What are Italy’s property taxes?

Becoming a property owner in Italy involves several obligations that continue well after the deed is signed. Both residents and non-residents are subject to Italian property taxation. The taxes that apply depend on the type of property, how it is classified in the land registry, whether the property is your main home or a second home, and who you buy from (a private individual or a business/developer).

An important clarification: the property taxes themselves (registration tax, VAT, IMU, TARI) do not change according to the buyer’s nationality. Italians and foreigners who own the same type of property are taxed in the same way. What actually changes the position of a foreign buyer is residency status, because residency determines whether you can claim the reduced “first-home” (prima casa) benefits and how rental income is declared.

Legal basis: the registration tax and the prima casa benefits are governed by Presidential Decree (D.P.R.) 26 April 1986, no. 131 (Testo Unico dell’Imposta di Registro), in particular Article 1 of the Tariff, Part I, and Note II-bis. IMU is governed by Law 27 December 2019, no. 160 (and prior Legislative Decree 23/2011). VAT on new-build sales follows D.P.R. 633/1972.

Before you buy: how the purchase is taxed

The most common way foreigners buy property in Italy is privately, directly from an existing owner rather than from a developer building new units. Buying from a private seller and buying from a business are taxed under two different regimes.

From a private seller (or a business selling VAT-exempt): you pay registration tax (imposta di registro) of 2% for a first home or 9% for a second home, plus a fixed mortgage-registry tax (imposta ipotecaria) of €50 and a fixed cadastral tax (imposta catastale) of €50 – €100 in fixed taxes in total. Note that the proportional registration tax can never be less than €1,000, even when 2% of the taxable value would be lower.

From a developer or company selling with VAT (IVA): you pay VAT of 4% (first home) or 10% (second home), or 22% if the property is in a luxury category (cadastral categories A/1, A/8 or A/9). In this case the registration, mortgage-registry and cadastral taxes are each due at a fixed €200 – €600 in fixed taxes in total.

Foreigners most often buy as a second home or holiday property. If instead you intend to move to Italy and make the property your main home, you will need to plan around residency, your Italian tax code (codice fiscale) and possibly the flat-tax regime for new residents.

A note on the mortgage-registry and cadastral taxes

The imposta ipotecaria and imposta catastale are often misunderstood. The name “ipotecaria” does not refer to a mortgage loan: it is a tax on the formality of recording the transfer in the public real-estate registers (registri immobiliari) and updating the land registry (catasto). The imposta catastale covers the cadastral update.

These are genuine State taxes, not a fee retained by the notary. The notary collects them at the time of registration and pays them over to the State (Agenzia delle Entrate) on the buyer’s behalf – acting, in effect, as a withholding/collecting agent. The amounts are fixed: €50 each when the sale is not subject to VAT (private seller or VAT-exempt business), and €200 each when the sale is subject to VAT.

The cadastral value

The cadastral value (valore catastale) is a tax value derived from the property’s cadastral income (rendita catastale) recorded in the land registry. It is usually well below the market price, but there is no fixed percentage: the gap depends on the property, its category and how recently the cadastral estimates were updated, so the relationship to market value varies considerably from one property to another.

• Cadastral income (rendita catastale): the registry’s notional taxable income for the property.
• Cadastral category (categoria catastale): the official classification of the property based on its use and type (e.g. A/2 civil dwelling, C/6 garage, A/10 office).

Multipliers for the purchase tax (“price-value” / prezzo-valore)

For residential purchases by a private individual not acting in business, the buyer can ask the notary to calculate the registration tax on the cadastral value rather than on the price (the prezzo-valore option). The formula is:

Cadastral value = Cadastral income × 1.05 × Multiplier

Multipliers for IMU (annual property tax)

IMU uses the same starting point (cadastral income revalued by 5%) but a completely different set of multipliers. Using the purchase-tax multipliers to estimate IMU would give the wrong figure.

The two phases of property taxation

Italian property taxes fall into two phases: the one-off taxes paid when you purchase, and the recurring taxes paid every year while you own the property. Knowing in advance which annual taxes apply to you is part of planning a purchase properly.

Phase 1 – At the time of purchase (one-off)

Phase 2 – While you own the property (annual)

IMU is the annual municipal property tax, due from the legal owner. Because it is administered by each municipality, the rate (aliquota) and the rules vary by location. An owner can be exempt where the property is their non-luxury main residence – broadly, where it is the owner’s registered address and is genuinely lived in. Luxury homes (categories A/1, A/8, A/9) pay IMU even when used as a main residence.

TARI is the municipal waste tax, financing collection, transport and recycling. It is paid by whoever occupies the property – the owner if they live there, or the tenant if it is rented out – and is calculated on two factors: the surface area of the property and the number of occupants.

Tax on rental income

If you lease your property, the rental income is taxable in Italy and must be declared. This applies to residents and non-residents alike: income from an Italian property is taxed in Italy regardless of where the owner lives. Owners who are individuals can generally choose between two regimes:

• Cedolare secca (flat substitute tax): a popular option that replaces progressive income tax (and certain other charges) with a flat rate – 21% for ordinary leases, or a reduced 10% for “agreed-rent” (canone concordato) contracts. No deductions are allowed for maintenance, agency fees or depreciation.
• IRPEF (progressive income tax): the rent is added to your other income and taxed at the progressive rates, currently 23% up to €28,000, 35% from €28,000 to €50,000, and 43% above €50,000, plus regional and municipal surcharges.

The 18-month residence rule

You can claim the first-home benefits (2% registration tax, or 4% VAT) even if you are not yet resident in Italy at the time of purchase – provided you commit to establishing residence in the municipality where the property is located within 18 months of signing the deed. This is the standard requirement for everyone, residents and foreigners; for a non-resident buyer it means you must actually relocate within that window to keep the benefit.

There is a separate, narrower rule for people who moved abroad for work: under Article 2 of Decree-Law 69/2023 and Circular 3/E of 2024, someone who lived or worked in Italy for at least five years before transferring abroad can claim the benefit for a property located in their municipality of birth or former residence, without having to move back. This is an objective test and does not depend on Italian citizenship.

Penalty for missing the deadline: if you do not establish residence within 18 months (and do not withdraw the commitment in time), you lose the benefit. You then owe the difference between the ordinary and reduced tax – for a private sale, the gap between 9% and 2% registration tax (or, for a VAT sale, between 10% and 4% VAT) – plus a penalty of 30% of that difference and interest. This makes timing something to plan carefully if you intend to claim the first-home benefits as a non-resident.

Conclusion

In short, property taxation in Italy depends not on your nationality but on whether the home is a first or second residence, who you buy from, and your residency status. Expect one-off taxes at purchase (registration tax or VAT, plus the fixed taxes) and recurring IMU and TARI thereafter, with rental income taxable in Italy whether or not you live there. Foreign buyers should pay particular attention to the cadastral value – which carries a different multiplier for the purchase tax than for IMU – and to the 18-month residence deadline that protects the first-home benefits. Because the details are easy to get wrong, it is worth confirming your specific position with a qualified professional before you sign. At AdvaLux, we help clients in understanding and getting through this rigorous process with our team of experts in real estate that are here to help you.