Question: I am going to sell my property. What taxes shall I pay in Italy?
Answer: Under the most common practice, the buyer pays all transfer taxes on completion whereas the seller pays capital gains tax, if applicable. For residential units, if you purchased the property less than five years ago as a holiday home, the difference between the sale price mentioned in the final agreement of sale and the purchase price mentioned in the purchase contract will be subject to capital gain tax. If you did some renovation work for which you received “superbonus” money in the form of invoice rebate option, the resale time to take into consideration for capital gains tax purposes is 10 years instead of 5. The current capital gain tax rate is 26%. Under certain circumstances, a lower rate can apply.
If the sale is subject to capital gains 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, your purchase transfer taxes, notary fees, renovation work cost, real estate agent fee, etc. can be deducted. However, for renovation work done benefiting from “superbonus” invoice rebate option, the renovation cost cannot be deducted if the sale happens within 5 years and can only 50% of it can be deducted if you sell within 5 and 10 years after the purchase.
In order to deduct any costs, payment receipts should show the property details and should be kept available in case of use, for capital gains tax deduction. In particular, you want to keep all the official invoices and the respective bank payments related to the expenses to deduct.
If you used the property as your registered primary residence for the majority of the time between the purchase and the sale, you might be eligible to avoid capital gains taxes even if you sell the property within 5 years.
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