The Italian government is debating some major new tax policies. Among them there is the intention to update (read “increase”) the property value on record that is used for many legal purposes such as calculating the taxes applicable to property transfers and property ownership.
More specifically, based on the current tax parameters, when you buy an Italian residential property from a private individual, as opposed to from a developer, chances are that your transfer taxes will be based on just 30% to 40% of the purchase price.
The reason is the taxable basis used for this type of purchase is not the purchase price, but the value of the property on record (“cadastral value”). This value is the subject of the announced government tax plan.
People fear that as a result of the new property tax parameters they might end up paying higher transfer and ownership taxes. However, the government assured interested parties that this will not be the case as they will work on lowering the tax rates as they increase the property values on record.
A tax reform to increase the property value on record has been discussed for the past 30 years without success because there is always a large portion of politicians against it.
It will be interesting to see whether the Italian Prime Minister Draghi will be able to seal this reform deal, too.
Stay tuned to receive more updates on this topic.
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