Property Taxation in Italy: What Every Foreign Buyer Needs to Know

Purchasing property in Italy requires a clear understanding of a specific tax framework. The applicable rules vary depending on whether the property is acquired as a primary residence, a second home or a rental investment, and on whether or not the buyer is an Italian tax resident. BARNES Milan provides a clear and up-to-date overview of the key considerations.

IMU and TARI: Annual Property Taxes

Property owners in Italy are generally subject to two main annual taxes.

IMU, the municipal property tax, is calculated on the property’s cadastral value, with rates varying by municipality. For second homes, these rates generally range from 0.86% to 1.06%.

TARI, the waste collection tax, finances local waste-management services and is calculated primarily according to the size of the property.

Primary Residence: A Valuable Exemption

Owners who establish the property as their primary residence are exempt from paying IMU on it. This significant tax advantage makes purchasing a main home in Italy even more attractive.

The Inbound Workers Regime: A Transformative Tax Framework

Introduced in 2019 and regularly renewed, Italy’s inbound workers regime allows individuals who transfer their tax residence to Italy to benefit from a 70% exemption — rising to 90% in certain southern regions — on employment income generated in Italy, for a renewable five-year period.

Alongside this regime, the annual €100,000 flat tax on foreign-source income has become a popular option among high-net-worth individuals.

Capital Gains on Property

When a property is resold within five years of its purchase, any capital gain is taxed at 26%.

After five years, the capital gain is fully exempt from tax, a rule that naturally encourages a medium-term investment strategy.

Our Recommendation

The Italian tax system can be highly favourable to well-informed buyers who plan their strategy carefully.

BARNES Milan works with specialist tax advisers and lawyers who assist our clients in optimising their individual position. We introduce each client to the most appropriate experts based on their personal circumstances.

For an initial tax consultation, contact BARNES Milan.