12 Mag Tax Benefits for Foreigners Purchasing Property in Italy
Investing in Italy: Tax Advantages for Those Who Buy a Home and Relocate
Italy remains an attractive destination for foreign investors, not only for its cultural and scenic heritage but also for the tax advantages it offers. Tax benefits for foreigners buying property in Italy have become an increasingly relevant topic for those looking to relocate or invest. Among these are benefits for purchasing a so-called “first home” and the tax regime for new residents. Let’s examine how these work and how they can be combined to maximize benefits.
What Is the “First Home” Benefit and Who Is Eligible
The benefit for purchasing a “first home” is a tax measure in Italy aimed at encouraging the purchase of properties to be used as a primary residence. Interestingly, this measure is not limited to Italian citizens but can also be used by any foreign nationals wishing to buy a home in Italy. The main requirement is that the individual establishes residency in the municipality where the property is located within 18 months of the purchase.
Applicable Tax Benefits
So, what are these benefits? A foreign investor purchasing a property in Italy as their “first home” is entitled to:
- 2% registration tax (instead of 9%) if the property is sold by a private individual.
- 4% VAT (instead of 10%) if sold by a construction company.
- Fixed tax of €50 each for the registration before the public registry and before the cadaster.
- Exemption from stamp duty and other minor taxes.
These elements result in significant tax savings on the purchase.
Eligible Properties
These benefits apply to properties falling under nearly all residential cadastral categories. The only exclusions are:
- A1 (luxury homes),
- A8 (villas),
- A9 (castles and historic buildings).
2025 Italian Budget Law Update
Another key condition under Italian law is the following. To maintain the first home tax benefit, the property must not be sold within five years of the purchase. Otherwise, the taxpayer must repay the saved taxes plus penalties and interest, unless they purchase another property to be used as their primary residence within a set period.
Until 2024, this period was 12 months. The 2025 Italian Budget Law extends it to 24 months, giving buyers more time to plan a new purchase without losing their benefits.
This change may be particularly useful for those relocating to Italy who need more time due to evolving personal or professional circumstances, making the benefit system more adaptable to real-life relocation or international investment timelines.
Tax Regime for New Residents in Italy
As noted above, a fundamental requirement for obtaining the first home benefit is transferring residency to the municipality of the property within 18 months of purchase. For foreign citizens, this requirement also opens the door to a powerful second opportunity: the new residents’ tax regime.
This is an optional regime introduced by the 2017 Italian Budget Law and amended in 2025, targeting those who transfer tax residence to Italy after a long period abroad.
In other words, the required relocation for the first home benefit can also qualify the individual for the new residents regime, allowing them to combine both measures for a double tax benefit: reduced purchase taxes and favorable taxation on foreign income.
How It Works
The new residents regime is designed to attract high-net-worth individuals transferring their tax residence to Italy. Its main feature is a lump-sum annual tax of €200,000 on foreign-source income, regardless of the amount.
Eligibility Requirements
The main requirements include:
- Not having been fiscally resident in Italy for at least 9 of the 10 years before the move;
- Transferring tax residence to Italy;
- Filing the specific option with the Italian Revenue Agency in the tax return.
Extension to Family Members
An additional advantage is the option to extend the benefit to family members, with a reduced substitute tax of €25,000 per person per year. This makes Italy an attractive destination not only for individuals but for entire families.
A Combined Opportunity: First Home + New Residents Regime
In summary, by purchasing a home in Italy as a “first home” and transferring tax residence there, one can combine the two regimes described. Specifically, one can:
- Substantially reduce purchase taxes through the first home benefit;
- Enjoy favorable tax treatment on foreign income for up to 15 years;
- Extend the benefits to their family, supporting a stable and planned relocation.
Contact Us to Learn More
If you wish to explore the requirements and opportunities related to the tax benefits for foreigners buying property in Italy, our firm – composed of professionals with international legal and tax expertise – is available to provide tailored advice.
