I am not resident in Italy, in 2019 I bought a property as a private; I’d like to resell it in 2023. Do I have to pay taxes if I resell it for a higher price?
The capital gain on Italian real estate is taxed in Italy only if the property is resold within five years from the purchase. The capital gain is calculated on the difference between the sale price and the original purchase price; however, some expenses can be deducted.
The seller may choose whether to pay a substitutive tax of 26% or a variable tax based on to his/her income.
Let’s make a couple of examples:
a) Mr. Tom purchased an apartment in 2018 for a price of 100,000 euro; he paied 10,000 euro for restructuring costs* that have increased the value of the property. He resells the good in 2022 for a price of 120,000 euro. The capital gain is 120,000 – 100,000 – 10,000 = 10,000 euro. Thus, if Tom chooses to pay the substitutive tax (26%), the amount will be 2,600 euro.
b) Ms. Jenny purchased an apartment in 2015 for a price of 150,000 euro; she resells it in 2023 for 300,000 euro, no taxation on capital gain is levied by the Italian Tax Agency.
If the property is resold after five years no taxation is levied on capital gain according to the Italian tax law. However, in case of a non-resident person the seller could be liable for taxation in the country of residence, pursuant to the domestic law, as provided for the double taxation agreement (or DTA) stipulated between Italy and seller’s home state.
On the other hand, the buyer is responsible for other taxes and expenses related to the purchase, such as registration and cadastral taxes, and notary’s fee.
* this is only an indicative example, every issue has to be discussed case by case
