What Are the Property Taxes in Italy?
Quick Answer
Annual IMU runs 0.4-1.06%, but primary residences are exempt. Purchase: 2% registration tax (first home) or 9% (second home). Hold 5+ years and capital gains are tax-free.
Italy rewards you for making a property your primary residence. The tax difference between first home and second home is substantial.
Annual property tax (IMU) ranges 0.4-1.06% of cadastral value. But here's the key: your primary residence is completely exempt from IMU. That's right, zero annual property tax on your main home. Second homes pay the full rate. For a €300K property with maybe €150K cadastral value, that's €600-1,600/year you're either paying or not paying depending on residency status.
Purchase taxes also split dramatically. Buying from a private seller as your first home: 2% registration tax plus €100 in fixed cadastral and mortgage taxes. Same property as a second home: 9% registration tax plus €100. On a €200K purchase, that's €4,100 versus €18,100.
Buying new construction from a developer triggers VAT instead. First home: 4% VAT plus €600 in fixed fees. Second home or luxury property: 10-22% VAT.
To qualify for first-home benefits, you must establish residency within 18 months of purchase, not own other properties with first-home status, and register in the municipality. It's not just declaring it on paperwork - Italy verifies.
Capital gains follow a simple rule: sell within 5 years of purchase and you pay 26% on the gain. Hold longer than 5 years and capital gains are completely tax-free. This makes Italy unusual in Europe - most countries tax capital gains regardless of holding period. If you're buying investment property, that 5-year exemption is worth planning around.
One Italian quirk: cadastral values (what taxes are based on) often haven't been updated in decades. A €500K Milan apartment might have a €120K cadastral value. This works in your favor for annual taxes but feels random.