Q. I am going to sell my property. What taxes shall I pay in Italy?
A. Under the most common practice, the buyer pays all transfer taxes on completion. If you purchased the property less than five years ago, the difference between the sale price mentioned in the formal sale deed and the purchase price mentioned in the purchase deed will be subject to capital gain tax. The current capital gain tax rate is 20%. Under certain circumstances a lower rate can apply.
In the event that the resale is subject to capital gain tax, most of the costs related to the property can be deducted from the sale price, resulting in a lower capital gain tax. For instance, the transfer taxes, notary fee, renovation work cost, agency fee, both for purchase and for sale, legal fees, etc. can be deducted. Payment receipts should mention the property details and should be kept available in case of use, for capital gain deduction.
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