Real estate taxation in Italy

Taxation on property is very favourable in Italy compared to many other countries. There are no restrictions on foreign ownership. Real estate in Italy has two completely independent value measurements. The “fiscal value” (also known as “cadastral value”) is the value recorded in the land registry, which is usually significantly lower than the “transaction value”, the value recorded in the purchase deed.

For residential properties, the value on which to apply the tax rates hereafter can either be the transaction value (TV) or the cadastral value (CV). CV is generally much lower than TV. For commercial and land, tax rates always apply to TV. Notary fees depend on a number of parameters, including the transaction value.

Taxation Upon Purchase

A non-resident private individual purchasing a newly built/an existing/an off plan property from a private individual pays 9% of fiscal value. Other rules apply to the purchase of land and whenever a company is involved.

• Notary and legal fees depend on several parameters, including the location, quality and value of the property. The combined amount usually varies between 2% and 4% of transaction value.
• Annual Taxation
• Property tax ranges from 0.4% to 0.7% of fiscal value, depending on location and property type. There is no wealth tax in Italy.
• Capital Gains Tax
• Individuals are exempt of capital gains tax five years after the purchase. If the property is sold within five years capital gains are taxed at 20%.
• In the case of companies or trusts, capital gains form part of the company’s income and are taxed at the applicable rate.