Purchase Taxes for Residential Properties in Italy
- Gregorio Arcaleni
- May 16
- 2 min read
Purchasing a property in Italy? Taxation is a crucial factor that need understanding and consideration before proceeding.
In this article, it will be analysed the taxation that an individual will find to pay when purchasing a house in Italy without the main residence relief tax scheme, which we will see in our blog in another article.
TAXATION Without relief, the taxation upon the purchase of a property is applied as follows:
A. Taxes When Buying from a Business (exempt from VAT) or a private seller:
- 9% registration tax
- €50 mortgage tax
- €50 cadastral tax
B. In case the sales is carried out by construction or renovation companies within 5 years of completion (or later, if the seller opts for VAT) or is related to social housing in which the seller chooses to apply VAT, the rates that will apply, are not the above-mentioned, but will be the following:
- 10% VAT (or 22% VAT for luxury properties in cadastral categories A/1, A/8, A/9).
- €200 fixed registration tax
- €200 mortgage tax
- €200 cadastral tax
It is important to know that the registration, mortgage, and cadastral taxes are paid at the time of the sale through the notary, and that a minimum rate of €1,000 is to be paid by the buyer as registration tax.
TAXABLE AMOUNT
Until 2006, the taxable amount was based only on the sale price. In 2006, the "Prezzo-Valore" System (Value-Based Taxation) mechanism was introduced to ensure fair taxation and transparency in property transactions. So now, upon request of the buyer, if the buyer is an individual buying a residential property, purchasing from a private seller or VAT-exempt entities, taxes can be calculated based on the cadastral value, not the sale price. This mechanism was introduced to prevent disputes over property valuation by tax authorities. When this mechanism is opted, the Revenue Agency have limits in tax auditing and in carrying out property value reassessment, and a 30% discount on notary fees applies.
THE CADASTRAL VALUE
As mentioned, the cadastral Value can be used as a parameter to calculate the taxes. The way it is calculated is the following: Cadastral value = Cadastral Rent × 1.05 × 120. So, the cadastral value it is equal to the multiplication of the cadastral income reevaluated by 5%, times the coefficient of 120.
MANDATORY DECLARATIONS IN PROPERTY TRANSACTIONS
Buyers and sellers must provide a formal declaration including: - Payment methods (e.g., bank transfers or checks). - Details of any real estate agent involved, including business registration. - Mediation fees and proof of payment.
If these requirements are not met, penalties range from €500 to €10,000, and the property may be subject to market value-based taxation instead of cadastral value taxation. Additionally, the notary must ensure that the property matches its official cadastral records, including floor plans. Misaligned records can lead to transaction nullification unless corrected by an authorised technician. Also, in VAT transaction, if in the deed there is a discrepancy between the declared sale price and the actual amount paid, the buyer may be liable for the unpaid VAT difference and corresponding penalties.
We hope this was helpful to understand more about Italian property transactions. Should you have any queries, do not hesitate to contact us! - mail@arcalenis.com
Comments