Understanding the cadastral value, or “valore catastale” of a property is important for all those considering purchasing or inheriting real estate in Italy, but it is often a term that is new for foreign buyers. Delving into the intricacies of what the cadastral value entails and how it is calculated is crucial for making informed decisions in the Italian real estate market.

What exactly is the cadastral value of a property?
The cadastral value of a property in Italy represents its fiscal value, utilized for the calculation of taxes associated with property ownership or acquisition. Unlike the market value, which reflects the price at which a property is bought or sold, the cadastral value is specifically tailored for taxation purposes. It’s worth noting that the cadastral value may significantly differ from the market value or selling price of a property.

Essentially, the cadastral value serves as the taxable base upon which various property-related taxes are levied. This value plays a pivotal role in determining the property registration tax, which is a one-time tax obligation incurred upon purchasing a property from a private individual in Italy (in the case of purchasing a home from a construction company, this tax changes). For instance, the tax rate for primary residences is calculated as 2% of the cadastral value, whereas for secondary homes such as investment or vacation properties, the rate increases to 9%.

A primary residence is considered to be the home that serves as your permanent address, where you spend more than 6 months of the year.

Furthermore, the cadastral value serves as the taxable base for computing the IMU (Municipal Property Tax), with specific multipliers applied for this purpose.

To read more about the taxes and general costs associated with a property purchase in Italy, check out our previous article.

How is the cadastral value calculated?
Determining the cadastral value of a property is a process that involves understanding the concept of cadastral coefficients.

As a general rule, the cadastral value is calculated by multiplying the cadastral income (adjusted by 5%) by the cadastral coefficient corresponding to the property’s cadastral category.

The cadastral income, also known as “rendita catastale,” is assigned to each property by the Italian Tax Revenue Agency. It’s essential to differentiate between the cadastral value and the cadastral income. While the cadastral value serves as the fiscal benchmark for taxation purposes, the cadastral income represents the hypothetical income that a property could generate. This cadastral income, adjusted by 5%, forms the basis for calculating the cadastral value.

When embarking on a property search in Italy, it’s important to consult your legal advisor regarding the cadastral income of prospective properties. This information enables you to estimate the property registration taxes accurately.

However, it’s important to bear in mind that both the cadastral income and cadastral value are subject to adjustment and validation by the notary during the property closing process. The notary, in collaboration with the Tax Revenue Agency, conducts a final round of property checks and due diligence to ascertain and finalize these values. This ensures transparency and accuracy in the property transaction process.

To speak directly with one of our consultants for questions on the cadastral value of a property in Italy, please reach out to us at info@italianrealestatelawyers.com.

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