Capital Gains & Real Estate Taxes in Italy - Protect Your Investment and Secure Your Wealth
Bought property in Italy, or thinking of selling? Tytle Tax Experts can help you minimize your property and capital gains tax liability — legally and efficiently.
Worried you might be paying too much property tax on your Italian home?
You're not alone. Many expats find Italy's property and capital gains rules confusing. One town's rate looks different from the next, and tax rules aren't always clear. Without proper planning, you might overpay — or miss out on valuable tax benefits for expats in Italy that could save you thousands. That’s where we step in.
The Dual Tax Burden (IMU & IVIE):
Italian tax residents often focus on the local property tax (IMU) for their Italian home but remain completely unaware of the annual wealth tax (IVIE) due on real estate they own outside of Italy. This is one of the most common and expensive oversights, leading to immediate non-compliance, back taxes, and penalties.
The "Five-Year Rule" Miscalculation:
It's a widespread myth that selling a property after five years guarantees a tax-free capital gain. This exemption is conditional and often void if the property was not your primary residence. This misunderstanding can trigger an unexpected 26% tax bill, wiping out a significant portion of your investment profit.
Ignoring Municipal Discrepancies:
IMU rates, rules, and deadlines are not set at a national level—they vary by each municipality (comune). Filing with a generic rate or missing a local deadline is a direct path to incorrect payments and penalties from the local tax authority. What’s compliant in Rome may be incorrect in Florence.
Missing Key Deductions on Your Capital Gain:
When calculating your taxable profit, many expats fail to deduct all legally permissible expenses—such as renovation costs, notary fees, and transaction taxes. Leaving these deductions on the table means you are overstating your gain and handing over more of your profit to the tax authorities than legally required.
The "Cedolare Secca" Oversight on Rental Income:
Expats renting out their property often mistakenly declare the income under standard progressive rates (IRPEF), where tax can reach 43%. They completely miss the option to elect for the cedolare secca, a 21% flat tax. This single oversight can needlessly cut your rental yield by almost half, year after year.
Overlooking Double Taxation Risks:
Italy’s tax treaties prevent you from being taxed twice, but the relief is not automatic. Failing to correctly apply treaty benefits or claim Italian tax credits (under Art. 165, TUIR) means you are effectively volunteering to pay tax twice on the same income or gain, unnecessarily reducing your net returns.
Understanding Real Estate Taxes in Italy
If you own property in Italy, or you’re planning to buy, you’ll come across several different taxes — some local, some national.
IMU – Municipal Property Tax
- The Imposta Municipale Unica (IMU) is Italy’s core local property tax.
- It’s calculated on the cadastral value (often lower than market value).
- Rates generally range from around 0.5% to 1.06%, depending on the municipality.
- Primary homes are usually exempt, unless classified as luxury (A/1, A/8, A/9).
TARI and TASI – Local Service Taxes
- The TARI covers waste collection and disposal.
- TASI, a former local services tax, has been merged with IMU in most municipalities.
IVIE – Wealth Tax on Foreign Property
- Italian tax residents pay IVIE on property owned abroad — generally 0.76% of its market value (1.06% for residential real estate).
- The tax is creditable against any property tax paid abroad, avoiding double taxation.
Property Purchase Taxes
- When buying, expect a registration tax of 2–9% (depending on property type and use), plus fixed mortgage and cadastral taxes.
Rental Income
- Rental income is taxed under progressive IRPEF rates (up to 43%) or a flat 21% under the cedolare secca system for qualifying long-term leases.
How Capital Gains Tax in Italy Works
If you sell property in Italy — or abroad while living there as a tax resident — you may need to pay capital gains tax.
When It Applies
- Selling within five years of purchase usually triggers taxation.
- Selling after five years is typically exempt when the sale is direct (not through a company).
- Your main home is also exempt if it was your residence for most of the ownership period.
Tax Rates
- The standard tax rate in Italy on capital gains is 26%, applied to your profit — the sale price minus what you paid and any documented expenses.
- Alternatively, you can opt for a substitute tax at the time of sale, also 26%, via the notary, which usually involves less paperwork than declaring it yourself.
For Non-Residents
- Non-residents are taxed only on Italian-source capital gains (sale of Italian property).
- Since 2023, this includes certain indirect transfers of companies owning Italian real estate.
- You may be protected by a tax treaty between Italy and your home country, which can prevent double taxation — it’s worth consulting with a chartered tax advisor for non-resident tax advice before you sell.
Avoiding Double Taxation on Italian Real Estate
Italy has tax treaties with over 100 countries to prevent being taxed twice on the same income.
In most cases, Italy keeps taxing rights on Italian property, but you can claim a foreign tax credit in Italy or your home country to offset what you’ve already paid.
Our experts make sure the right Article 165 (TUIR) credits and treaty reliefs are applied correctly, so you stay compliant and avoid double taxation.
Common Mistakes Expats Make
- Forgetting to file annual IMU or IVIE declarations.
- Assuming selling after five years abroad is always exempt (it’s not, if you were tax resident in Italy recently).
- Not electing the “sostitutiva” 26% flat tax at the moment of sale.
- Missing deductible expenses that reduce the taxable gain.
- Ignoring regional variations and deadlines.
With the right guidance, these issues are easy to avoid — and you can save thousands of euros, whether you own property, manage rentals, or deal with self-employed tax in Italy.
Tailored Real Estate Tax & Capital Gains Strategies for Expats in Italy
Our international tax advisors simplify Real Estate Taxes in Italy — from annual IMU bills to cross-border capital gains and double-taxation relief.
We help you stay compliant while ensuring you pay only what’s legally required — not a euro more.
Tailored Real Estate Tax & Capital Gains Strategies for Expats in Italy
Our international tax advisors simplify Real Estate Taxes in Italy — from annual IMU bills to cross-border capital gains and double-taxation relief.
We help you stay compliant while ensuring you pay only what’s legally required — not a euro more.
Tailored Real Estate Tax & Capital Gains Strategies for Expats in Italy
Our international tax advisors simplify Real Estate Taxes in Italy — from annual IMU bills to cross-border capital gains and double-taxation relief.
We help you stay compliant while ensuring you pay only what’s legally required — not a euro more.
Our Tax Services
Italian Property Tax Planning We analyze your Italian and foreign property holdings to ensure the right taxes are paid — no more, no less. From IMU to IVIE, we create a compliant, efficient plan tailored to your residency status and property type.
Capital Gains Optimization & Reporting Selling property in Italy or abroad? We calculate your capital gains, apply the correct deductions, and file the necessary documentation — ensuring you claim every exemption and relief available under Italian law.
Italian Tax Residency Assessment We determine whether you qualify as an Italian tax resident and explain how that status affects your global income, foreign assets, and capital gains exposure.
Annual Property & Wealth Tax Filings We manage your IMU, TARI, and IVIE declarations — ensuring proper filing, accurately and on time, so you never miss a deadline.
Double Taxation Relief & Treaty Claims We help you avoid paying tax twice on the same property income or gain. Our team applies the correct treaty benefits and Article 165 (TUIR) credits so you remain fully compliant in both Italy and your home country.
Tax Exemption & Deduction Optimization We identify all available deductions, allowances, and exemptions for homeowners and investors — from renovation credits to treaty-based exclusions — helping you reduce your overall tax burden.
We Provide Tax Support in the Following Countries
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Simply answer a few questions about your tax requirements, and Tytle’s expat tax advisors will assist you with expert advice, filings, planning, bookkeeping, and more.
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Who Are We?
Tytle provides tax services for over 30 countries, including the EU, UK, US, Brazil, and parts of Asia. Our team, consisting of more than 50 experienced tax advisors, offers a wide range of services, from tax planning and filing to bookkeeping and audits.
With a proven reputation for excellence, Tytle is dedicated to simplifying tax management, ensuring a smooth and stress-free process.
The goal is to ensure full compliance, optimize tax situations, and accelerate the tax process whenever possible. Our specialization lies in handling complex tax issues, such as double taxation and dual reporting, for individuals and businesses operating across borders.
Tytle ensures that clients are paired with the right tax advisor, offering transparent fees and timely support, no matter where in the world they are located.
Why choose Tytle?
Tytle is your trusted partner for expat property and capital gains tax in Italy — offering personalized, compliant strategies that reduce your tax burden and protect your investments. We simplify complex cross-border issues and help you stay compliant with Italian and international law.
Our approach is straightforward: we listen, understand, and offer clear, actionable solutions.
For individuals and businesses seeking dependable, simple tax assistance, Tytle is the trusted company you can count on.
Here is why:
At Tytle, we connect you with the right tax advisor to address your unique needs.
We take the time to understand your situation, providing clear, actionable guidance and proactive solutions to ensure you get the support you need.
From handling your taxes to securing your tax number, we make the entire process smooth, clear, and hassle-free, reducing filing time by up to 70%.
Our skilled tax professionals manage taxes with precision, offering competitive pricing and prompt, reliable service.
No hidden fees - just straightforward tax help.
Frequently asked questions
Yes. Homeowners and non-residents are subject to several Property Taxes in Italy, including:
- IMU / IUC – municipal property tax on land and buildings
- TARI / TASI – local waste and service charges
- IVIE – 1.06% wealth tax on foreign property for Italian tax residents
Buyers also pay registration or VAT and cadastral taxes on purchases, typically ranging from 2% to 9% depending on use and residency.
Property taxes vary by municipality, region, and property type. The main levy, IMU, generally ranges from 0.86% to 1.06% of the cadastral value.
Primary residences are often exempt, except for luxury properties (categories A/1, A/8, A/9).
You’ll need to manage annual local taxes like IMU and TARI, and if you’re an Italian tax resident, report and pay IVIE on foreign real estate.
Rental income is taxable under progressive IRPEF rates (up to 43%) or the 21% cedolare secca flat tax.
If you sell within five years, Capital Gains Tax in Italy may also apply.
You’ll owe Capital Gains Tax if you sell your Italian property within five years of purchase or construction — unless it was your main residence for most of that time.
After five years, the gain is usually exempt.
By European standards, Italy’s ongoing property taxes are moderate. Annual IMU bills for second homes typically range from a few hundred to a few thousand euros.
Purchase costs — like taxes and notary fees — are higher upfront, but yearly costs remain manageable with proper planning.
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