Yes, there is property tax in Italy, and owners typically deal with two recurring levies: IMU, the municipal ownership tax, and TARI, the waste collection charge. On top of those, buyers pay one-time transfer taxes at purchase, sellers can owe capital gains tax within the first five years, and landlords are taxed on rental income. If you’re an American, Italian ownership also creates a layer of U.S. federal reporting that sits alongside whatever you pay in Italy.
IMU: The Annual Ownership Tax
IMU (Imposta Municipale Unica) is what most people mean when they talk about Italian property tax. Since January 2020 it has absorbed the former TASI, so it’s now the single municipal ownership levy. It’s paid by owners of second homes, commercial properties, undeveloped land, and luxury primary residences classified under cadastral categories A/1 (stately homes), A/8 (villas), or A/9 (castles and historic palaces).
The primary residence exemption is the big one. If you live in the property as your official residence, you owe no IMU, unless it falls into one of the three luxury categories above. Non-residents cannot claim this exemption; an Italian property owned by someone living abroad is automatically treated as a second home.
Co-owners each pay their own share. A 50% co-owner pays 50% of the IMU and files separately.
How IMU Is Calculated
IMU isn’t based on market value. It starts from the property’s rendita catastale, a standardized value assigned by Italy’s land registry that usually runs well below the actual price you’d pay or receive on the open market.
- Take the rendita catastale and increase it by 5% (a statutory revaluation).
- Multiply by a coefficient tied to the property type. For most residential properties (cadastral categories A/2 through A/9), the coefficient is 160.
- Multiply by your municipality’s 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% in communes running a deficit, so you need to check your local comune’s current resolution for the rate that actually applies.
You can look up your rendita catastale through the Agenzia delle Entrate’s online cadastral service, though access requires Italian digital identity credentials (SPID, CIE, or CNS).
Reductions Worth Knowing
Several situations cut the IMU tax base in half:
- Lending the property rent-free to a close family member under a registered comodato d’uso gratuito, provided both parties reside in the same municipality.
- Properties formally declared uninhabitable (inagibile or inabitabile), backed by municipal inspection or a surveyor’s sworn certification. The reduction only covers the months the condition is documented.
- Buildings classified as historically or artistically significant, with potential full exemption if also uninhabitable and verified by the municipality.
- Certain agricultural land, especially in mountainous or hilly areas.
Each comune layers on its own documentation rules, so confirm locally before assuming a reduction applies.
TARI: The Waste Collection Tax
TARI (Tassa sui Rifiuti) funds waste collection, transport, and disposal. Unlike IMU, it’s paid by whoever occupies the property. If you rent your Italian home out on a lease of six months or more, the tenant pays TARI. For shorter occupancies, the owner remains liable.
TARI applies to any property capable of producing waste, whether or not collection has actually been set up. The bill combines a fixed component with a variable one tied to the municipality’s waste disposal costs, and it’s calculated from the floor area and the number of occupants. Rates are set annually by each comune, so amounts vary sharply between towns.
Taxes You Pay When You Buy
The one-time taxes at purchase depend on whether you’re buying from a private seller or from a developer, and whether the home will be your primary residence.
From a Private Seller
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 you meet the prima casa (first home) requirements. Mortgage tax and cadastral tax are each a flat €50, so €100 combined.
From a Developer
New builds bought directly from a builder trigger VAT (IVA) instead, calculated on the full purchase price rather than the cadastral value:
- 4% if the property qualifies as your prima casa and isn’t luxury-classified
- 10% for standard second homes and investment properties
- 22% for luxury properties in categories A/1, A/8, or A/9
Registration, mortgage, and cadastral taxes are each a fixed €200 (€600 total). Because VAT hits the full price while registration tax hits a much lower cadastral value, a €300,000 new build often carries a heavier upfront tax load than a resale at the same price.
Capital Gains When You Sell
Sell within five years of purchase and the profit is generally taxable. You can fold the gain into your ordinary Italian income at progressive rates, or opt for a flat 26% substitute tax paid through the notary at closing.
Hold longer than five years and the gain is tax-free. An earlier exemption applies if the property was your primary residence for most of the time you owned it, even if the sale falls inside the five-year window. Note that the five-year rule covers direct sales by individuals only; sales through corporate structures follow different rules.
Rental Income and the Cedolare Secca
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 new rate applies to leases signed after that date and to existing leases that renew, whether explicitly or automatically, after January 1, 2026. A reduced 10% rate is still available for canone concordato (subsidized-rent) agreements in high-demand municipalities, provided conditions are met, including allocating at least 75% of the rent to housing support funds.
The cedolare secca is limited to individual owners and residential properties. The trade-off: you can’t raise the rent for the duration of the lease.
When Payments Are Due
IMU is paid in two installments through the F24 form: the acconto by June 16 and the saldo by December 16. The June payment usually uses the prior year’s rates; the December payment reconciles to whatever the municipality set for the current year. Your comune won’t send you a bill. You have to calculate it yourself.
TARI works differently. The municipality sends notices directly, and the number of installments varies by locale, often three or four across the year.
Miss an IMU deadline and the standard penalty is 30% of the unpaid amount, plus daily interest. Italy’s ravvedimento operoso lets you slash that penalty by paying voluntarily before the municipality acts: catch it within 14 days and the charge is 0.1% per day (capped at 1.4%); within 30 days it’s 1.5%; within a year, 3.75%; after two years but before formal notice, 5%. The practical takeaway is to pay the moment you realize you’ve missed the date. Every threshold you cross makes the penalty jump.
What American Owners Owe the IRS
The U.S. taxes worldwide income, so Italian rental income and gains on a sale go on your federal return regardless of what you paid in Italy.
The foreign tax credit (Form 1116) only covers foreign income taxes. IMU and TARI don’t qualify because they aren’t income taxes; they may instead be deductible as an itemized deduction on Schedule A. Italian income tax paid on rent or capital gains does qualify for the credit, which is what prevents straight double taxation on the same income.
Directly held foreign real estate isn’t itself an FBAR or FATCA asset. The FBAR (FinCEN Form 114) covers foreign financial accounts, not real property. Form 8938 likewise doesn’t require reporting of directly held real estate. But if you hold the property through an Italian corporation or trust, your interest in that entity is a specified foreign financial asset. Form 8938 thresholds for U.S. residents are $50,000 at year-end or $75,000 at any point during the year (single), and $100,000/$150,000 (married filing jointly). Americans living abroad face higher thresholds: $200,000/$300,000 (single) and $400,000/$600,000 (joint).
Even if the property itself doesn’t trigger a filing, the Italian bank account you likely opened to collect rent, pay IMU, and handle utilities does count for FBAR purposes once the aggregate of all your foreign accounts tops $10,000 at any point in the year. Penalties for missed FBAR and FATCA filings are steep and often dwarf the underlying tax, so treat those forms as seriously as the return itself.