The buying process in Italy

The purchase of a property in Italy as a non resident, and being a resident there, involves a series of fiscal obligations which must be met:

IMPOSTA SUL VALORE AGGIUNTO (V.A.T.)

This is charged at 10% on all new properties except luxury homes, which bear 20%.

IMPOSTA DI REGISTRO (REGISTRATION TAX)

This is a tax payable when you purchase either agricultural land or a house, apartment or building plot.
Usually it is a fixed tax of 168 €.

IMPOSTA IPOTECARIA (MORTAGAGE TAX)

This is a tax payable when you purchase either agricultural land or a house, apartment or building plot through a mortgage loan.
Usually it is a fixed tax of 168 €.

IMPOSTA CATASTALE (TAX FOR INVENTORY AND ASSESSMENT OF REAL PROPERTY)

This is a tax payable when you purchase either agricultural land or a house, apartment or building plot.
Usually it is a fixed tax of 168 €.

WEALTH TAX

There is no wealth tax in Italy.

ICI (LOCAL TAX)

This is the main local property tax affecting owners of properties in Italy.
The amount of the tax is calculated by reference to the "rendita catastale" (official value of the property) registered in respect of all properties in Italy.
The official values were, until recently, very low.
They are now rapidly rising, pursuant to a policy of the Italian Government that will result in the official values approaching the real value of the property.
In general terms, local taxes will cost less than taxes on a similar property in the UK, and will usually be between 0.4% - 0.9% of the estimated value of the property fixed by government tables.

TASSE LOCALI (ADDITIONAL LOCAL TAXES)

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.

CAPITAL GAIN TAX – REAL ESTATE

In case of resale of the house within five years from the purchase date the seller is liable for capital gains tax. This is a progressive tax and the percentage due at the present time is 20% of the gains. The gains are calculated by deducting the price of the purchase from the price of resale. It is possible to add to the deducting sums also the sums paid and directly related to the first purchase: notary fees, taxes, agent commission; and also the sums paid in case of renovation of the house. Legal costs and costs for ordinary maintenance can not be deducted. After five years time once has been producted a regular invoice from the purchase date there is no liability for capital gains tax.

INCOME TAX - IMPOSTA SUL REDDITO DELLE PERSONE FISICHE (IRPEF)

Residents of Italy are subject to income tax on their worldwide income, whilst non residents are subject to income tax only on income arising in Italy, e.g. rental income from a property in Italy.
A person not resident in Italy for tax purposes must still make an annual declaration of any Italian income.
You do not need to file a tax declaration if you have no income in Italy.
If you are resident in Italy, certain relief is available depending on the composition of the family, and the level of your income.

RENTAL INCOME

If you let a property in Italy you will be taxed on (usually) around 25% of the rental income received, depending on the area. Nevertheless you will be able to set off certain expenses against that income (repairs, management expenses, local taxes etc.).

to rent the property
you can freely rent the property; it is possible to rent the house you own  in the period of the year you prefer without any restriction.

the procedure due to rent the property
The Contract of Rent has to be registered at the competent Office of the Local Revenue within 30 days from the signature of the same. Before registering the Contract it is necessary to pay a fee of  2% of the annual rate for the period the house is being rented. This tax is not due if the Rental Contract has a duration of less than 30 days. For the Contracts which are more than 30 days duration it is also necessary to fill in a form at the local Police Station to communicate the name of the new tenant of the house within 48 hours from the moment the keys of the house are given to the new tenant. There is not any true rental rate: you can fix the rate you prefer.

the taxation in renting the property
There is a tax on the rental annual rate amounting to 2% of the rent.  It is due once a year. You should be aware that the tenant and the renter divide the tax between themselves and they pay the tax 1% each

GIFT AND INHERITANCE TAX

Spouses and next relatives are charged a 4% of the value, just over € 1.000.000. Within € 1.000.000 no gift and inheritance taxes for Spouses and next relatives
For other relatives to the limit of the fourth line of relationship the tax is 6% of value with an exemption of € 100.000. Where the beneficiary is not related to the donor, gift and inheritance tax will be 8% of value with no exemptions.

• MPOSTA IPOTECARIA FOR GIFT AND INHERITANCE

Usually it is a 2% value of property of calculated by reference to the "rendita catastale" (official value of the property) registered in respect of all properties in Italy.

• IMPOSTA CATASTALE (TAX FOR INVENTORY AND ASSESSMENT OF REAL PROPERTY) FOR GIFT AND INHERITANCE

Usually It is a 1% value of property of calculated by reference to the rendita catastale (official value of the property) registered in respect of all properties in Italy.