We often talk about investment strategies, how to buy a house and how not to make mistakes. These are very beautiful things; but let’s face it, everyone has a fear, especially Italian people: taxes. In this article, we will (finally) understand together what taxes you have to pay to buy a house and how much is property tax in Italy.
I often read articles by experts who use big words and expose a thousand tricks, I will be clear and concise in order to make this complicated matter as simple as possible.
If you will have any further needs in buying/selling a property or real estate investing in Italy you can leave a comment or e-mail me.
Index
- Buying property in Italy: Tax
- Registration of the preliminary contract, buying a house in Italy
- Buying with first house tax relief from a company
- Buying a home from a company
- Buy with first house tax relief from a private individual
- Buying a property from a private individual
- What is the first House tax relief?
- How Much is property tax in Italy?
Buying property in Italy: Tax
- Registration Tax
- VAT
- Hypothecary and cadastral taxes
- Registration of the compromise
These fees change depending on the specific situation. I advise you to understand which is your case and go directly to read the dedicated paragraph without having to read all the other cases that may not interest you (actually, taxes are not a very exciting topic!).
Taxation of a real estate purchase is usually on the buyer.
Registration of the preliminary contract, buying a house in Italy
I start from this point because it is the same in all the different cases. The fixed costs for the registration of the preliminary contract are:
- 200 euros
- 16 euros as stamp duty for every 4 pages or 100 lines of paper.
In addition to these costs, advances must be paid with respect to the registration tax which will then be paid in the notarial deed, specifically:
- 0.5% of the amounts paid as a deposit
- 3% of the amounts paid as a down payment
These last two items are not “extra” costs and they will be deducted from the registration tax due to the final deed of sale.
Buying with first house tax relief from a company
If it’s your first house in Italy you can take advantage of the tax relief (continue to read)
If the seller is a construction company (which sells within 5 years of the completion of the work), the VAT will have a rate of 4%, the registration tax, the mortgage and the cadastral tax will be € 200.00 each.
Example: purchase price € 100,000.
VAT = € 4,000
Mortgage, registry and cadastral taxes: € 600 (in total)
TOTAL: € 4600
If a construction company, after 5 years from the completion of the works, or a non-construction company sell a property it does not apply VAT, the registration tax is equal to 2% of the revalued cadastral income (minimum € 1,000 ), the mortgage and cadastral tax are equal to € 50, each.
Example: purchase price € 100,000, cadastral value € 50,000
Registration fee: 1000 €
Mortgage and cadastral taxes: € 100 (in total).
TOTAL: € 1100
Buying a home from a company
In the case of a non-luxury second home, the registration tax, the land registry and the mortgage are € 200.00, while the VAT increases to 10%.
Example: purchase price € 100,000
VAT = € 10,000
Mortgage, cadastral and registry taxes: € 600 (in total)
TOTAL: € 10,600
If the house is luxury then the land registry, mortgage and registry tax will remain unaffected, instead, the VAT rate rises to 22%.
Example: purchase price € 100,000
VAT: € 22,000
Mortgage, cadastral and registry taxes: € 600 (in total)
TOTAL: € 22,600
Buy with first house tax relief from a private individual
The mortgage and cadastral taxes amount to € 50 each, the registration tax is equal to 2% of the revalued cadastral income (minimum € 1,000). No VAT is payable.
Example: purchase price € 100,000, revalued cadastral income € 50,000
Registration fee: 1000 €
Mortgage and registration taxes: € 100 (in total)
TOTAL: € 1100
Buying a property from a private individual
The mortgage and cadastral taxes amount to € 50 each, the registration fee is equal to 9% of the revalued cadastral value.
Example: purchase price € 100,000, revalued cadastral income € 50,000
Registration fee: 4500 €
Mortgage and cadastral taxes: 100 € (in total)
TOTAL: € 4,600
What is the first House tax relief?
If you choose to buy a house in Italy you could choose to take advantage of this tax relief, below you need that the property:
- It is classified as a dwelling
- Not classified as “luxury”, according to the land registry classification A/1, A/8, A/9
- It is located in the municipality where the buyer has or, within 18 months, intends to transfer his residence.
The benefits may also be applied to the appurtenances of the house. However, with the limit of one for each of the cadastral categories C / 2 (cellar or attic), C / 6 (garage or box) and C / 7 (closed or open canopy).
In addition to the characteristics of the property, in order to benefit from the concessions, the buyer must:
- Within 18 months of the purchase, undertake to establish residence in the territory of the Municipality where the property to be purchased is located, if not already resident there;
- He is not the sole owner or in communion with his spouse of property rights, usufruct, use and residence of another house in the territory of the Municipality where the property to be purchased is located;
- Is not the owner, throughout the national territory, of property rights, usufruct, use, dwelling and bare ownership on another house purchased by the same person or by the spouse by taking advantage of the first home tax breaks that have followed over the years.
Both foreign citizens and emigrants abroad will be able to take advantage of the first home benefits. It should be specified that taxpayers who do not have Italian citizenship can purchase a first home with concessions if the required requirements are met.
Is there a property tax in Italy?
The answer is yes, and it’s called IMU.
How Much is property tax in Italy?
IMU (property tax in Italy) is paid annually and is calculated starting from the taxable value, here is the formula to calculate it:
- Take the cadastral income
- Increase it by 5%
- Multiply the results with the right coefficient (look at the tab right after)
| Cadastral category | Coefficient | Type of property |
| From A / 1 to A / 11 (excluding A / 10) | 160 | stately, civil, economical, popular, ultra-popular, rural, small villas, villas, castles, palaces of outstanding artistic or historical value, typical accommodation of the places |
| A/10 | 80 | Offices or private studios |
| From B1 to B8 | 140 | Colleges and boarding schools, nursing homes and non-profit hospitals, prisons and reformatories, public offices, schools and laboratories, libraries, museums, galleries, academies, clubs |
| C/1 | 55 | Shops |
| C/2, C/6, C/7 | 160 | Warehouses and storage rooms, stables, sheds |
| C / 3, C / 4, C / 5 | 140 | Laboratories for arts and crafts, buildings and premises for non-profit sports exercises, bathing establishments |
| From D / 1 to D / 10 (excluding D / 5) | 65 | Factories, hotels and boarding houses, theatres, cinemas, halls for concerts and shows and the like, nursing homes and hospitals, buildings and premises for sports exercises |
The tab of coefficients to calculate the right taxable value
IMU: property tax in Italy
When you have this value you just need to apply the rate of the municipality where the house is located.
The rate can change in every city and here are the 2 types of rates:
- An ordinary one (in general cases), is equal to 0.86%; Municipalities can increase it up to 1.06 or decrease it up to zero. It is possible to further increase the rate under certain conditions;
- A reduced one (luxury home with residency and related appurtenances), is equal to 0.5%; Municipalities can increase it by 0.1% or decrease it to zero
This article will surely have clarified many doubts about what taxes you have to pay to buy a house in Italy but, if you still need some advice or help, I invite you to write me an email here.
