Yes, Italy has property taxes, primarily the annual Municipal Property Tax (IMU) on secondary homes and luxury primary residences, plus the mandatory Waste Tax (TARI); other taxes include registration, inheritance, capital gains, and rental income taxes, making it a complex system for owners, especially non-residents.
Annual property taxes in Italy
There are also annual taxes every property owner in Italy must pay, which include IMU and the waste tax known as TARI.
Taxation in Italy is levied by the central and regional governments and is collected by the Italian Agency of Revenue (Agenzia delle Entrate). Total tax revenue in 2024 was 42.8% of GDP. The main earnings are income tax, social security, corporate tax and value added tax.
When buying a property in Italy, you will have to pay 2% – 9% of the cadastral value of the house. If you are a tax resident and the property will be your main residence, you will pay 2%. Non-residents or second-home buyers, however, will pay 9%.
Unfortunately, the reality is that there's no state in the U.S. where homeowners live completely property-tax free. Every state has some form of property tax, but there are states with significantly lower rates and generous exemptions for low-income households, veterans, and elderly Americans.
Belgium appears at the top of the list as a jurisdiction levying the highest property transfer tax rates in the world. The country charges a property transfer tax at the rate of 11,3%, whereas the global average rate of such tax is approximately 3,3%.
Italy's 7% tax rule is a special flat tax regime for foreign retirees who move their tax residency to small towns in Southern Italy, allowing them to pay a flat 7% on all their foreign-sourced income (pensions, rentals, dividends, etc.) for up to ten years, instead of standard progressive rates, as an incentive to revitalize southern regions. To qualify, you must not have been an Italian tax resident for the past five years and meet relocation criteria, with benefits including exemption from wealth taxes on foreign assets and simplified reporting.
Retiring to Italy from the U.S. involves downsides like navigating complex bureaucracy, a significant language barrier, and cultural adjustment to a slower pace, alongside potential difficulties with inconsistent infrastructure (like old buildings or driving rules) and complex dual tax filing, though costs can be lower and lifestyle excellent. Key challenges include the lengthy visa process, understanding Italian tax laws, and potential isolation without Italian fluency, especially outside major cities, with top doctors often in the North.
U.S. Social Security benefits are taxable in Italy as part of your worldwide income. While the U.S. retains the right to tax these benefits under the tax treaty, Italy also taxes them—often at your marginal income tax rate.
The most common question that most people ask is "What are the extra costs associated with the purchase of a home in Italy?" Unfortunately, there is not a simple answer to this question. We usually advise clients to expect an additional cost of roughly 10% of the purchase price of a home in Italy.
Pitfalls when buying property in Italy include significant bureaucracy, language barriers, hidden property liabilities (like illegal constructions or unpaid debts), and costly, complex renovations for older homes, requiring thorough due diligence with local experts (notary, surveyor, lawyer) to verify building permits, floor plans, title deeds, and urban planning compliance to avoid scams and costly disputes.
The old regime provided that 70% of qualifying income from employment carried out in Italy is exempt from income tax. So only 30% of gross salary/net profit is liable to income tax. 100% of salary continues to be liable to social security under normal rules.
Yes, American citizens can buy property in Italy with few restrictions, thanks to bilateral agreements, but ownership doesn't grant automatic residency; you're still limited to 90 days in the Schengen Area unless you obtain a specific long-stay visa, and you'll need a Codice Fiscale (Italian tax code) to complete the process, involving significant paperwork and local professional help like a notary (Notaio) and possibly a bilingual lawyer or geometra.
In Italy, the number 17 is considered unlucky because its Roman numeral, XVII, can be rearranged to spell “VIXI,” meaning “I have lived,” a phrase associated with death.
Generally, it's not rude to tip in Italy, but it can be seen as unnecessary in certain situations. Since tipping is not expected in some cases, locals may find large tips unusual or overly generous. Instead, small, thoughtful gestures are typically well-received and appreciated.
Costs of the Italian Healthcare System
In-patient care and primary care are free, as is visiting a doctor. However, the public health system uses a "co-pay" system (cost-sharing between the SSN and the patient) for specialist visits, diagnostic procedures, and prescription medication.
Expats who plan to move to Italy will enjoy a number of benefits, but should be aware that there are a few disadvantages, as well.
No, a U.S. citizen cannot just move to Italy; you must obtain the correct long-stay visa before you go, as you can only stay for 90 days visa-free for tourism, and longer stays (over 3 months) require a specific visa like a work, elective residence (for passive income), digital nomad, or student visa, followed by applying for a permesso di soggiorno (permit to stay) upon arrival. The process involves applying at an Italian consulate in the U.S., gathering extensive documentation (proof of income, housing, etc.), and can take several weeks or months.
Quick answer (2025): Countries and territories with no recurring annual property tax include Malta, Monaco, Liechtenstein, Andorra (no annual property tax but a small local “foc i lloc” levy), Georgia (exempt or very low depending on income), Vanuatu, Fiji, Cook Islands, Cayman Islands, Turks & Caicos, the United Arab ...
Are there any states without property tax? Sadly for investors, the answer is no, there are no states without property tax. This is because property tax is a useful way for local governments to fund public services such as schools, fire and police departments, infrastructure and libraries.
There are no U.S. states with zero property tax, but Hawaii, Alabama, Louisiana, and Delaware have some of the lowest rates, while some specific counties or towns within states (like parts of Alaska or certain Arizona cities) have very low or virtually no primary property tax, funded by other revenue, though you'll still find some form of property tax to fund local services. Internationally, countries like the UAE, Bahrain, and Monaco have no property tax on ownership, while others have very low rates.