Italian Property Taxes: A Complete Guide for Foreign Owners and Buyers

Owning or purchasing property in Italy involves a range of tax obligations that foreign owners and buyers need to understand. Italian property taxation covers three distinct areas: periodic taxes on ownership, income taxes on rental income, and transfer taxes payable at the time of purchase, inheritance or donation. Understanding which taxes apply, how they are calculated and when they must be paid is essential for anyone holding or acquiring real estate in Italy.

This guide provides a systematic overview of all the main property taxes applicable in Italy, with a focus on the situations most commonly encountered by foreign owners and buyers. For guidance on the legal process of purchasing property in Italy from abroad, see our page on Italian property lawyer.

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1. Periodic Property Taxes: IMU and TARI

Foreign owners of property in Italy are subject to two main periodic taxes payable annually to the municipality where the property is located.

IMU — Municipal Property Tax

IMU (Imposta Municipale Unica) is the principal annual property tax in Italy. It applies to all property owners — both Italian residents and non-residents — with the notable exception of owners who use the property as their primary residence (abitazione principale) in a non-luxury cadastral category. For foreign buyers who purchase a property in Italy but retain their primary residence abroad, IMU is payable on the Italian property from the year of purchase.

IMU replaced the former ICI tax in 2012, and since 1 January 2020 also absorbed the former TASI tax, which had previously covered municipal indivisible services. The current IMU is therefore the single consolidated periodic municipal property tax.

Who is liable: the owner, or the holder of another real right over the property (usufruct, right of use, right of habitation, surface right, emphyteusis). Where the property is subject to a long-term lease, the lessee may also be liable in certain cases.

How IMU is calculated: the taxable base is the cadastral value of the property, obtained by multiplying the cadastral income (rendita catastale), revalued by 5%, by one of the following coefficients based on the cadastral category:

• 160 — residential buildings in groups A (excluding A/10) and C (excluding C/1 and C/5)
• 140 — buildings in group B and C/3, C/4, C/5
• 80 — buildings in categories A/10 and D/5
• 65 — buildings in group D (excluding D/5)
• 55 — buildings in category C/1

The municipal IMU rate (aliquota) is set annually by each municipality within the limits established by national law. The standard rate for properties other than the primary residence is generally set between 8.6‰ and 10.6‰ of the cadastral value. Each municipality publishes its rates, which must be consulted for precise calculations.

Payment dates: IMU is paid in two instalments — the first on 16 June (an advance payment based on the previous year’s rates), the second on 16 December (the balance based on the current year’s rates). Payment is made using the F24 form online or by postal order.

Exemptions from IMU: in addition to the primary residence exemption, IMU is not due on rural residential buildings with farm management, rural buildings used for agricultural activities, and agricultural land in mountainous municipalities.

Reductions: a 50% reduction on the taxable base applies to properties that are uninhabitable and uninhabited (certified by a qualified technician), and to properties loaned for use to a first-degree relative who uses it as their primary residence (subject to a registered contract). A 25% reduction applies to properties rented at a regulated agreed rent (canone concordato).

TARI — Waste Collection Tax

TARI (Tassa sui Rifiuti) covers the costs of the municipal urban solid waste collection and disposal service. It is payable by anyone who owns or occupies premises that can produce waste — the mere condition of having utilities connected to the property is generally sufficient to trigger liability.

How TARI is calculated: the tax is composed of a fixed element based on the surface area of the property and a variable element based on the number of occupants.

Who pays: if the property is rented out, the tenant bears the cost of TARI. If the property is vacant, the owner is liable.

Payment: TARI payment dates vary by municipality — most municipalities provide for at least two semi-annual instalments.

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2. Income Tax on Rental Income from Italian Property

Foreign owners who rent out property in Italy are subject to Italian income tax on the rental income produced, regardless of where they are resident. Italian tax law provides two main options:

IRPEF — Personal Income Tax on Rental Income

Where the standard income tax regime applies, rental income from Italian property forms part of the owner’s Italian income and is taxed at the progressive IRPEF rates. For non-residents, Italian income tax applies exclusively to income produced in Italy — Italian rental income is therefore always subject to Italian taxation regardless of the owner’s residence.

The taxable rental income is generally calculated as the higher of the cadastral income (revalued by 5%) or the actual annual rent received, reduced by a 5% flat deduction for maintenance costs. The resulting amount is included in the owner’s Italian taxable income and taxed at the applicable marginal rate.

Cedolare Secca — Flat-Rate Tax on Residential Rental Income

For residential letting contracts, Italian law provides an optional alternative to IRPEF: the cedolare secca, a flat-rate tax on the gross rental income. This regime is available to individual property owners who let residential properties under standard contracts.

The cedolare secca rates are:

• 21% — standard rate for free-market rental contracts
• 10% — reduced rate for contracts at agreed rents (canoni concordati) in municipalities with housing shortages

By choosing the cedolare secca, the owner benefits from:

• Exemption from the annual registration tax on the rental contract
• Waiver of the right to adjust the rent for ISTAT inflation during the contract term
• Exclusion of the rental income from the total income base for IRPEF purposes

The cedolare secca is collected at the time of contract registration and must be confirmed when filing the annual income tax return.

IRES — Corporate Income Tax

Where the owner of Italian property is a company rather than an individual, corporate income tax (IRES) applies to the rental income and any other property-related income, at the standard rate of 24%.

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3. Transfer Taxes on Purchase of Italian Property

The taxes payable when purchasing property in Italy depend on whether the property qualifies as a first home (prima casa), whether the seller is a private individual or a company, and whether VAT or registration tax applies.

Purchase from a Private Individual or Exempt Company

Where the seller is a private individual or a company whose sale is exempt from VAT, the buyer pays:

• First home purchase: registration tax at 2% of the property’s value (the lower of the declared purchase price and the cadastral value), plus fixed mortgage tax of €50 and fixed cadastral tax of €50. Stamp duty, special mortgage levies and cadastral charges are also exempt
• Second home or non-primary residence purchase: registration tax at 9% of the cadastral value, plus fixed mortgage tax of €50 and fixed cadastral tax of €50

Purchase from a Construction Company (VAT-Liable Sale)

Where the seller is a construction company selling the property within five years of completion, and the sale is subject to VAT, the buyer pays:

• First home: VAT at 4% of the purchase price, plus fixed registration tax of €200, fixed mortgage tax of €200 and fixed cadastral tax of €200
• Second home or non-primary residence: VAT at 10% (or 22% for luxury properties), plus fixed registration tax of €200, fixed mortgage tax of €200 and fixed cadastral tax of €200

The Prima Casa (First Home) Benefit

To qualify for the prima casa tax benefit, the buyer must declare at the time of the deed that they intend to establish their primary residence in the municipality where the property is located within 18 months of purchase. Foreign buyers who establish Italian residency qualify for this benefit. Non-residents who purchase a property as a holiday home or investment, without intending to establish Italian residency, generally do not qualify.

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4. Capital Gains Tax on the Sale of Italian Property

Where an Italian property is sold at a profit — at a price higher than the original purchase price — a capital gain (plusvalenza) may arise. Italian tax law distinguishes between exempt and taxable capital gains.

Exempt Capital Gains

No capital gains tax is due where:

• The property is sold more than five years after the date of purchase
• The property was inherited (regardless of when it is sold)
• The property was received as a donation, where the donor had held the property for more than five years before the donation
• The property was used as the seller’s primary residence for more than half of the period between purchase and sale

Taxable Capital Gains

Where the sale occurs within five years of purchase and none of the exemptions above apply, the capital gain is subject to tax. Two options are available:

• Standard IRPEF: the capital gain is included in the seller’s taxable income for the year and taxed at the applicable marginal IRPEF rate. This option is exercised when filing the annual income tax return
• Substitute tax at 26%: the seller can opt, at the time of signing the deed before the notary, to pay a flat substitute tax of 26% directly to the notary, who settles it with the tax authorities. This is generally advantageous for sellers with high marginal IRPEF rates

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Transfer Taxes on Inherited or Donated Property

Where property changes ownership through inheritance or donation rather than sale, inheritance tax (imposta di successione) or gift tax (imposta sulle donazioni) applies instead of registration tax. The rates depend on the degree of relationship between the transferor and the recipient, as described in our dedicated article on Italian inheritance tax: rates, calculation and payment. In addition to inheritance or gift tax, mortgage tax and cadastral tax are also due on inherited or donated real estate at rates of 2% and 1% respectively (or at fixed amounts where the primary residence exemption applies).

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Frequently Asked Questions

Do foreign owners who are not Italian residents have to pay IMU?

Yes. IMU applies to all owners of Italian property, regardless of their nationality or country of residence. Non-residents who own property in Italy that is not used as their primary residence in Italy are subject to IMU on that property. The primary residence exemption applies only where the owner actually uses the property as their habitual residence and is registered in the Italian resident population register at that address.

Can a non-resident use the prima casa benefit when buying property in Italy?

Yes, provided they commit to establishing their primary residence in the municipality where the property is located within 18 months of the purchase deed. A non-resident who purchases property as a holiday home or investment, without intending to transfer their primary residence to Italy, cannot use the prima casa benefit and pays registration tax at the standard 9% rate.

Is rental income from an Italian property taxable in Italy if I live abroad?

Yes. Italian income tax applies to income produced in Italy regardless of the owner’s country of residence. A non-resident who rents out property in Italy must declare that income in Italy and pay the applicable tax — either through the standard IRPEF system or, for residential lettings, by opting for the cedolare secca flat-rate regime.

What is the most tax-efficient way to rent out an Italian property as a foreign owner?

This depends on the individual owner’s tax position and the type of rental contract. For most individual foreign owners with residential letting contracts, the cedolare secca at 21% (or 10% for agreed-rent contracts) is generally simpler and often more advantageous than the standard IRPEF regime, particularly because it avoids the annual registration tax and provides a predictable flat rate. However, tax efficiency must be assessed in the context of the owner’s overall Italian and foreign tax position, taking into account any applicable double taxation treaties.

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Request an Initial Legal Assessment

If you are purchasing, owning or selling property in Italy from abroad and need guidance on the applicable tax obligations, contact our Italian property lawyer to request an initial legal assessment. We will review your specific situation and advise on the legal and tax aspects of your property matter under Italian law.