Tax obligations for a secondary dwelling in Italy: A rundown on tax implications.
Owning a second home in Italy is the dream of countless individuals. But for those who have a 'seconda casa' in the country, it's essential to stay clear of any trouble with the Italian taxman.
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Are you planning to buy or have recently purchased a holiday home in Italy? Make sure you're well-versed in Italian taxes on second homes. Here's a quick summary of what you need to be aware of.
Calculating taxes on a second home
First off, it's important to note that taxes on second homes are typically higher than for primary residences (or a main home) due to the constitutional right to a home in Italy. This means utility bills might be higher on holiday properties compared to reduced tariffs for first homes.
READ ALSO: Can you pay your Italian utility bills via direct debit from a foreign account?
The good news is that the hard part is over once you've successfully navigated the buying process. According to tax expert Nicolo Bolla of Accounting Bolla, "The cost of maintaining a property in Italy is much easier to calculate than the fees you need to work out for buying a property."
Compared to stamp duties, VAT payments, and notary fees involved with buying a house, paying taxes is less complex but still crucial to understand to steer clear of issues or possible fines from the Italian Revenue Agency.
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What taxes will you pay?
IMU
IMU, or Imposta Municipale Unica ('Unified Municipal Tax'), is Italy's main property tax and is determined by the property's value. This tax is mandatory for second homes as residents benefit from exemptions unavailable to second-home owners.
Non-EU nationals without residency in Italy are permitted to spend 90 days out of every 180 in the EU. Anyone in this category with a second home in Italy would need to pay IMU.
Luxury dwellings, regardless of whether they're a primary or secondary residence, may also be subject to this tax. Homes falling under cadastral categories A1, A8, and A9 are all considered luxury dwellings for tax purposes.
Payment is based on a percentage of the property's value and is collected by the municipality where your home is located, with a portion also going to the national government.
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TARI
The Tassa sui Rifiuti ('waste disposal tax') is paid by homeowners to cover rubbish collection services. Unlike IMU, this tax applies to both main residences and second homes.
(Please note: if you choose to rent your Italian property, the tenant will be responsible for paying TARI if the rental agreement is longer than six months.)
The municipality determines the exact amount, and homeowners receive a payment notice. TARI is calculated based on factors like the property's surface area, the number of people living in it, and the waste produced.
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Additional Considerations
The IRPEF, or Italy's personal income tax, may apply to second homes if they are rented out and generate rental income. If you're using the property exclusively as your second home and don't rent it out when you're not in Italy, income tax is not due.
What if I want to rent out my second home?
If you're considering letting your property in Italy, be aware that there will be additional taxation and bureaucracy involved. Firstly, IRPEF would be due on the income generated from rent paid by your tenants according to the established scale rates. IRPEF ranges from 23 percent to 43 percent of your taxable income depending on your earnings.
Besides IRPEF, you'll also have to pay an additional municipal tax known as Addizionale Comunale. Additionally, you will need to file yearly income tax returns with Italy's tax revenue agency if you're a foreign resident renting out your Italian property. This may introduce further complexities.
For more information on property taxes in Italy, consult a qualified professional as the amounts owed may change depending on personal circumstances, property location, and type.
Please note that our website cannot advise on specific cases. Read more in our Italian property section.
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See Also
[Adult Content Section Title]
- [Article 1 on paying taxes for non-resident property owners]
- [Article 2 on understanding and managing property taxes in Italy]
- [Article 3 on the tax increases in Italy and its impact on property values]
- EU nationals who have residency in Italy can benefit from exemptions on IMU (Imposta Municipale Unica) that non-EU nationals without Italian residency do not enjoy, even though the latter are allowed to spend 90 days out of every 180 in the EU.
- Italian tax laws consider homes falling under cadastral categories A1, A8, and A9 as luxury dwellings, and they may be subject to higher taxes regardless of whether they are primary or secondary residences.
- If a foreign resident rents out their second home in Italy, they will be responsible for paying IRPEF (Italia's personal income tax) on the generated rental income, which ranges from 23 percent to 43 percent of taxable income depending on earnings.
- In addition to IRPEF, foreign residents renting out their Italian properties must also pay an additional municipal tax known as Addizionale Comunale, file yearly income tax returns with Italy's tax revenue agency, and contend with further complexities due to bureaucratic requirements.
