Yes, there is property tax in Italy, and if you own real estate there you’ll deal with two recurring municipal levies plus a set of one-time taxes tied to buying, selling, or renting out the place. The main annual tax is IMU, a municipal ownership tax that applies to second homes, luxury primary residences, commercial buildings, and land. The second is TARI, the waste collection charge, paid by whoever occupies the property. On top of those, buyers pay transfer taxes at purchase, sellers may owe capital gains tax, and landlords are taxed on rental income.
IMU: The Annual Ownership Tax
IMU (Imposta Municipale Unica) is paid by the owner of the property. It applies to second homes, commercial properties, undeveloped land, and primary residences classified as luxury under cadastral categories A/1 (stately homes), A/8 (villas), or A/9 (castles and historic palaces). Since January 2020, IMU has absorbed the former TASI, so there’s one consolidated municipal levy rather than two.
The biggest exemption is for your primary residence. If you live in the property as your main home and it’s registered as your official residence, you owe no IMU, unless it falls into one of the three luxury categories above. Non-residents can’t claim this exemption; an Italian property owned by someone whose main home is elsewhere is automatically treated as a second home.
Co-owners pay in proportion to their share. A 50% owner pays 50% of the IMU due, and each co-owner files and pays separately.
How IMU Is Calculated
IMU is not based on market value. It’s built on the property’s rendita catastale (cadastral income), a standardized figure assigned by the land registry that usually sits well below market price. The calculation goes:
- Take the rendita catastale and increase it by 5% (a statutory revaluation).
- Multiply by a coefficient that depends on property type. For most residential properties (categories A/2 through A/9), the coefficient is 160.
- Multiply the result by the municipal tax rate (aliquota).
The national base rate is 0.86%. Municipalities can set it anywhere from zero up to 1.06%, or up to 1.14% if the commune is running a budget deficit. Rates vary considerably from one town to the next, so check your comune’s current resolution for the figure that actually applies to your property.
TARI: The Waste Collection Charge
TARI (Tassa sui Rifiuti) is a separate municipal charge that funds waste collection, transport, and disposal. It’s paid by whoever occupies the property, not necessarily the owner. If you rent your Italian property out, the tenant typically pays TARI. The exception is short-term occupancy of less than six months, where the owner stays liable.
TARI applies to any property capable of producing waste, whether or not collection has actually been arranged. The amount depends on the property’s floor area and the number of occupants, with a fixed component and a variable component tied to the municipality’s waste disposal costs. Each comune sets its own rates annually, and the amounts differ sharply between locations.
Taxes When Buying Property
The one-time taxes at purchase depend on two things: whether you’re buying from a private seller or a developer, and whether the property will be your primary residence.
Buying From a Private Seller
When the seller is a private individual (or a VAT-exempt business), you pay a registration tax (imposta di registro) calculated on the cadastral value, not the purchase price. The standard rate is 9%, dropping to 2% if the property qualifies as your primary residence under the prima casa rules. Mortgage tax and cadastral tax are each a flat €50, for €100 combined.
Buying From a Developer
When you buy a newly built property directly from a builder or developer, VAT (IVA) applies instead of registration tax, and it’s calculated on the full purchase price rather than the cadastral value:
- 4% if the property qualifies as your first home and is not in a luxury category
- 10% for standard second homes and investment properties
- 22% for luxury properties in categories A/1, A/8, or A/9
Fixed registration, mortgage, and cadastral taxes of €200 each (€600 total) also apply. Because VAT hits the purchase price while registration tax hits the cadastral value (often a fraction of market price), new builds generally carry a heavier upfront tax load than resale properties at the same price.
Capital Gains Tax When Selling
Selling an Italian property within five years of buying it generally triggers capital gains tax on the profit. You can include the gain in your ordinary Italian income (progressive rates) or elect a flat 26% substitute tax paid through the notary at closing.
Hold the property more than five years and the gain is tax-free. The exemption also applies if the property served as your primary residence for most of the time you owned it, even if you sell within five years. These rules cover direct sales by individuals; sales through corporate structures follow different rules.
Tax on Rental Income
Rental income from Italian property is taxable in Italy. Individual landlords can include it in ordinary taxable income at progressive rates, or opt for the cedolare secca, a flat-rate substitute tax that also replaces registration tax and stamp duty on the lease.
As of January 1, 2026, the standard cedolare secca rate rose from 21% to 26% under the 2026 Budget Law. The higher rate applies to new leases signed after that date and to existing leases that renew (explicitly or automatically) after January 1, 2026. A reduced 10% rate is still available for subsidized-rent agreements (canone concordato) in high-demand municipalities, provided specific conditions are met, including allocating at least 75% of the rent to housing support funds.
The cedolare secca is only available to individual owners (not companies) and only for residential property. The trade-off: you can’t raise the rent for the duration of the contract.
When to Pay and What Happens If You’re Late
IMU is paid in two annual installments: the first (acconto) by June 16, the second (saldo) by December 16. The June payment covers January through June and typically uses the prior year’s rates; the December payment adjusts for any rate changes the municipality made during the year. Your comune won’t send a bill. You calculate the amount yourself and pay using the F24 form.
TARI works differently. The municipality sends payment notices directly, and the number of installments and due dates vary by locale, often three or four payments across the year.
Missing an IMU deadline carries a 30% penalty on the unpaid amount plus daily interest. Italy’s ravvedimento operoso (voluntary correction) system cuts the penalty sharply if you pay before the municipality catches up with you:
- Within 14 days: 0.1% per day, up to 1.4%
- Within 30 days: 1.5%
- Within 90 days: 1.67%
- Within one year: 3.75%
- Within two years: 4.29%
- After two years, before formal notice: 5%
If you realize you missed a deadline, pay immediately. The jump after the 14-day and 30-day thresholds is steep, and waiting for a formal notice pushes you toward the full 30%.
Reductions Worth Asking About
Beyond the primary-residence exemption, several reductions can lower your IMU bill:
- Free loan to a close family member (comodato d’uso gratuito): 50% reduction in the tax base, with a registered loan agreement, and both parties resident in the same municipality.
- Uninhabitable properties (inagibile or inabitabile): 50% reduction in the tax base, based on a municipal inspection or a sworn declaration backed by a surveyor’s certification. The reduction only applies for the months the condition is documented.
- Historical or artistic properties: reduced rates, and potential full exemption if the building is also uninhabitable, subject to municipal verification.
- Certain agricultural land, particularly in mountainous or hilly areas.
Each comune can add its own local rules and documentation requirements, so confirm with the municipality before assuming a reduction applies.
If You’re a U.S. Owner
The United States taxes worldwide income, so rental income from Italian property and capital gains on a sale have to be reported on your federal return, whether or not you also pay Italian tax on the same income.
Italian income taxes paid on rental income or capital gains can qualify for the foreign tax credit on Form 1116, which helps avoid double taxation. IMU and TARI do not qualify for the credit because they are not income taxes; they may instead be deductible as an itemized deduction on Schedule A.
Owning Italian real estate directly does not trigger FBAR (FinCEN Form 114) reporting, which covers foreign financial accounts rather than real property. Form 8938 (FATCA) likewise does not require reporting of directly held foreign real estate. If you hold the property through a foreign entity such as an Italian corporation or trust, your interest in that entity is a specified foreign financial asset and may be reportable on Form 8938 once the applicable threshold is crossed.
One trap for direct owners: any Italian bank account you open to receive rent, pay IMU, or handle utilities counts for FBAR purposes if the aggregate balance across all your foreign accounts exceeds $10,000 at any point during the year.