First of all, it is necessary to distinguish whether the real estate purchase was made by a foreign citizen (and whether this is resident abroad or in Italy) or by an Italian citizen.
If the property is owned by a foreign national resident abroad.
The taxes to be paid, annually, on the property purchased by a foreign national resident abroad (not in Italy) change depending on whether the property is used for personal use or as an investment, i.e. it is rented out.
If the property purchased by the foreigner is used for personal use, the taxes to be paid in Italy concern only IMU and TARI. IMU is an annual property tax that varies according to the value of the property and its cadastral category. TARI is a tax on services that is levied annually on the basis of the value of the property to finance local public services.
On the other hand, if the property purchased by the foreigner is rented but does not constitute a principal and organised business activity, the taxes, according to the principle of the prohibition of double taxation, are paid in the country of residence, in addition to the obligation to pay IMU, TARI, registration tax and stamps for the rental contract. Finally, if the foreigner is not resident in Italy and decides to manage the property in Italy as an organised entrepreneurial activity, the income produced in Italy must be taxed and paid in Italy, in addition to the above-mentioned (IMU, TARI, registration tax and stamps for the rental contract).
If the property belongs to a foreign national resident in Italy.
If the foreign citizen decides to reside in Italy, he/she will be obliged to pay taxes and duties like an Italian citizen, so he/she is obliged to pay IMU (except if the property is the foreigner’s main residence), TARI and taxes on the income produced in Italy (IRPEF, income tax payable by individuals based on the ownership of property). In addition, if the foreign national decides to reside in Italy and to rent the property in Italy, the income produced is also subject to IRPEF (or, alternatively, to the facilitated substitute tax called cedolare secca, the rates of which are specified below), registration tax and stamp duty for the rental contract, in addition to IMU and TARI.
If the property belongs to an Italian citizen resident abroad.
The purchase of property in Italy by an Italian citizen residing abroad has a different regulation. In fact, the expatriate Italian citizen who buys a property to keep at his disposal pays IMU and TARI but is not required to indicate it in his IRPEF declaration. It should be noted that in such a case, if the expatriate is also a pensioner (according to the international convention regime), the IMU alone is reduced by 50% if the property is not rented or granted on gratuitous loan.
On the other hand, if the expatriate decides to rent the property in Italy, the income produced is also subject to IRPEF, registration tax and stamp duty for the rental contract, in addition to IMU and TARI.
In the latter case, the expatriate has the option of choosing whether to apply the IRPEF rate on the basis of his ability to pay, or to request the application of the ‘cedolare secca‘ (i.e. a facilitated substitute tax in lieu of IRPEF) at the rate of 21% (for income deriving from short-term rental contracts relating to a property chosen by the taxpayer in his tax return), whereas the rate is 26% starting from the second home.
It should be noted that the ‘cedolare secca‘ applies to short-term leases (a short-term lease is a lease of property for residential use, lasting no more than thirty days, entered into by natural persons, outside of the exercise of business activities) and is provided only if a maximum of four flats are used for this purpose during the year; above this threshold, the activity, by whomever exercised, is considered to be carried out in an entrepreneurial form.
