As examined in Italian property purchase: what is it really going to cost?, being an owner-occupier (“residente”) comes with significant tax advantages, both in terms of the transfer taxes and ongoing expenses. If your time in Italy is instead limited to holidays and you wish to purchase an Italian property you can rent out for the rest of the year, making use of its income potential, then here are some useful considerations to take in mind.
Every year millions of tourists, both Italian and foreign, visit the main art and business cities like Milan, Rome, Florence and Venice, but also lesser well-known areas like Puglia, Calabria and Abruzzo, thanks to an increase in low-cost flights operating in these areas.
While properties in the main cities will ensure higher rents, the investment needed to buy a home in these locations is obviously much higher. Here is a rough idea of property prices per square meter in various locations and possible rental income per month from a 2-bedroom property:
|Location||Price per sqm (€)||Rent on a 2-bedroom property (€)|
|Rome||8,000 – 10,000||1,500 – 2,000|
|Milan||7,000 – 9,000||1,700 – 2,100|
|Venice||10,000 – 12,000||800 – 1,200|
|Florence||4,500 – 6,000||1,300 – 1,400|
|Napoli||2,500 – 4,000||600 – 800|
|Bari||2,000 – 3,000||500 – 800|
Although more time-consuming, renting to tourists for short periods can of course be a more profitable option. In the main cities, a well-equipped studio apartment in a good location can be rented for 50 euro per night and up to 300-400 euro for larger apartments.
Breaking into this market has become much easier thanks to the popularity of websites such as Airbnb, which allow owners to get into direct contact with tourists from around the world.
There is however a fair amount of competition so it is important to provide a top-quality service and a well-equipped and maintained property. In order to stand out from the crowd, the ideal choice would be an apartment more in the style of an upmarket hotel than an ordinary apartment. Customer satisfaction and positive online reviews obviously remain the best business card.
For those who do not wish to personally manage the rental of their property, this can be entrusted to a local realtor. Smaller agencies will normally also offer such a service in return for a percentage of the rental income.
In major cities, there are now many companies that deal exclusively with the rental of accommodation to tourists, essentially virtual hotels or “alberghi diffusi”, organized to not only promote properties but to also provide all related services: cleaning, management of all expenses, check-in and check-out. In this case, it is possible to sign a rental contract with a fixed monthly amount and there is no need to worry about anything other than the payment of yearly income taxes.
Any income earned is subject to the payment of IRPEF (“Imposta sul Reddito delle Persone Fisiche”) with full details to be provided in the relevant income declaration submitted yearly. Pursuant to Italian law, any income arising from ownership of real estate located in Italy and earned by a non-resident is taxable in Italy.
The normal income tax rates are applied to the computed taxable rental income, but a flat rate (so-called “cedolare secca”) of 21% (or 15%) may be applied if specific conditions are met.
Rental income is VAT-free, unless the seller chooses to apply VAT for fiscal reasons (it may be advisable in certain cases when the landlord is an Italian company). As the owner and manager of more than one property used for tourist accommodation, a VAT number may be necessary, along with all the relevant formalities this entails.
Needless to say, an Italian accountant will be necessary.
Aside from income taxes, what other obligations are there when renting your property to tourists?
All guests need to be registered with the local authorities and most local councils require the payment of a visitor’s tax (“tassa di soggiorno”), usually charged per person per night. The responsibility for these registrations and taxes falls on the owner.
If a property is rented for more than 30 days, the contract must be registered at the local tax office.
Irrespective of whether the property is managed by the owner or a property manager, whether it is a luxury apartment in the center of Milan or an apartment in a small village, it is essential to ensure all safety requirements are met. The systems must comply with regulations and be equipped with the necessary certifications. Structurally speaking, the building must conform with current regulations at the time of its construction and/or renovation, and no alterations can be made if they have not been verified and calculated by an engineer or authorized professional. In the case of an accident, the owner is held accountable under criminal law and the consequences can be very serious.
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© Kate A. Taylor – Gianvito Cardone, Additaly Ltd. – all rights reserved
Additaly – Real Estate & Consulting
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