposit with a Italian bank or income you derive from letting your Italian property. If you let your Italian property you will have to declare
the income received. You will be able to set off certain expenses against that income – repairs,
management expenses, local taxes etc. The residue is taxed at between 19% and 46%, depending on the amount. For most people it will be about 30%. As this income is part of your world wide income it will have
to be declared to the country where you live, but double taxation relief does exist as a result of a Treaty between the two countries. You do not need to file a tax declaration if you have no income in Italy.
Notional Income Tax
There is also a tax to pay upon the notional rental value of your house, even if you do not actually rent it out. This is based on the official rendita catastrale (rateable value). It is normally small.
Capital gains tax (imposta sostitutiva sulle plusvaenze)
As from January 1st 1993 capital gains tax on the sale of property or land no longer exists, and has been replaced with an annual tax on property called ICI (Imposta Comunale sugli Immobili) which is defined above.
While property values are periodically taxed via IRPEF, there is now no capital gains tax on property (the former INVIM) and there is no wealth tax. Inheritance and gifting of property are sheltered too, with gifts under €80,760 or to close family members shielded from tax. The position on inheritance, with numerous
exemptions and a sliding scale of marginal taxation is complex and you should seek expert advice. And
again, it’s not quite as rosy as it sounds. Though Berlusconi’s government conceived the plan as a way of attracting capital back into Italy, your real estate owned in Italy is regarded as being subject to the tax laws of your home country. Again, this is a juncture for consulting the commercialista or your home tax advisor.
Wealth tax
Unlike most of the other European countries, there is no wealth tax in Italy.
Inheritance tax (Imposta sul Morto)
Both residents and non-resident property owners are subject to Italian inheritance law, with the amount of
tax paid varying depending on the relationship between the deceased and the heirs. Both the estate and each individual beneficiary in the legacy received (Imposta Individuale - beneficiary's tax) is taxed.
In 2007 the new Prodi government re-introduced Inheritance and Gift Tax - but in a very low rate. These new tax rates are still much lower than those applied before 2001, and compare very favourably with the inheritance tax rates applied in other western countries.