When Is Capital Gain Taxable in Italy?

You may be subject to tax if you sell a property within 5 years of purchasing or building it and make a profit (i.e., the sale price is higher than the original cost).

Key Exemptions:

  • Main residence: If the property was your or a close family member’s primary home for most of the time between purchase and sale, no tax applies, even if sold within 5 years.
  • Inheritance: Properties received through inheritance are not taxable, no matter when you sell.
  • Donations: If you received the property as a gift, tax applies only if sold within 5 years from the donor’s original purchase date.

What If the Property Sold Is Located Abroad?

The same tax rules apply even if the property sold is located outside Italy. If you become an Italian tax resident and you sell a foreign property within 5 years of its purchase, the gain may be taxable in Italy under the same conditions described above.

If you acquired the property via inheritance, or it was your main residence, then it will likely be exempt from Italian taxation.

Capital gains on foreign real estate must be reported in your Italian tax return. The gain is generally calculated using the same principles (sale price minus purchase cost and eligible expenses). If you paid tax in the foreign country, you may be entitled to a foreign tax credit to avoid double taxation, depending on the tax treaty.

Superbonus Renovations and Capital Gains (from 2024)

Starting 1 January 2024, selling a property renovated under the Superbonus 110% scheme may result in a taxable capital gain if the renovations were completed within the last 10 years.

You are exempt if:

  • The property was inherited.
  • The property was used as a main residence by you or a family member for most of the 10 years before sale.

How Is the Capital Gain Calculated?

The capital gain is calculated as:

Selling price - (Purchase price or construction cost + eligible expenses)

Eligible costs may include:

  • Notary and agent fees
  • Expenses to clear the property of encumbrances or tenants
  • Demolition costs

In case of property exchanges, the value of the received asset is considered.

Tax is due in the year the sale takes place. There is no separate (progressive) tax option for this income.

The 26% Substitute Tax Option

If you sell a property within 5 years and realize a gain, you can opt to pay a flat 26% substitute tax instead of adding it to your personal income.

  • This option must be requested at the time of signing the deed.
  • The notary handles the payment.

No tax applies if the property is held for more than 5 years.

Tax-Free Scenarios (Even if Sold Within 5 Years)

No capital gains tax is due in these cases:

  • Property was inherited.
  • Used as your or a family member’s main residence for most of the ownership period.
  • You sell part of your main home.
  • The property was acquired by usucapione (adverse possession).
  • Sale of a garage/box that is a pertinence of your home and sold together with it. (Selling separately may trigger tax.)

Rights of Use and Real Rights (Usufruct, Use, etc.)

From 2024, granting real rights (e.g., usufruct) in return for payment is taxable as income, even without selling the property.

Transferring such rights is treated as a sale, and capital gains tax rules apply.

Important Notes Before Selling

  • These rules apply only to individuals, not companies or professionals.
  • Selling renovated properties with tax incentives may have additional tax impacts.
  • If you are a non-resident, different rules may apply.
  • If you sell a property abroad after moving to Italy, remember that the gain might still be taxable in Italy unless exempt.

Practical Examples

Example 1: Sarah, a U.S. citizen, becomes an Italian tax resident in June 2025. She sells a holiday apartment in Spain in December 2025, which she bought in 2021. The gain is taxable in Italy because:

  • The property was sold within 5 years.
  • She is now an Italian tax resident.

Example 2: Michael inherits a house in the UK in 2018 and becomes an Italian resident in 2025. He sells the house in 2026. No capital gains tax applies in Italy because:

  • The property was inherited.

Example 3: Julia buys a second home in Italy in 2020 and sells it in 2023, but it was her main residence for most of the time. No tax applies because:

  • The home was her main residence.

Move to Dolce Vita provides expert guidance on real estate transactions and tax planning in Italy. Contact us for tailored support.

Disclaimer: This guide is for informational purposes only and does not constitute legal or tax advice.

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