Taxes on the purchase of a second home: complete guide

Second home: what changes compared with a primary residence from a tax perspective

The difference can be summed up in one sentence: the “first home” tax benefits do not apply to a second home. These benefits reduce purchase taxes for those buying the home where they will live, provided they meet specific residency requirements. A second home, by definition, does not meet those requirements.

In practical terms, this means two things. When you make the purchase, you pay higher taxes: the registration tax increases from 2% to 9%. And in the following years, you pay IMU property tax, from which the main residence is instead exempt.

Registration tax on a second home: rates and calculation

If you purchase from a private individual, the registration tax on a second home is 9%. This is in addition to the fixed mortgage and cadastral taxes of €50 each.

The important point concerns the basis on which that 9% is applied. It is not the price you pay, but the cadastral value of the property, which is generally lower than the market price.

The cadastral value is calculated as follows: take the property's cadastral income, revalue it by 5%, and multiply it by 120 (the coefficient applicable to a second home).

Let's look at a practical example. Imagine a house with a cadastral income of €1,000. The cadastral value is €1,000 × 1.05 × 120 = €126,000. The 9% registration tax is €126,000 × 9% = €11,340. The same property, perhaps purchased for €250,000, is therefore taxed on €126,000.

Your property's cadastral income is shown on the cadastral register extract.

VAT on the purchase of a second home: when it applies

In some cases, you do not pay registration tax, but VAT. This applies when you purchase from a construction company within a certain period after the completion of the works. In that case, the taxable amount is the purchase price, not the cadastral value.

There are two VAT rates:

• 10% for homes that do not fall into the luxury categories;

• 22% for luxury homes, classified in cadastral categories A/1 (prestigious residences), A/8 (villas), and A/9 (castles and historic palaces).

When VAT applies, registration, mortgage, and cadastral taxes are each payable at a fixed amount of €200.

For buyers in the luxury segment, the key point to bear in mind is the difference in the tax rate. On a luxury property sold by a construction company, 22% VAT has a significant impact on the total cost because it is calculated on the full purchase price. It is an expense that should be carefully considered from the very first estimates.

IMU on a second home: calculation and deadlines

A second home is subject to IMU, always. Unlike a primary residence, it is not exempt.

Here it is important to clarify a common misconception. For IMU purposes, what matters is not whether the property is labelled as a “first” or “second” home at the time of purchase, but whether it is your primary residence, meaning the place where you are officially resident and habitually live. A holiday home by the sea where you spend your vacations is not considered a primary residence: it is subject to IMU, even if it is the only property you own.

The calculation follows the same basic method as the cadastral value, with a different multiplier. You start with the cadastral income, revalue it by 5%, and multiply it by 160 (the IMU coefficient for residential properties). The municipal tax rate is then applied to the result.

The tax rate is the variable element. The law sets a basic rate of 7.6 per thousand, but each municipality can adjust it within a range of up to 10.6 per thousand. Two identical homes in different municipalities can therefore have different IMU liabilities. Before purchasing, it is advisable to check the rate applied by the municipality where the property is located: the relevant resolutions are published on the Department of Finance’s portal.

IMU is paid in two instalments: the first instalment is due by June 16 and the balance by December 16 each year.

Second-home taxes for non-residents in Italy: what changes

Those who purchase property in Italy without being resident there (foreign nationals, Italians registered with AIRE, or simply those who do not reside in the municipality where the property is located) often wonder whether the rules are different. The answer requires a distinction.

As regards purchase taxes, no: registration tax and VAT are the same for everyone. A foreign buyer pays 9% registration tax, exactly like an Italian buyer. What residence abroad may prevent, if anything, is access to the “first home” tax benefits, which require the buyer to transfer their residence to the municipality. But since this is a second home, those benefits would not apply anyway.

As for IMU, there is a specific point to consider. For a non-resident, property in Italy is almost always considered a second home and is therefore subject to the standard IMU. Current legislation no longer allows it to be treated as a primary residence. There is only one exception: pensioners receiving a pension accrued under an international social security agreement with Italy and residing in another country are entitled to a 50% reduction in IMU on a single property unit, provided it is neither rented out nor granted under a loan for use.

There are also some practical differences. Those living abroad often pay IMU by bank transfer to the municipality rather than using the F24 form. It is advisable to check with the municipality’s tax office for the correct payment procedures. TARI, the waste collection tax, also remains payable.

All the costs to factor in beyond taxes

Taxes are not the only expense to consider. To get a realistic estimate of the investment, other costs must also be taken into account.

Notary fees include the notary’s fee for the purchase deed. The notary is also responsible for collecting and paying the purchase taxes at the time of completion

The estate agency fee covers the brokerage service. It is advisable to agree on the amount and payment terms in advance.

You should also consider the cost of any renovation work. A second home, especially one in a prestigious location or an older property, may require upgrades or customisation. Estimating these costs before purchasing helps avoid discovering afterwards that the actual budget was higher than expected.

By adding together taxes, additional expenses and any renovation work, you arrive at the total cost of the transaction: the figure that should ultimately be used to assess whether the purchase is financially sustainable.

Why choose Engel & Völkers when buying your second home

Buying a second home, especially a high-end property, is a decision that deserves a comprehensive financial and tax assessment.

Engel & Völkers knows the luxury second-home market in Italy’s leading destinations and supports buyers in the preliminary assessment of the costs involved, including taxes and additional expenses. The aim is to enable buyers to make a fully informed purchase, with a clear understanding of the overall investment from the outset.

For those looking to turn their second-home plans into reality, having access to dedicated advice means approaching the purchase with the confidence that nothing has been overlooked.