Buying a House in Italy

So you are planning to buy a house in Italy!? Here’s what you need to know about the different taxes etc…

Here’s an easy but hopefully comprehensive reference describing all the taxes involved in buying Italian property.

Tassa di Registro (RegisterTax)
This tax must be paid when a house is purchased and just then. The amount to pay may vary from 4% to 8% of the sale price.

Imposta Catastale e Ipotecaria (CadastralTax)
These two taxes are normally grouped together and must be paid when the house is bought, for transcriptions and variations of the public registers upon a change of ownership/purchase of a house. The amount to pay is approx. 260 ?.

IVA ? Imposta sul Valore Aggiunto (VAT ? Value AddedTax)
This tax is paid when a house is purchased and only if sold by a construction company, not by a private owner. The amount to pay can vary normally from 4 to 10 or in some cases even 20% of the sale price.

INVIM ? Imposta sull Incremento di Valore degli Immobili (Tax on the Increment of Value of a Property -now cancelled)
This tax was paid by property sellers and it has been cancelled in 2002 with the introduction of the ICI (see below). As the title says, the INVIM was a tax on the increment of value of a property, and it was calculated considering the initial value of a house, and the final value of the property, counting legal and notary taxes and expenses. The tax was paid at various rates, from 3% to 30% of the difference of these two values. Describing the exact way to determine the tax rate and the initial and final value goes beyond the scope of this article; however, you’ll no longer have to pay this tax, which was cancelled upon the introduction of the ICI.

ICI ? Imposta Comunale sugli Immobili (Communal Tax on Properties)
This is perhaps the most important tax that property owners have to pay. It was introduced in 2002 substituting the INVIM and other taxes and its rates vary depending on the Commune, but must be between 0.4% and 0.9% of the taxable value of the property, increased by 5%.

Such value is obtained by multiplying the cadastral value (rendita catastale) of the property by a coefficient which changes according to the type of property, but for private houses is normally 100. The ICI must be paid every year and there could be possible reductions for first homes, depending on the specific case, especially for multiple owners. Such reductions can vary from 25 ? to approx. 100 ?.

For example, lets say the taxable value of the property already increased by 5% is 100,000 ?, the amount to pay for the ICI can vary, depending on the rate fixed by the Commune ( which ranges from 0.4% to 0.9%) , from 400 ? to 900 ?.

IRE ? Imposta sul Reddito (Income Tax -substitutes the IRPEF ? Imposta sul Reddito delle personale.)
Owning a house represents a source of income, and therefore the cadastral value of a house (or more than one houses), the so called 'rendita catastale' is included to determine the taxable value, as well as other sources such as salaries, profits etc.

In particular, the rates just changed (and will change in nearly future) upon the substitution of the old IRPEF with the IRE:

• Annual income up to 14,000 ? : 0% 

• Annual income between 14,000 and 26,000 ?: 23% 

• Annual income between 26,000 and 33,000 ?: 33% 

• Annual income between 33,000 and 100,000 ?: 39% 

• Annual income beyond 100,000: 45% (only in 2005)

TIA ? Tariffa Igiene Ambientale (Garbage Tax -substitutes the TARSU ? Tassa sui rifiuti soldi urbani )
This new garbage tax introduces a new system to determine the amount to pay for private houses, based on the dimensions of the property and the number of people living in it (before only the dimensions were considered). The amount to pay per year is normally 0.5-0.8 ? per sqm plus a variable quota (100-200 ?) plus 10% VAT, which means something like 200-300 ? per year, for a family of 3 people in a 100sqm house, for example. The exact rates are defined specifically by each Commune.

That's it: these are the most common taxes concerning property. This document should be considered as just a simply reference to get an idea of the amount of tax, but we recommend you visit your local city hall for further information and more specific details.