Tax Hike Looms for Second Homes as the Treasury Comes Knocking

The Tax Burden on Second Homes: What to Know

Purchasing a second home is often viewed as a smart investment; however, it’s crucial to be aware of the financial implications before making such a commitment.
The tax authorities may require a double taxation payment, including both income tax (Irpef) and property tax (Imu).

It’s important to note that the taxes associated with purchasing a second home differ significantly from those applied to a primary residence.
From the higher acquisition costs to the annual taxes, understanding these differences is key.

Taxes Involved in Buying a Second Home

When acquiring a property that is not your primary residence, you cannot benefit from the same tax exemptions.
Specifically, the cadastral tax and mortgage tax amount to €50 each for buyers, but the most substantial cost is the registration tax: while the rate for first homes is 2% of the cadastral value, it soars to 9% for subsequent properties.

Moreover, annual expenses such as Imu, Tari, and sometimes Irpef must be factored into the cost of ownership.
Imu is the municipal property tax applicable to all real estate owners, but primary homes are typically exempt if they do not fall into luxury categories.

Understanding Imu and Tari

The Imu amount varies as it depends on the municipality’s set tax rate, which fluctuates between 8.6 and 10.6 per thousand of the cadastral income.
Interestingly, if the second home is rented out to a close relative under a free loan agreement, the tax base for Imu can be halved.

Tari, the waste collection tax, applies to all properties regardless of occupancy.
The fee is dictated by local authorities and is based on the property’s size and the number of residents.
Even vacant homes are subject to Tari, unless they are uninhabitable and lack essential utility connections.

Double Taxation on Unoccupied Homes

Unoccupied houses located in the same municipality as your principal residence may also incur Irpef, despite generally being exempt from this tax when subject to Imu.
Introduced by Decree Law 147/2013, this rule aims to encourage homeowners to rent out their second properties.

Specifically, as per the Legal provisions, the income from vacant residential properties contributes 50% to the Irpef base, calculated on the adjusted cadastral revenue.

Increased Costs for Renovations

From 2025, renovation costs are set to increase for second homes.
Although the renovation bonus remains at 50% for primary residences, the discount for second homes drops to 36%.
This change significantly raises the financial burden of renovations.

Additionally, owners of second homes renovated under the Superbonus program must update property valuations, potentially resulting in higher Imu payments.

For more insights on property taxes in Italy, visit Italian Revenue Agency.