Italy continues to attract international buyers seeking lifestyle benefits, diversification, and long-term capital appreciation. For many, owning property in Italy as a non-resident represents more than a holiday experience — it is a strategic investment in one of Europe’s most desirable markets.

However, before purchasing, foreign buyers must understand how Italian property taxation works for non-residents. Doing so helps avoid unexpected costs and ensures full compliance with local tax rules.

In this article, we outline the key taxes and filing obligations applicable to non-resident property owners in Italy, including IMU, TARI, rental income tax, and capital gains considerations.

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Who Is Considered a Non-Resident for Tax Purposes in Italy?

From an Italian tax perspective, an individual is generally considered non-resident if they:

• spend fewer than 183 days per year in Italy,

• do not maintain habitual residence in the country, and

• have primary economic or personal interests abroad.

Non-residents are taxed only on Italian-sourced income, which typically includes:

• property-related taxes,

• rental income from Italian real estate, and

• capital gains on the sale of Italian property.

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Annual Property Taxes for Non-Residents

Foreign owners who are not Italian tax residents must pay two main municipal taxes on their property: IMU and TARI.

IMU (Imposta Municipale Unica)

IMU is a municipal property tax applied to second homes and investment properties. It is typically paid in two instalments, due on 16 June and 16 December each year.

Key points:

• Rates are set by the municipality

• Average range: 0.4% – 1.06% of the cadastral value

• Primary residence exemptions rarely apply to non-residents

As a result, IMU is often one of the most significant recurring ownership costs for international investors.

TARI (Waste Collection Tax)

TARI applies regardless of whether the property is rented out, used regularly, or occupied only seasonally. It is calculated based on:

• the surface area of the property, and

• the number of declared occupants

Payments are typically due annually or in multiple instalments, commonly between June and July, depending on the municipality.

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Taxation of Rental Income for Non-Residents

Non-resident owners renting property in Italy must declare rental income in Italy, even if they file taxes abroad.

Two taxation regimes are available:

Cedolare Secca (Flat Tax Regime)

• Flat rate of 21% on gross rental income

• No municipal or regional surcharges

• Rent increases prohibited during the lease term

This regime is often chosen for simplicity and transparency.

IRPEF (Progressive Taxation)

Alternatively, rental income may be taxed under IRPEF at progressive rates:

• 23% up to €28,000

• 35% from €28,001 to €50,000

• 43% above €50,000

Under IRPEF, certain expense deductions may apply, including:

• maintenance costs

• property management fees

• real estate agent commissions

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Capital Gains Tax When Selling Property in Italy

Non-residents selling Italian property should assess capital gains exposure.

• Property sold more than five years after purchase: capital gain is generally exempt

• Property sold within five years: capital gain taxed at 26%

The taxable gain is calculated as the difference between the sale price and purchase price, adjusted for eligible costs. This rule can significantly influence investment or short-hold strategies.

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Compliance and Filing Requirements

Italy maintains strict tax compliance standards and penalties for incorrect or late filings.

Non-resident owners should:

• maintain records of rental income,

• keep receipts for tax payments, and

• document eligible expenses.

Non-residents earning rental income must file an annual Italian tax return (Modello Redditi PF) by 30 November each year.

Notably:

• IVIE, the tax on foreign property, applies only to Italian residents

• IVAFE applies only in limited cases relating to Italian financial assets

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Practical Example

A U.S.-based investor earning €15,000 per year renting a property in Tuscany would typically:

• pay IMU in June and December,

• pay TARI per municipal deadlines,

• make advance income tax payments in June and November,

• file Modello Redditi PF by 30 November, and

• report the same rental income to U.S. authorities as required.

This structured approach supports compliance in both jurisdictions.

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Final Thoughts

Owning property in Italy as a non-resident involves more than annual maintenance and management. It comes with distinct tax responsibilities that must be understood and handled correctly. With proper planning, foreign investors can minimise tax risk, protect returns, and enjoy the advantages of Italian real estate ownership.

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About ItalianTaxes.com

ItalianTaxes.com is a digital platform designed to simplify Italian tax compliance for expatriates, non-residents, and returning Italians. Combining technology with licensed professional support, the platform assists users in navigating filings, optimising tax outcomes, and maintaining full confidence when owning property in Italy.

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