Real Estate – Tax FAQ’s

The technical explanation to the US/Italy double tax treaty (at p.58) states that that distributions from  qualified plans under section 401(a), individual retirement plans (including individual retirement plans that are part of a simplified employee pension plan that satisfies section 408(k), individual retirement accounts, individual retirement annuities, section 408(p) accounts, and Roth IRAs under section 408A), constitute “pension” income provided they are made “consideration of past employment. 
There is no specific mention of  401k schemes, and since only certain kinds of distributions are covered, specific advice needs to be sought.
The main point to note is that access to the 7% regime depends on the taxpayer being in receipt of “a pension”. There is no doubt that SS benefits constitute  “pension” for these purposes (unless that are pensions relating to government service to which special rules apply. The SSA benefits will permit the taxpayer to access the 7% regime at which point, all other income and gains will fall to be taxed at the special regime for the period the relief applies.  A problem only arises where the taxpayer has no SS pension (or who has such a pension in relation to services provided to goverment. 

Rental income from real estate located in Italy is always subject to Italian tax, and the tax due on rental from non-business lettings is pretty much the same whether you are resident or not. 

Since the property will not be occupied as your residential address it is likely that you will be liable without exemption to IMU, the annual property ownership tax and to TARI at potentially higher non residential rates.  Utility costs are typically higher where the property is not occupied as your residence.

1)  Purchase tax /VAT

2) Tax on capital gain on future disposal

3) Local property taxes

4) Costs for utilities 

5) Income Tax on worldwide income

6) Wealth tax on non-Italian real estate, investments and bank accounts

Fairly limited but it depends on the facts on the facts and circumstances  The Comune  in which your property is situated will effect a series of checks to ensure that you are indeed residing at the property and wile most are resolved within 45 days, these can extend in time, although typically timescales are a maximum of four to six months.
Once completed you will be registered as resident effective from the date you made the initial application.
In our experience the main reasons for the request not being met are the 
1) Bureaucratic error, loss of paperwork (increasingly more rare thanks to digitalization)
2)  The applicant failing to follow up on further requests for information from the Comune
3) a refusal on the part of the Comune to accept that the property is in fact the primary residence of the applicant.
The effect of not being registered as resident within 18 months of the purchase deed is that you need to “top” up the registration tax payment due on the purchase – typically an extra 7% of the cadastral value of the property (for residential purchases).
Note that the 18 month timescale is black and white. even if the reason for the delay in registration is not due to the applicant, the extra tax will be due in any event.

In terms of legal restrictions the main limitation is that foreigners are not allowed to purchase real estate in Italy, to the extent that Italian citizens are not able to do the same in the other country. 
The Italian foreign ministry has published a list where the “condition of reciprocity” is not satisfied.   
EU/EEA citizens, non EU holders of work permits can purchase without restrictions.  Others should discuss the issue with their notary BEFORE making an offer to purchase (or make the offer subject to the satisfaction of the condition of reciprocity after taking legal advice. 

It does  – here.  This together with the technical notes is a fundamental document for anyone moving from the States to Italy or with cross border sources of income/gain.  There is also a social security treaty.  

  1. Can you please explain the VAT?  What are all of the places where it applies and what are all of the figures that they are based on?  How are properties distinguished regular from luxury and what are the differences in the VAT tax for each?

Ha ha this would need another day.  VAT is a goods and sales type tax. More info on Italian Tax Agency site:

It applies on sales of new residential property by the developer or construction company.

All property in Italy is registered at the catasto and designated a category. List of urban residential real estate categories here:


From the USA apart from US tax reporting requirements

  1. If you could use a 100,000 Euro apartment as an example,  can you walk through what the costs and taxes that someone from the USA would incur if they will remain a non-residents for the next 6 years?

How long is a piece of string. Also purchase price is not important the important aspect is the valore catastale

8. Under indirect taxes:

It says a typical transaction = a prelim deposit at the time of the offer being made, a contract being drawn up and at  completion (title deed)

9. Does this mean 1/3 of the purchase price at each of those stages?

No – the exact amount will depend on what has been agreed – there is no set rule.

Vat on the sale (I note the circumstances) but it also says that the selling business could treat the sale as Vat exempt.

10. Under what circumstances could this happen.  Example if I buy an agricultural piece of land but do not intend to continue with a commercial (agricultural) venture, just small scale farming for for personal and or Tourist lodge use , could this constitute grounds for lower taxes?  Do I then need to change land status?  Would any Euro 1 farms with (example) olives or fruit be subject to the 10% tax (euro 1 = disused/derelict)

Yes. Farmland and rural building have a special purchase tax regime – 15% of value, with a significantly reduced rate if you are a registered farmer

For the registration of deeds involving the transfer of agricultural land (and related appurtenances) in favor of subjects (natural persons or agricultural companies) who cover:

– the qualification of direct farmer (registered in the relative social security and welfare management),

– the qualification of professional agricultural entrepreneur (IAP) (registered in the relative social security and welfare management),

the following taxes apply:

  • Registration tax: Fixed (currently € 200.00)
    Transcription tax: Fixed (currently € 200.00)
    Cadastral tax: 1%
    Registration tax not due


What is non dom? And what tax changes are we talking about?  Is this non domicile i.e. not residing on the property?

Non dom is a UK law concept.

What is a public deed versus any other type of deed

A public deed is one that is drawn up by a notary

Occupancy tax

IMU                       What % or Euro and how does one self assess

TASI                       Same question

TARI                       What is this monthly charge

TARI – Tax on waste

The waste tax (TARI) is the tax intended to finance the costs relating to the waste collection and disposal service and is payable by anyone who owns or holds, for whatever reason, premises or uncovered areas likely to produce the waste.

Help is available through web sites.  First port of call is the local authority (comune) and the visura catastale.  You comune may well have a web site with this information on it eg.

Further reading

Real Estate

Taxing.It Guide to Buying Property in Italy

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