Real Estate Investment

Planning to purchase a property in Italy and take advantage of the booming market while you are not in Italy? 

One of the key reasons for buying real estate in Italy is to rent it out permanently, or to use it as a holiday home. 

The favorable climate, good food, art and charm of Italy make it a popular holiday destination throughout the year.

Fortunately, Italy has very good transport links, with 11 major airports and 20 smaller airports across the country, making it comfortable and easy for foreigners to move from place to place. The train and road networks are also very good. As Italy is easily reached from many countries, your potential rental guests could come from around the world.

Purchasing a property to use as a rental and source of income may seem like an interesting business idea, but you’ll also want to bear in mind that there are some rules and restrictions when it comes to renting out your property.

Real estate flipping is gaining momentum in Italy. 

As it is well known, the first step in real estate flipping is to find a property, and buy it at an advantageous price. 

One source for highly profitable investment in real estate in Italy is judicial auctions.  

There are many advantages to purchasing real estate in Italy through judicial auctions: 

  • all property transcriptions and registration costs are waived
  • properties are normally sold below market value (from 20% to 50% or even more)
  • you do not need to go to the notary, because the judge transfers the property to you 
  • all real estate auctions in Italy are available online through easy, user-friendly pages which list properties, alongside thorough descriptions and minimum bid prices, with a dedicated PDFcalled “Avviso di vendita” comprising the auction date, time and place. This gives you the possibility to check all of the real estate available, and purchase properties in any region in Italy

The second step for those who buy real estate is to take care of the renovations of the accommodations, in order to make the property more attractive on the market.

This phase is very important, because it is necessary to try to limit expenses; otherwise, you risk losing the profit margin.

The third step is to resell the asset on the market, obtaining a profit margin between the purchase cost and the resale price to a third party. Choosing the best property to buy is very important, considering the logic of resale. It must have an attractive place, perhaps a location in the historic center, a cultural area, near universities or other places of interest, or in large cities.

Once the house has been sold and the proceeds collected, the percentage of taxes must also be subtracted.

In fact, when you buy and sell a property, you must consider real estate capital gains (plusvalenza immobiliare) that always apply when the owners/buyers involved are individuals.

Capital gains apply in the following cases:

  • when you buy a property, and resell it at a higher price within five years
  • when a property is sold to a natural person, and not transferred by inheritance
  • when you build a house on land, and sell it within five years
  • when you buy a second home, and resell it within five years
  • when you buy a piece of land with a cottage or a ruin, and renovate it and resell it

Well planned renovations can massively increase the value of a property, by making it more competitive and desirable in the marketplace.

While you might be very tempted to renovate a property in Italy, it is necessary that, before doing any work, you fully understand the processes you will be going through, including: complying with Italian policies and liability regulations, entering construction contracts with contractors, and finding and selecting experienced professionals.

Property renovation in Italy is complex. 

In Italy, you need to comply with building rules and regulations in order to do any construction work on an Italian property.

Keep in mind that underestimating legal obligations, work without the required authorizations, or not complying with rules and regulations can result in criminal prosecution. 

First, it is necessary to complete legal due diligence in order to verify the compliance status of the property with documents lodged in the municipal office (planning and land registry, building permits, and so on). If they are all fully in compliance, you will be able to apply for and obtain an authorization to start your renovation work.

Every single renovation project is different, and therefore, every one will need to be evaluated separately. 

Second, be sure to hire technical experts (architects, engineers, surveyors) in order to make sure that your renovation project meets the provisions of current legislation. 

The next key step is to choose a building company to carry out the work, and sign a contract with them. In Italy, construction agreements with an Italian supplier are governed by the standing Italian Regulation (precisely, Civil Code) regarding terms of liabilities, insurance, and the possibility of damage.

Depending on the nature of the work, one of the following requests will need to be made:

  • Building Notice: If you do minor work, without any impact, or with nominal impact, on zoning and property value, that does not make a substantial alteration to the property surface. Common notices are: Dichiarazione di Inizio Attività (or DIA), Comunicazione di Inizio Lavori (CIL/CILA); and Segnalazione Certificata di Inizio Lavori (SCIA).
  • Building Permit (Permesso di Costruire): If you do more substantial work, you will need a Building Permit.

It is possible to rent your property to tourists for a short term stay, or to Italians or to foreigners for either a short or long term stay. While it is a fact that buying a property in Italy with the intention of renting it out in your absence allows you to enjoy a regular and healthy income, there are some important aspects to keep in mind.

  • Renting out a property in Italy makes you liable to pay Italian taxes on that income, regardless of if you are resident in Italy or not, and regardless of if you pay annual taxes elsewhere. If you own and manage more than one property used for tourist accommodation, a VAT number may also be necessary, along with extra paperwork requiring the use of an Italian accountant.
  • All the long term rental contracts (more than 30 days) should be registered at the revenue agency (Agenzia delle Entrate) within 30 days of signing the contract. You can also register the contract online. However, there is a certain procedure to be followed, and different documentation to submit, so it is advised to contact a real estate lawyer.
  • Taxes on rental income can be either a flat-rate tax 21% (cedolare secca) without any deductions, or, if that is not applicable, traditional progressive taxation based on total personal income brackets.
  • If you will be renting to tourists, keep in mind that a visitor’s tax is due to the Comune for each guest. This tax can be collected by you, and paid every trimester.
  •  All domestic help should be legally hired. There are also ‘seasonal’ options. 
  • Each local authority has its own regulations concerning holiday rentals. In some cities, you have to inform them of the arrival of each guest, and send a monthly list of all your guests. The responsibility for these registrations and taxes falls on the property owner.

Italy is one of Europe’s top countries for holiday rentals. It’s simple to advertise your home to potential guests through websites such as AirBnB, manage your bookings, safely be contacted by potential guests, and receive payments.


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