Italian Property Taxes for International Buyers

IMU: the annual municipal property tax

Imposta Municipale Propria (IMU) is Italy's annual municipal property tax. It is charged by each municipality (comune) on all properties. The local rate generally falls between 0.4% and 1.06% of the rendita catastale (cadastral income). That amount is then multiplied by a statutory coefficient based on the property's category. IMU is therefore calculated using an assessed value that may be substantially below the market value.

The key exemption is that IMU does not apply to your prima casa (primary residence) if you are formally resident there, but the exemption does not extend to luxury-category properties. Homes registered as A/1 (signorile), A/8 (ville) or A/9 (castles and palaces of historic or artistic importance) remain taxable even if the owner occupies them as a primary residence. Many of the finest lake villas are registered A/8 or A/9, meaning IMU applies regardless of your residency status.

Owners who are not resident in Italy pay IMU on every Italian property they own. Municipalities in premium lake locations, including Stresa, Bellagio and Cernobbio, frequently set rates at or close to the maximum permitted. Obtain the precise aliquota IMU for any property you are seriously considering.

TARI: the waste collection levy

TARI (Tassa sui Rifiuti) is a separate annual charge for municipal waste collection and disposal. It is based on the property's surface area and the number of occupants. The charge applies to all owners and is usually modest. TASI, the former municipal services tax, was incorporated into IMU in 2020 and is no longer charged separately.

Registration tax at acquisition

For a resale property, meaning a property that is not a new build, the buyer pays the state imposta di registro (registration tax). For a purchase that is not a primary residence, the standard rate is 9% of cadastral value. Where the property qualifies as your prima casa and you undertake to take Italian residency within 18 months of purchase, the rate falls to 2% of cadastral value.

Registration tax is charged on the valore catastale (cadastral value), rather than the price paid. For premium lake properties, the cadastral value is often considerably below the market price. As a result, the tax as a proportion of the purchase price is usually lower than the headline rates indicate. The minimum tax is €1,000.

VAT on new-build properties

If you buy directly from a developer within five years of construction completion, VAT (IVA) applies instead of registration tax. The standard residential VAT rate is 10%. For luxury-category properties, namely A/1, A/8 and A/9, the rate increases to 22%. VAT is calculated on the agreed purchase price, not the cadastral value.

Most historic lake villas and period apartments are resale properties, which means registration tax applies instead of VAT. New-build luxury developments on the lakes are uncommon. If one is available, however, the 22% rate on an A/8 property represents a significant cost to include in your planning.

Capital gains on resale

When an Italian property is sold, any gain (plusvalenza) may be taxable. The principal exemption is based on the length of ownership: after more than five years, the gain is entirely tax-free. A property used as your primary residence for most of the holding period is generally exempt as well.

A non-resident who sells within five years of acquisition is subject to a 26% flat substitutive tax on the net gain. This is the sale price minus the purchase price and documented improvement costs. You may choose this treatment instead of ordinary income tax, and it is usually the simpler option for most non-resident sellers. Italy's double-taxation treaties may affect how the gain is treated in your home country, so obtain advice in both jurisdictions before deciding to sell.

Inheritance tax on Italian real estate

Italian inheritance tax (imposta sulle successioni) applies to Italian real property inherited by non-resident heirs, regardless of where the deceased was domiciled. The rate is determined by the relationship between the deceased and the heir:

• — 4% applies to direct heirs (spouse, children, parents) on the value above €1,000,000 per heir.
• — 6% applies to siblings. Ask your commercialista which exemption threshold applies to your circumstances.
• — 8% applies to all other beneficiaries and is charged on the entire value.

Italy has double-taxation treaties with many countries, which may reduce or eliminate the possibility of the same inheritance being taxed twice. Begin estate planning for Italian real estate early, ideally before or at the time of purchase, especially when the property is a high-value lake property.