Costs of property ownership in Italy

Ownership costs and taxes

After buying an Italian property, you will need to notify the local police authorities within 48 hours of signing the final deed of sale. Next you must organise contracts for utilities such as gas, water, electricity and telephone.

Property owners must pay several taxes or levies that fall under the umbrella of IUC taxes. They cover local services and waste collection taxes and are due three times per year – April, August and December – and calculated on a property’s square meterage and/or book (cadastral) value.

Expat schemes

There are tax schemes available for expats moving to southern Italy (from Abruzzo to the south). After becoming a resident of Italy, in the first 10 years you will have a reduced income tax rate of 7%. This might be especially appealing to retirees, whose income typically decreases.

Flat tax (millionaire's tax)

This is a tax in Italy that isn’t as well known. Flat tax (also known as millionaire’s tax) can be an option for those with high finances. Instead of paying the normal tax rates, you can pay €100,000 upfront and you will not have to pay any more tax.

Inheritance Tax 

One of the benefits of owning a property in Italy is that there is no tax payable on estates valued up to €1 million that are being inherited by either a surviving spouse or children  – either Italian residents or non-resident foreign owners. A property is valued by its book/cadastral value, not market value (as per with purchase tax). When an estate is valued over €1 million, IHT is payable at 4% by immediate family members. Siblings have a €100,000 allowance each, after which IHT is payable at 6%.

Taxation/CGT 

If you choose to become a tax-resident of Italy or are an ex-pat living in Italy full-time, you now have to declare all your assets held outside the country (such as a UK bank account) to the tax authorities annually. Residents are taxed on their worldwide income at rates from 23% to 43%– rates are progressive. Capital Gains Tax (CGT) is not levied on property held for more than five years, but if a property is held for a shorter period of time, gains are considered as ordinary income and taxed at the same progressive rates referred to above.

Rentals

If you wish to rent out your Italian property you’ll be relieved to know that Italy doesn't have the strict restrictions  on holiday lets that can be found in some other countries/regions, or the need for specific licences. However, it's worth noting that you will be taxed on rental income in Italy (normally between 23 and 43%, although there can often be deductions). You will need to file a tax return every year if you're renting out your property.