In general, the cost of owning a home in most parts of Italy is significantly more affordable than in much of the United States. Many people are hesitant to purchase a second home in Italy because they assume the taxes and costs will be similar to those in the U.S. However, they’re often pleasantly surprised to find that owning a property in Italy—even as a non-resident—is far more accessible and affordable than expected.
Purchase Taxes
When you buy property in Italy, you pay taxes at the time of purchase. The exact type and amount depends on:
- Whether you’re buying from a private seller or a developer
- Whether the property is your first home (prima casa) or not
➤ A. Buying from a Private Seller (Used Property):
- Registration Tax (Imposta di Registro):
- 2% of the cadastral value (valore catastale) if it’s your first home
- 9% if it’s a second home or not your primary residence
- Fixed taxes:
- €50 for mortgage tax (imposta ipotecaria)
- €50 for cadastral tax (imposta catastale)
First home bonus applies only if the buyer resides or plans to reside in the municipality within 18 months and doesn’t already own another prima casa in Italy.
➤ B. Buying from a Developer (New Property):
- VAT (IVA):
- 4% if first home
- 10% if second home
- 22% for luxury properties (A/1, A/8, A/9 categories)
- Plus: Mortgage and cadastral taxes of €200 each
🏡 2. Annual Property Taxes
Once you own the property, you’ll pay ongoing annual taxes—mainly:
➤ A. IMU (Imposta Municipale Unica)
- A local property tax paid to the municipality
- Based on the cadastral value multiplied by set coefficients and a local rate
- Not due on your prima casa (primary residence), unless it’s a luxury property. This is only true if you are tax resident in Italy.
- Always due for second homes, rental properties, and non-resident owners
➤ B. TARI (Tassa Rifiuti)
- This tax is paid instead of a paying separately for garbage.
- Calculated based on property size (m²) and number of occupants
- Due annually to the comune (municipality), usually in 2-3 installments
3. Income Tax (If You Rent the Property)
If you rent out your Italian property, you’ll owe tax on rental income:
➤ A. Standard Regime:
- Rental income is added to your personal income and taxed at progressive IRPEF rates (23%–43%)
➤ B. Cedolare Secca (Flat Tax Option):
- 21% on gross rent for standard leases
- 10% for long-term, subsidized rental contracts (if eligible)
- Opting for cedolare secca means you don’t pay registration or annual stamp duties on the lease
4. Additional Notes for Foreign Owners
- Non-residents must still pay IMU and TARI on their Italian homes
- Income from rental property must be declared both in Italy, your country of Residence and the United States (if you are an American citizen)
- Property ownership may need to be declared abroad (e.g., on IRS Form 8938 or FBAR for U.S. citizens)
Example: A Second Home in Sicily
Let’s say you buy a holiday home in Sicily for €80,000 from a private seller:
- Purchase tax: 9% of cadastral value (~€1,500)
- Annual IMU: ~€200–€800 depending on the municipality
- TARI: €100–€300 per year
- Rental tax: 21% on rental income if using cedolare secca
Final Thoughts
Owning property in Italy means navigating a patchwork of national and local taxes—but with the right planning and guidance, it’s manageable. Whether you’re investing, retiring, or returning to your roots, make sure to:
- Budget for both upfront and annual costs
- Keep track of deadlines and local regulations
- Feel free to schedule a consultation with us to get precise local advice.
Living the Sicilian dream is absolutely possible, let us help not make it a nightmare.
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