Legal issues when renting out an Italian holiday home

Legal issues when renting out an Italian holiday home

If you are lucky enough to own a property in Italy, the best advice I can offer is that you enjoy it 365 days per year!

However, should you have purchased the property for investment purposes, or you are not fortunate enough to afford a year's holiday, renting out your property maybe an option.

Dependent upon the duration of the period you wish to rent out your property for, there are specific types of tenancy agreements that you may choose from, each of which come with their own legal implications.

So, firstly there are two categories of tenancy agreement: residential and non-residential.

There are various types of residential tenancy agreements; although they are usually valid for a period of four years - and can be renewed for the same - there are also shorter lets, called Short Term Contracts. Do note however, regardless of the duration of the tenancy agreement, there are also some important tax implications you should be aware of when renting a property out.

The first issue concerns the fact that generally speaking the tenancy agreement must be filed with the tax authorities to be stamped and the relevant Stamp Duty tax must paid. This takes place at the commencement of the tenancy, and is paid for every year of the tenancy agreement.
Stamp Duty tax is obligatory if the term of the tenancy agreement is more than 30 days total in a year.

Tax changes since 2011: stamp duty

The registration of a tenancy agreement involves the payment of Stamp Duty OR "cedolare secca".

Since 2011, owners of property leased for residential purposes may choose to pay (as a tax on rental income) the Stamp Duty at the moment of registration of the contract; or a new tax (cedolare secca) so that tax will be paid in the tax return as direct-income tax.

Both the landlord and the tenant are jointly liable for the payment of the stamp duty.

Therefore, should you decide to let your tenant assume responsibility for the payment of their share of the initial and the annual stamp duty, you must ensure that he/she actually does so, or you may be held liable for their non-payment.

Income tax

The second issue concerns the income tax that is payable on the rent. Whether or not you are resident - for tax purposes - in Italy, there may potentially be income tax payable on the rent you receive.

In order to do so you might be required to register with the tax authorities - a good idea would be to seek the advice of an accountant or tax specialist who can advise on calculation of tax payable on the rental income and prepare and file your tax returns accordingly.

It is worth being aware of the UK/Italy double taxation agreement, whereby income derived from property by a resident of one of the countries may be taxed in the other.


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