Home » Italy » Financial » Property Investment for Expats in Italy

Property Investment for Expats in Italy

Submitted: April 2014

Italy does not impose any foreign investment restrictions on property investment (Immobiliare). Thus, Italy may be a good country for international property investment. Be aware, however, that Italy’s property transaction costs (buying and selling) are one of the highest across Europe. As these costs often exceed the 20% mark, any property investment should be viewed as long-term.

Property rights can be an issue, as Italy is not the country where you can rely on the judiciary for all your disputes. That being said, Italy’s homeownership rate is very high (over 80%). Being an owner occupier generally comes along with significant tax benefits, such as:

To that extent, Italy’s principal residence-related tax reliefs are quite similar to those seen in the UK or in many other countries. It’s just that Italy may levy tax at the progressive scale (up to 50%) on any other income from property investment. This distortion should be kept in mind when buying Italian property.

The only good news for buy-to-let or second home investors is that capital gains on the sale of real estate after a five-year holding period are exempt.

Italian housing market generally

The Italian real estate market is all but uniform. You would first expect the South to be cheaper than the North. However, there are huge disparities within the North/North East area as well.

Property prices can get really expensive in some high-profile destinations, such as Venice or the Lakes near the Swiss border. Rome, Milano or Florence may appear to be a little expensive as well. Property costs may enter cheap territory if you are elsewhere in Italy.

Italian housing market statistics are not necessarily easy to come by. Typically, statistics may be published by Eurostat, the European Central Bank, the Bank of Italy, or Istat. 

Here’s a summary of the prices you could roughly expect in town centres:

Location Price per sqm (€) Rent on a 3-bedroom property (pcm – €)
Rome 8,000 – 10,000 1,900 – 2,300
Milan 8,000 – 9,000 1,700 – 2,100
Venice 10,000 – 12,000 800 – 1,200
Turin 3,500 – 4,000 900 – 1,100
Florence 5,500 – 6,000 1,300 – 1,400
Naples 3,800 – 4,200 900 – 1,100
Como 5,000 – 5,500 1,300 – 1,400
Verona 3,100 – 3,300 700 – 800
Genoa 3,000 – 4,000 1,100 – 1,150

Italian housing market – developments

Home prices have nearly doubled between 2000 and 2008. In real terms, they are still around 35% their 2000 levels in real terms. This, however, may be justified by the much lower interest rates on the market right now. Thus, previous price rises are no evidence of any overpricing as of today.

The Eurozone crisis has heavily weighed on property prices in Italy. This is not just because of the economic downturn, but also because of the recent property tax hikes. Such events have not completely fed through Italy’s home prices yet. As a result, home prices may still shrink for a small period before stabilising.

It should be noted that the recently introduced property tax (IMU) was scrapped in late 2013 and replaced with a service tax (IUC) on the occupier. This should give a boost to home prices.


Get your documentation right before applying for a mortgage, and do it early to avoid disappointment.

For an Italian property, you could expect to pay between 3.5% and 4% for your mortgage, even though it’s best to negotiate this well. Loan-to-value ratios of 80% are acceptable.

From a financial point of view, remember that:

For more information on mortgages in Italy, see ACCOMMODATION – Mortgages for Expats in Italy.

Property taxes

Property taxes (IMU – IUC) are levied by local authorities. The rates vary strongly from one local authority to another. As higher property taxes mechanically shrink property values and rental yields, it is essential to check in advance how much property taxes you can expect to pay.

From 2014, there are two main property taxes in Italy: IMU and IUC. The first tax is levied on property owners, except for “non-luxury” primary residences. The second tax is levied on all occupiers, regardless of ownership or primary residence status. In other words, the tax system favours owner occupiers rather than property tycoons.

Italian property taxes have changed a lot recently. Further changes may be reasonably expected down the line, so caution is advisable.

Letting your property

Property investment in Italy can be financially sound if you intend to be an owner occupier, not if you want to kick-start a buy-to-let business. Typically, you could expect a gross rental yield of around 4%, i.e. before taxes and any interest or maintenance expenses.

Do check Italy’s landlord and tenant law prior to leasing property. Italy has traditionally been quite pro-tenant, even though there is a strong culture of owning your home. However, Italian policymakers are not concerned about not hampering housing supply. Consequently, the law has been relaxed in favour of landlords over the recent years. The previous fair rent regime (Equo canone) has thus been abolished.

As of today, rents can be freely negotiated but their revisions are regulated, if not disallowed. The minimum duration of a rental agreement is four years. In order to be enforceable, the contract must be in writing and registered.

Evicting a tenant through the court system can largely take two years, so it’s worth checking how reliable your prospective tenant is. It is common practice to ask payment of three months’ rent, plus a deposit for the same amount.

Italian REITs

Property investment can be made by buying shares in listed real estate funds (Fondi immobiliari). These are similar to Anglo-American REITs in that they distribute most of their rental income in exchange for corporation tax exemption at company level. Any distribution is taxed at the progressive rates.

Financial returns

From a financial point of view, the return on property investment comprises of:

If rents are to rise (e.g. because of inflation), you are more likely to make capital gains over the long run, i.e. without taking into account medium-term fluctuations, such as mortgage availability.

Overseas property investment

Unlike its French counterpart, the Italian tax system discourages overseas property investment. In fact, Italian residents have to pay a 0.76% tax (IVIE) on the purchase cost of any overseas properties they have.

The purpose is to make sure that Italian residents pay the same tax rate on their property investments, whether in Italy (through IMU) or abroad (through IVIE). The extent to which this tax on overseas property investment complies with the EU freedom of capital is unclear.



Moving to Italy

If you are considering moving to Italy or are soon to depart, you can find helpful information and advice in the Expat Briefing dedicated Italian section including; details of immigration and visas, Italian forums, Italian event listings and service providers in Italy.


Living in Italy

From your safety to shoppingliving in Italy can yield great benefits as well as occasional drawbacks.  Find your feet and stay abreast of the latest developments affecting expats in Italy with relevant news and up-to-date information.


Working in Italy

Working in Italy can be rewarding as well as stressful, if you don't plan ahead and fulfill any legal requirements. Find out about visas and passports, owning and operating a company in Italy, and general Italian culture of the labour market.



Italian Expat News Headlines

Italian Expat Service Providers

Integra Global Health Insurance 1st Move International Expatriate Healthcare Bright!Tax Efficient Language Coaching

Italian Expat Tools