Cadastral income: what it is and why it matters when selling your home

What is cadastral income: definition and purpose

Cadastral income is a theoretical taxable value representing the average annual income that a property could generate, after deducting expenses and under ordinary conditions. It is not the property's market value, the rent you receive or its sale price.

Essentially, it is a conventional figure that the Italian State uses as the starting point for calculating almost all property-related taxes, including IMU (municipal property tax), registration tax on property transactions, inheritance tax, gift tax and ISEE (the indicator of household economic status).

How to check cadastral income

The quickest way to find out the cadastral income of your property is to request a cadastral register extract for the property. There are three main ways to do this.

The first is to access the Italian Revenue Agency's online portal, using SPID, CIE or CNS digital credentials. In the "Consultation" section, you can view the cadastral details of all properties registered in your name, including their cadastral income, free of charge.

The second option is to request a cadastral register extract, either through the Italian Revenue Agency's website or at one of its physical offices. This document provides all the property's cadastral details in a printable format.

The third option is to check the notarial deed of sale: cadastral income is explicitly stated in all property transfer deeds.

How cadastral income is determined: calculation criteria

Cadastral income is calculated by multiplying the property's cadastral size (expressed in rooms for category A residential properties, in cubic metres for group B properties and in square metres for categories C, D and E) by the cadastral valuation rate applicable to the municipality and cadastral area in which the property is located.

Three parameters therefore determine cadastral income:

• Cadastral category, which identifies the type of property;

• Class, which indicates its quality level within the category;

• Cadastral size, which measures the property's dimensions according to cadastral criteria.

The specific cadastral valuation rates for each municipality and cadastral area can be consulted on the Italian Revenue Agency's website.

This explains why two similar apartments in the same area may have different cadastral incomes: the assigned cadastral class, calculated size and applicable valuation rate can vary, even between neighbouring properties.

If you believe that your property's cadastral income does not accurately reflect its characteristics, you can file a cadastral appeal. This procedure requires the assistance of a qualified professional and, if successful, results in an amended cadastral income with retroactive effect.

Cadastral income and taxes on property sales

This is the most relevant aspect for anyone selling a property. Cadastral income is used to calculate property transfer taxes through the so-called price-value mechanism, introduced by Law No. 266/2005. This mechanism applies only to property transactions between private individuals subject to registration tax, where the buyer is an individual and explicitly requests its application from the notary in the deed.

In practice, registration tax is not calculated on the price declared in the notarial deed, but on the cadastral value. This is obtained by increasing the cadastral income by 5% and multiplying it by the coefficient applicable to the property category: 110 for a primary residence and 120 for a second home. Since the cadastral value is almost always significantly lower than the market value, the savings for the buyer can be substantial.

For sellers, knowing the cadastral income before putting a property on the market is also useful when estimating any taxable capital gain: the difference between the sale price and the original purchase price. A 26% substitute tax may apply if the property is sold within five years of purchase and was not used as the seller's main residence for most of the ownership period.

Cadastral income and IMU: how much you pay each year

To calculate IMU (Italian municipal property tax), you first need to determine the taxable base using the following formula: cadastral income increased by 5%, multiplied by the relevant cadastral coefficient. For residential properties (category A, excluding A/10), the coefficient is 160. The result is the taxable base to which the tax rate set by the municipality is applied.

IMU is not payable on properties used as primary residences, with the exception of properties classified under cadastral categories A/1, A/8 and A/9 (luxury homes, villas and castles), which remain subject to IMU even when used as the owner's primary residence.

Why choose Engel & Völkers for a well-informed property sale

Knowing your property's cadastral income is the first step towards understanding how taxes on a property sale are calculated. However, interpreting it correctly in the context of your specific property, personal tax situation and market conditions requires expertise that goes beyond simply reading a figure.

Engel & Völkers consultants also support sellers with the tax and cadastral aspects of property transactions: from checking cadastral income and ensuring it accurately reflects the property's characteristics, to estimating taxes on the sale and coordinating with the notary and tax advisor to identify the most advantageous tax strategy.