Property Taxes in Italy: Buying, Renting & Selling

Italy consistently attracts international investors and second-home buyers thanks to its lifestyle, culture, and a relatively accessible property market. At Globihome we believe that anyone purchasing property in this country should have a good understanding of the Italian tax system for real estate.

Whether you plan to buy, sell, or rent a property in Italy, taxes may apply at various stages of ownership. Non-resident property owners must comply with Italian tax rules regarding property ownership, rental income, and capital gains.

In this article we outline the key real estate taxes in Italy for foreign owners, including property ownership taxes, rules for reporting rental income, and regulations related to sales.

Tax residence and property taxes in Italy

Before analyzing the different taxes, it is important to understand the rules of tax residence.

For tax purposes in Italy you are considered a non-resident if:

• you spend in Italy less than 183 days in a year,
• you do not maintain your main residence there,
• you do not have your main economic interests in that country.

Non-residents are taxed only on income deriving from Italian sources, which include:

• rental income from property located in Italy,
• capital gains from the sale of Italian property.

Owning property in Italy alone does not automatically trigger an income tax liability, but certain local property taxes and reporting obligations may still apply.

Property taxes in Italy for foreign owners

Property owners in Italy are typically subject to two main municipal taxes: IMU and TARI.

These taxes apply regardless of the owner's citizenship.

IMU (municipal property tax)

IMU (Imposta Municipale Unica) is the primary property tax in Italy.

It mainly applies to:

• second homes,
• investment properties,
• properties owned by non-residents.

Key features of IMU:

• payable twice a year (in June and December),
• calculated based on the cadastral value of the property,
• rates vary depending on the municipality,
• they usually range from 0.4% to 1.06%.

The main residence is usually exempt from IMU, but because foreign owners often use properties as holiday homes or investments, IMU generally applies to them.

TARI (waste collection tax)

TARI (Tassa sui Rifiuti) is a municipal tax intended to fund waste collection and waste management.

Its amount depends on:

• the area of the property (in square meters),
• the number of residents or users,
• local municipal rates.

The payment schedule varies by municipality and may include several installments.

In the case of long-term rental TARI is often paid directly by the tenant. For short-term rentals this obligation usually falls on the owner.

Whether you are looking for property in Italy for yourself or to rent out, you can find the latest listings from real estate agents in our articles about specific cities in Italy:

• Umbria Properties
• Sansepolcro Properties

Tax on rental income in Italy

If you rent out your property in Italy — both for long-term and short-term rentals — you must report that income to the Italian tax authorities. This rule applies even if you live outside Italy.

Property owners can choose between two main tax regimes.

Cedolare Secca: flat tax on rental income

The system Cedolare Secca is a simplified flat tax system applied to income from renting residential properties.

Tax rates:

• 21% flat tax for most residential lease agreements,
• 26% may apply in cases involving multiple properties rented short-term.

Advantages of Cedolare Secca:

• simplified tax calculation,
• no regional and municipal income taxes,
• exemption from certain registration fees and stamp duties related to the contract.

However in this system you cannot deduct expenses, such as repairs or property management fees.

Standard income tax (IRPEF)

Alternatively, rental income can be taxed under the standard, progressive income tax system IRPEF.

The current tax brackets include:

• 23% up to €28,000,
• 35% from €28,001 to €50,000,
• 43% above €50,000.

Under this system:

• in principle, the taxable amount is 95% of rental income,
• certain deductions and tax credits may apply.

For some investors with high expenses, this system can sometimes be more advantageous than the flat tax.

Rules for taxing short-term rentals in Italy

If you rent a property through short-term rental platforms, special rules may apply.

Platforms or intermediaries may be required to withhold 21% withholding tax on rental payments received from guests.

This tax is reported to the Italian tax authorities and can be used as an advance payment or tax credit when filing the annual tax return.

Reporting Rental Income in Italy

Non-residents who own property must report rental income using the Italian tax form Modello Redditi PF.

This process typically includes:

1. declaring annual rental income,
2. choosing the tax regime (Cedolare Secca or IRPEF),
3. paying any additional tax due.

Tax returns are usually filed in the year following the receipt of the income.

Failure to report rental income can result in significant penalties that may exceed twice the unpaid tax.

Additional Taxes on Rental Properties

Depending on how the property is used, there may be additional local obligations.

Tourist Tax (Imposta di Soggiorno)

Many Italian cities require guests using short-term rentals to pay the tourist tax.

Property owners or hosts must:

• collect the tax from guests,
• report it and remit it to the municipality.

The amount of the tax varies depending on the city and type of accommodation.

Capital Gains Tax on Property Sales in Italy

When selling property in Italy, capital gains tax may apply depending on how long the property was owned by the seller.

Rules regarding capital gains:

• no capital gains tax if the property was owned for more than five years,
• if sold within five years, a 26% capital gains tax.

Taxable income is calculated as the difference between:

• the sale price,
• the original purchase price, along with certain acquisition costs.

If you are considering buying property in other countries, on our Globihome blog you can compare properties in Albania, Spain, Greece, Cyprus or Bulgaria.

Double Taxation Agreements

Italy has signed double taxation agreements with many countries.

These agreements help prevent a situation where foreign investors are taxed twice on the same income.

Typically:

• rental income is taxed in Italy,
• the owner can claim relief or a tax credit in their country of residence.

Because treaty rules vary by country, it is often advisable to consult a tax advisor.

Managing Property Taxes in Italy

Owning property in Italy requires careful monitoring of local taxes, reporting obligations and deadlines.

Foreign property owners should keep documentation of:

• rental agreements,
• income received,
• taxes paid,
• property-related expenses.

ItalianTaxes.com

For anyone planning to move to or buy property in Italy, professional tax advice is a key element of a successful transition to a new reality.

In our opinion at Globihome, we believe it is worth considering ItalianTaxes.com It is a digital platform designed to simplify tax filings in Italy for expats, non-residents and people returning to Italy. By combining advanced technology with personalized support from licensed specialists, it helps users navigate tax processes, optimize their tax situation and remain compliant with regulations.

Property Taxes in Italy – Summary

Italy is one of the most popular destinations for international investors, attracting with its lifestyle, rich culture and affordable property prices. However, the key to success for any investment on the Apennine Peninsula is a thorough understanding of the local tax system.

The most important aspects every property owner in Italy must remember:

• Tax residence: Persons spending less than 183 days a year in Italy and not having their main economic interests there are considered non-residents. They are taxed only on income from Italian sources, such as rental income or capital gains from sales.
• Property ownership taxes (IMU and TARI): Owners typically pay the municipal property tax (IMU) – from 0.4% to 1.06% of the cadastral value – and a waste collection tax (TARI), the amount of which depends on the premises’ area and number of occupants.
• Property rental: Rental income can be taxed in two ways: a lump-sum Cedolare Secca (usually 21%) or according to the progressive IRPEF scale (from 23% to 43%). The choice depends on the costs incurred and the number of properties rented.
• Sales and capital gains: Selling a property within 5 years of purchase is subject to a 26% capital gains tax. After 5 years of ownership, the gain from sale is usually tax-exempt.
• Reporting obligations: Non-residents are required to file an annual tax return using the Modello Redditi PF. Failure to report income may result in severe financial penalties.