Property-Related Taxes in Italy

Non-residents are taxed in Italy only on income derived from Italian sources. Married couples may be taxed separately, depending on the provisions of their marriage contract.

Personal income is subject to progressive IRPEF rates, with additional regional, municipal, and provincial surcharges. Rental income is often taxed under the optional cedolare secca flat-tax regime at 21% (or 10% for certain regulated leases), which replaces IRPEF and related surcharges but does not allow expense deductions. Capital gains on property sales are taxed at 26%, with exemptions after five years of ownership or if the property was a main residence.

Corporate income is taxed at 24% (IRES), with an additional regional IRAP tax at 3.9%. Property transaction costs are moderate by European standards, while annual property holding taxes apply mainly to second homes through IMU and related municipal levies.

Annual Property Tax

Real Estate Tax (IMU)

IMU is an annual property tax payable by the owner on second homes and luxury properties. The tax base is the cadastral income of the property, increased by 5% and multiplied by a coefficient, then applied at a rate set by the local comune, typically ranging from 0.40% to 1.06%.

Primary residences are generally exempt from IMU. Properties of historical or artistic interest may qualify for a 50% reduction.

TASI (Tributo per i Servizi Indivisibili)

TASI is levied to finance municipal services such as street lighting and road maintenance. It is calculated in a similar way to IMU and generally follows the same exemption rules for primary residences. Where the property is rented, the tenant is typically responsible for 30% of the TASI charge.

TARI (Tassa sui Rifiuti)

TARI is a waste collection tax payable by the occupier of the property. It may be calculated as a fixed charge based on property size and occupancy, or as a variable charge determined by the comune to cover waste collection, transport, and disposal services. 

Income Tax (IRPEF)

Taxable income generally consists of the aggregate of all income earned during the year, reduced by allowable expenses related to acquiring and maintaining income, as well as permitted deductions.

Personal Income Tax Rates (2026)

In addition to IRPEF, regional surtaxes apply at rates ranging from 1.23% to 3.33%. Municipal and provincial surtaxes may also apply, with a combined maximum of around 0.80%. Municipal rates are set by each comune, while provincial rates are set at the provincial level.

Rental Income Tax

Most non-resident landlords may opt for a substitute flat tax known as cedolare secca, instead of the progressive IRPEF system. This regime replaces IRPEF as well as related regional and municipal surtaxes. Under cedolare secca, no deductions for expenses related to the property are allowed.

As of 2026, the standard cedolare secca rate is 21% for most residential leases. A reduced rate of 10% applies to certain regulated low-rent agreements (canone concordato). For short-term rentals, the 21% rate generally applies to the first property. Additional short-term rental properties may be subject to higher taxation under updated rules, although as of late 2025 the 21% rate continues to apply to at least one property.

Corporate Taxation and Capital Gains

Income and capital gains earned by companies are subject to corporate income tax (IRES) at a flat rate of 24%. Expenses incurred in the production of taxable income are generally deductible. Rental income received by corporations is treated as business income and taxed at the IRES rate.

In addition to IRES, companies are subject to IRAP, a regional tax on productive activities. IRAP is levied on the net value of production rather than on profits. It applies to Italian companies and to foreign companies with a permanent establishment in Italy. The standard IRAP rate is 3.9%, although regional variations may apply.

Capital Gains Tax (Individuals)

Capital gains arising from the sale of real estate are taxed at a flat rate of 26%. The seller is exempt from capital gains tax if the property has been owned for more than five years, or if it was used as the seller’s main residence.

Property Buying Costs and Transaction Taxes in Italy