Starting from January 1, 2025, Italy will roll out significant changes to its housing policy, introducing new tax benefits aimed at promoting homeownership and encouraging renovations. This initiative, described as necessary to combat the challenges of the housing market, is expected to make it easier for citizens to acquire their first home, reflecting the longstanding Italian passion for property ownership.
The newly announced measures include substantial reductions on registration taxes for first-time buyers. For those purchasing from private individuals or companies selling VAT-exempt properties, the registration tax will decrease to 2% of the cadastral value, compared to the standard 9%, with a minimum fee established at €1,000. Similarly, those who buy from companies selling VAT-applicable properties will benefit from a reduced VAT rate of 4%, rather than 9%, with fixed fees for registration, mortgage, and land tax set at €200 each.
A major aspect of the legislation is the inclusion of deductible expenses for those acquiring homes through mortgage financing. Instead of regular taxes, buyers will pay a substitute tax of 0.25% of the mortgage amount. They will also be able to deduct 19% of mortgage interest payments, up to €4,000 annually, potentially resulting in tax savings amounting to €760 per year.
The tax benefits are not just financially enticing but are also linked to specific eligibility criteria. Buyers must adhere to certain requirements, including the type of property and whether it is classified correctly within categories defined by the land registry. Eligible categories include properties typically used for ordinary residential purposes (A/2 to A/3), and for attached properties tied to the main residence, such as storage rooms and garages. On the other hand, luxury properties and certain high-value properties are excluded from these benefits.
According to Idealista, “The state has introduced various forms of support for purchasing first homes…” aimed at making real estate investments more accessible to citizens, especially the younger generation hoping to step onto the property ladder.
Beyond individual home purchases, the updated policy also addresses broader renovation incentives aimed at improving community and sustainable living. This includes tax deductions for renovations aimed at energy savings and earthquake safety improvements collectively termed 'sismabonus' and 'ecobonus'. Homeowners engaging in such projects can request tax relief, with regulations having been streamlined to clarify procedures for projects conducted on shared condominium properties.
Recent communication from the Agenzia delle Entrate has outlined the procedures required for submitting documentation concerning renovation projects. A significant deadline for condominium administrators looms on March 16, when they must report expenditures related to building renovations and energy-saving upgrades on communal parts of the buildings owned by multiple residents. This notification is necessary to claim various tax credits associated with these improvements, aimed at fostering both property enhancement and energy efficiency.
For homeowners investing significantly in upgrades, particularly aimed at seismic retrofitting, there's now more clarity on how to report the cumulative expenses and benefits. For example, if a condominium carries out both renovation and 'sismabonus' work during the same year, recent guidance has specified how to fill out notifications to the tax office properly. Administrators are required to keep detailed records for every expenditure incurred, ensuring every benefit is claimed appropriately.
Community responses to the new regulations and tax incentives indicate cautious optimism as stakeholders wait to see how these changes will impact housing demand and property values across Italy. There’s hope the changes will stimulate the economy by invigorated investment in residential properties and infrastructure.
It’s clear the Italian government is taking steps to address challenges within its housing market, directly engaging with ownership barriers through innovative fiscal policies. While these measures come with detailed eligibility requirements and compliance measures, their potential socio-economic benefits could reshape the real estate climate as we approach 2025. By making homeownership more attainable, Italy might see not just additional roofs over heads but also stronger communities enriched by invested homeowners eager to improve their living spaces.