How to use the Italian property remodeling tax credit
Question: Can I use the 110% Super Bonus tax credits if I am not an Italian resident?
Answer: Yes, any Italian property remodeling tax credits can be used by a not Italian residents too. This applies to any tax credit program, being 50%, 65%, 85%, 110% Super Bonus, etc. Although the application of 110% Super Bonus tax credit program has been significantly restricted by the government in 2023, it still applies in some cases, as detailed below. Additionally, many other remodeling tax incentives still apply.
Here are the most common ways for a non Italian resident to use a remodeling tax credit:
1) Offset Italian Income Tax
If you live overseas and are not an Italian resident, but you have a rental home in Italy, or any other Italian taxable income. You can offset your Italian income taxes by using the remodeling tax credit. You can use maximum 10% of the tax credit every year, therefore for 10 years: use it or lose it. This means that if one year you do not have any income tax to offset, you are not entitled to any refund: you just do not use the tax credit for that year.
2) Remodeling Price Reduction
If you started the Italian property renovation work prior to February 17, 2023, you can trade your tax credit entitlement for a price reduction on your remodeling job. Your contractor will most likely apply a fee to such trade thus the reduction might be approximately 15%-30% lower than your tax credit.
3) Tax Credit Transfer
If you are doing handicap accessibility renovation work or if you started the Italian property renovation work prior to February 17, 2023, you can transfer the tax credit to a bank, Italian post office or insurance company. Such institutions will give you income tax free cash subject to a processing fee which usually ranges between 7% and 15%.
4) Property Sale Credit Transfer
If you are entitled to any remodeling tax credit and are selling the property before having used it all, you can “sell” the remaining tax credit to your buyer. Such credit purchase would be tax free for both parties, would reduce the buyer’s capital gains burden, and would allow the buyer to use the credit for his/her Italian income tax return.
Follow us on social media for more Italian tax credit information, or discuss your specific case with an Italian legal expert to structure your Italian property purchase in the most cost-effective manner:
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