Buy a house in Italy, as in the rest of the world, involves both the selling price itself and the payment of a number of other charges ranging from taxes on the purchase to those relating to the ownership. It is important to take this into account when calculating your budget, to make sure that you do not bite off more than you can chew.
Starting this year there are good news on the way. In ‘the beautiful country’, with the Law of Stability 2016 the government has introduced a number of important changes to the IUC from 1st January to lighten the tax burden on real estate in Italy. This forms part of the Italian budget for 2016.
Let’s look more closely at what taxes will be payable by those who have or will buy a property for sale in Italy, and how much they will cost you.
Property taxes on the ownership of a house in Italy: IUC
What is Italy IUC tax? It is the Single Municipal Tax which is paid regardless of whether you own or rent a home in Italy. It applies both to owners and to tenants. It encompasses the following elements:
• IMU on the ownership of property.
• TASI which covers indivisible communal services (lighting, street maintenance, etc.).
• TARI which covers the costs for the collection and disposal of waste in the municipalities.
IUC is paid on possession of properties, building sites and, in some cases, agricultural land, which encroaches on the municipal territory.
Italy IMU tax 2016
Primary home – If you are owners of a main residence, you are exempt from paying the municipal taxes (IMU and Tasi), unless it is a luxury real estate (cadastral categories A1, A8 and A9).
We remind you that to consider your abode as a ‘principal home’ these requirements must be met – it must be registered in the land registry as a unique property in which you and your family normally live and are identified as being resident.
Second home – To calculate the amount to be paid, you must increase the cadastral income by 5% and multiply the result by a predetermined coefficient based on the ‘cadastral category’ to which your abode belongs. The result will be applied to the rate provided by the municipality where the real estate is located.
Some special cases:
1) A new feature is the rate for houses let at ‘agreed rent’ (canone concordato) which is to be equal to 75% of the base rate set by the municipality.
2) In the event that the property is allocated for the use of first-degree relatives like parents or children (comodato d’uso gratuito) with a contract duly registered. If the owners live in a house located in the same municipality and do not own any other real estate in Italy, then the tax rate will be reduced by 50%. Also in this case luxury homes (Cat, A1, A8 and A9) are not included.
3) In the case of bare ownership, the usufructuary will be responsible for payment.
Also TASI tax has been eliminated for the owners of primary residences, as well as the TASI share charged to the occupants/tenants when the property being leased is their primary home. However, it remains in force for luxury houses (Cat, A1, A8 and A9) and for second properties.
The rate is established by each municipality with an applicable surcharge of up to 0.08%.
The rate for the buildings leased at ‘agreed rent’ will be equal to 75% of the base rate set by the municipality.
TARI tax must be paid by anyone who occupies a property for any reason and who then produces municipal waste for which the collection and disposal service is required. If a person lives in a real estate for less than 6 months in any calendar year, it is excluded and the owner will we responsible for paying Tari.
Each municipality sets its own rates based on the actual costs of collection and disposal of waste. The rate is determined by the floor space of the buildings and the number of family members living there. The taxpayer does not need to calculate their liability because the amount to be paid is communicated directly by the Town Hall.
As usual, we recommend that you double check the amounts to be paid in each specific case. In the meanwhile, look for the perfect Italian retreat: