Buying a Property in Italy as an Individual or through a company

Buying a property as an Individual:

PROs

- Sales tax calculated on the cadastral value (instead of purchase price, which is normally higher than the cadastral value);

- Taxation of rents at a flat rate of 21% (26% from the second unit onwards) (under certain conditions at 10%);

- Ten-year recovery, in the form of a tax deduction, of 50% of any renovation costs (65% of energy requalification costs);

- Exemption from taxation on any capital gain on resale, where the property has been held for at least 5 years;

- “First home” benefits (sales tax at 2% instead of 9%, exemption from property tax) if the buyer transfers his residence in the property.

CONs:

- Absolute non-deductibility of property management costs (condominium expenses, utilities, etc.).

- Non-deductibility of amortisations

The purchase of a property through a company:

PROs:

- Recovery of the investment thanks to the deductibility of the purchase costs of the capital property* - annual amortisation

- The deductibility of all costs related to the property (condominium expenses, ordinary and extraordinary maintenance of the property);

- Ten-year recovery limited to energy requalification works carried out on the property;

CONs:

- Sales tax calculated on the purchase price indicated in the transfer deed (instead of cadastral value – usually lower);

- The taxation of any capital gain on the re-sale or, in any case, on the exit of the asset from the business regime (as in the case of assignment of the property to shareholders), regardless of the period for which the property was held.

DO NOT forget that:

- *capital property is property used for the business activity, including property used by a company for short-term rentals

- For a small or medium-sized company, accountancy costs are around EUR 2,000.00 - 3,000.00 per year.