If you are thinking of purchasing a property in Italy you might want to learn more about the annual expenses involved. In fact, the Italian government allows people who own one house to pay less property taxes, however, people who own a second property or a holiday property in Italy are required to pay all local property taxes.
Please note that residency in Italy is mandatory in order to own a property that can be considered as “first” home.
If you are curious to learn more about the annual expenses related to your new real estate investment, this article will give you an overview of the different annual property taxes in Italy.
The main tax on a property is IUC (Imposta Unica Comunale – Single Municipal Tax); this tax includes the following:
- IMU (Imposta Municipale Propria – Local Municipal Tax): owners of a first home are exempt from paying this tax. Nevertheless, if the first property is a luxury home or a mansion, the tax has to be paid at a smaller rate than normal (0.4%).
For second/holiday property owners, this tax is divided into two payments (one due in June, one due in December) and its amount depends on the type of property. It is calculated as follows: the cadastral value of a property is multiplied by 1.05 (therefore adding a 5% to the cadastral value of the property). The value obtained will need to be multiplied again by the coefficient of each property. A rate will be applied to this amount. The basic rate for a second home is 0.76%. However, a municipality may decide to increase or decrease this rate up to 0.3%, depending on where the property is located. Therefore, the rate may vary from a minimum of 0.46% to a maximum of 1.06%.
Additional reduction on IMU tax or exemptions depend on the specific municipality or on particular circumstances related to the property or the owner.
- TASI (Tributo per i Servizi Indivisibili – Tax for Indivisible Services): owners of a first home are exempt from paying this tax. For the outstanding categories, this tax is calculated like IMU but the basic rate is 0.1%. As for IMU, municipalities can decide to increase or decrease this rate up to 0.25%.
- TARI (Tassa sui Rifiuti – Waste tax): as the name suggests, this tax covers the costs of waste collection, transport and disposal. Each municipality determines the amount due which is based on the property’s surface (square meters of the property) and quantity of waste produced (considering the number of individuals in the property).
The three above-mentioned taxes represent the main expenses when owning a property in Italy. However, when thinking of purchasing a property in Italy some additional costs have to be considered as part of the “fixed expenses”:
- Utility bills (water, electricity, heating, gas and telephone/wifi) are part of the additional costs. They are due in small amounts, based on consumption, and are due each month or every two months, depending on your contract.
- Condominium expenses: if the property you own is part of a residential building, you’ll be required to pay an amount which covers the costs related to the building and the common services present in the building (i.e. electricity, administrative costs). The amount will be divided among all the individuals living the building.
If you would like further information about the topic do not hesitate to contact us for a consultation!