Tax on registering luxury property purchases in Italy
Registration Tax for Purchasing Luxury Real Estate in Italy
Acquiring high-end property represents not just a substantial financial commitment but also a noteworthy tax obligation. It's critical to note that when buying luxury properties, the tax deductions available for a "first home" do not apply. Therefore, the full tax rate is applicable even if the purchased property is your primary residence.
Criteria for Elite Real Estate for Tax Purposes
Under the law (particularly Legislative Decree 175/2014), "luxury homes" (abitazioni di lusso) are defined as properties classified in the following cadastral categories:
A/1 — premium class residences (abitazioni di tipo signorile);
A/8 — villas;
A/9 — castles and important historical-artistic structures (castelli e palazzi di eminente pregio artistico o storico).
Besides the category, the attributes of luxury homes are outlined in the Ministerial Decree of August 2, 1969. These features are crucial in establishing the VAT rate and other taxes. For instance:
total area exceeding 240 sq.m (excluding balconies, terraces, basements, attics, stairs, and parking spaces);
presence of swimming pools, tennis courts, and other amenities for enhanced comfort;
superior quality finishings: marble, luxurious tiles, natural wood, etc.
Amount of Registration Tax When Buying Luxury Real Estate
The tax rate varies depending on whether the seller is an individual or a VAT-registered company. The primary scenarios include:
If the Seller is an Individual :
Registration tax - 9% of the property's cadastral value;
Cadastral and Mortgage Taxes - 50 euros each (fixed rate).
If the Seller is a VAT-registered Company :
VAT - 22% of the acquisition price;
Registration, Cadastral, and Mortgage Taxes - 200 euros each (fixed rate).
Note: Unlike standard properties (categories A/2 – A/7), homes in categories A/1, A/8, and A/9 cannot avail of the reduced tax rate of 2% even when they serve as a primary residence.
Comparison: Luxury vs Standard Real Estate
| Property Type | Category | Reg. Tax (First Purchase) | Taxes: Cadastral and Mortgage | Note |
|---|---|---|---|---|
| Standard (First) | A/2–A/7 | 2% of the cadastral value | 50 euros each | Subject to conditions |
| Standard (Second) | A/2–A/7 | 9% | 50 euros each | No benefits |
| Elite (Any) | A/1, A/8, A/9 | 9% | 50 euros each | Benefits do not apply |
| Elite from a Business (with VAT) | A/1, A/8, A/9 | 22% VAT | 200 euros each | All taxes are fixed |
Additional Significant Taxes
IMU (Property Tax) : applicable even for a primary residence if it is luxurious;
TARI (Waste Disposal Tax) : no perks, calculated according to local tariffs;
Penalties for not paying the registration tax can reach 120-240% of the tax if completely ignored. A 30% penalty is imposed for late payments. The ravvedimento operoso system can be employed to reduce penalties through voluntary settlements.
Final Thoughts and Suggestions
Investing in luxury real estate necessitates full awareness of the taxes and potential responsibilities. It is advisable to:
Verify the cadastral classification of the property;
Determine the seller's status (whether an individual or VAT-registered business);
Consult with professionals: notaries, tax advisors, architects - to prevent errors and subsequent penalties.
