What Taxes Do You Pay on Italian Houses?

Purchase Taxes

When acquiring Italian property, taxes are paid at the point of sale. The amount depends on whether you're buying from a private individual or developer, and whether it will be your primary residence.

Buying from a Private Seller (Used Property)

The first home bonus applies only if you reside or plan to reside in the municipality within 18 months and don't already own another primary residence in Italy.

Buying from a Developer (New Property)

Additional fixed fees: €200 each for mortgage and cadastral taxes when buying from a developer.

Annual Property Taxes

IMU — Municipal Property Tax

IMU (Imposta Municipale Unica) is a municipal property tax based on cadastral value multiplied by coefficients and local rates:

• Primary residences: Exempt — provided you're an Italian tax resident living there (luxury properties still pay)
• Secondary homes and non-residents: Always applies, rates set by each municipality (typically 0.4%–1.06% of cadastral value)
• Rental properties: IMU applies regardless of whether rented

TARI — Waste Disposal Tax

Calculated using property size (square meters) and number of occupants. Paid annually to the municipality in 2–3 installments. All property owners pay TARI.

Rental Income Taxes

Standard IRPEF Regime

Rental income combines with other personal income and is taxed at progressive IRPEF rates (23%–43%), plus regional and municipal surcharges, as administered by the Italian tax authority (Agenzia delle Entrate). Non-residents may also face treaty-based withholding adjustments. On the U.S. side, it helps to understand how foreign rental income from Italy is taxed on a net, not gross, basis.

Cedolare Secca — Flat Tax Option

• 21% on gross rent for standard leases
• 10% for long-term subsidized rental contracts (canone concordato)
• Choosing this option eliminates lease registration and stamp duties
• Cannot deduct expenses but eliminates progressive rate exposure

What Non-Residents Need to Know

Americans purchasing Italian property as non-residents face different obligations than Italian residents:

• IMU applies to all secondary properties — no primary residence exemption unless you're a registered Italian resident
• Rental income must be declared both in Italy and on your U.S. return (with Foreign Tax Credit available to offset)
• U.S. FBAR reporting required if Italian bank accounts used for property management exceed $10,000
• Form 8938 may be required if total foreign financial assets exceed applicable thresholds

Becoming an Italian tax resident changes the picture again, adding annual exposure to the IVIE wealth tax on foreign real estate you hold outside Italy.

See also: Selling Italian Property and Capital Gains Tax for what happens when you eventually sell.

Frequently Asked Questions

What taxes do I pay when buying a house in Italy?

Purchase taxes are paid at the point of sale and depend on the seller and how you'll use the property. Buying a used home from a private seller means registration tax of 2% of cadastral value for a primary residence or 9% for a secondary home, plus fixed €50 mortgage and cadastral taxes. Buying new from a developer means VAT of 4% for a primary home, 10% for a secondary residence, or 22% for luxury properties, plus €200 each for mortgage and cadastral taxes.

Do non-residents have to pay IMU on Italian property?

Yes. IMU always applies to secondary homes and to non-resident owners, with rates set by each municipality (typically 0.4% to 1.06% of cadastral value). The primary-residence exemption is only available to registered Italian tax residents living in the home, so non-residents do not qualify for it. IMU also applies to rental properties regardless of whether they are rented out.

How is rental income from an Italian property taxed?

Under the standard regime, rental income is combined with other personal income and taxed at progressive IRPEF rates of 23% to 43%, plus regional and municipal surcharges. Alternatively, the cedolare secca flat tax charges 21% on gross rent for standard leases or 10% for long-term subsidized (canone concordato) contracts. Cedolare secca eliminates lease registration and stamp duties but does not allow you to deduct expenses.

Which annual taxes apply to owning a home in Italy?

The two main annual taxes are IMU, a municipal property tax based on cadastral value multiplied by coefficients and local rates, and TARI, a waste disposal tax calculated from the property's size and number of occupants. All property owners pay TARI, and it is paid to the municipality in two to three installments each year.

What U.S. obligations come with owning Italian property?

Non-resident American owners must pay IMU and TARI in Italy and declare any rental income both in Italy and on their U.S. return, with the Foreign Tax Credit available to offset it. FBAR reporting is required if Italian bank accounts used for property management exceed $10,000, and Form 8938 may be required if total foreign financial assets exceed the applicable thresholds.