Investing in Italy can be tricky if you don’t have insider information. The Belpaese is a wonderful place, so identifying the boundaries between a real profitable investment and a personal whim for one’s holidays is not easy without the proper advice.
Today we’ll try to focus on:
- the best regions to invest in in Italy
- average house prices in 2022-2023
- the things you need to check before buying
- taxation advantages for foreigners who restore
If you want to increase the possibilities of making a good Italian investment, then you’ll need a team of dependable local experts to assist you through the process of finding, securing and finalizing the purchase of your dream Italian property. Having an insider’s view on the local scenario, and being able to count on the expertise and know-how of real estate agents, fiscal experts and lawyers who know the ropes of Italian property law is essential to making a profitable deal.
Should you invest in real estate in Firenze, Venezia or Sardegna?
Watching the gondolas cruise along the Grand Canal. Swimming in the crystal clear waters of Sardinia. Finding an house for sale in Tuscany, Italy, to restore and move into, your perfect place under the Tuscan sun. Some things in life never cease being marvelously appealing, and Italy, with its gorgeous natural environment and inspiring centuries-old heritage, are among these. But, while everybody knows how seductive Italy can be, not all are aware of the concurrent factors that are turning this global fascination into a more substantial and tangible investment opportunity.
Purchase real estate in Firenze or Venezia in 2022 and enjoy tax benefits
It’s a fact: smart, far-sighted American, British and European investors are flocking to Italy to buy property. And Florence (as long as the other Tuscan towns) is among the preferred destinations.
Bloomberg was one of the first influential journals to mention this trend, revealing that current Italian tax benefits and fiscal advantages, alongside lower purchase costs compared to other European countries, are playing a leading role in luring prospective foreign buyers to buy property in Italy. This, I’d like to add, and will explain further on, is true both for those who buy both for their own personal use and for commercial purposes. But first things first: let’s get the facts straight on the taxation issue.
Why moving to Italy is a win-win choice
As of today, standing Italian tax regulations provide for fiscal advantages for those who:
- move to Italy to work
- retire to Italy for taxation purposes
Taxation advantages for freelancers and employees who move to Italy
As regards the former, it is a tax relief scheme directed to freelancers and employees who have lived in a foreign country and choose to move to, and reside in, Italy and work mainly on the Italian territory. The beneficiaries include graduates who have worked abroad, students who have studied and graduated abroad, highly qualified and/or skilled and/or specialized managers and workers. Basically, the person is subject to a lower income tax rate for 5 years. The “discount” amounts to 30% in most Italian regions, and 10% if he/she chooses to live in Abruzzo, Molise, Campania, Apulia, Basilicata, Calabria, Sardinia or Sicily. In certain cases, for instance workers with 3 small children, the regime can be extended to over 5 years.
Tax regime for high-net-worth individuals
Adopted by the Italian government to motivate high-net-worth individuals to move their residence, and hence invest, in Italy, this regime allows these persons who transfer their tax residence to Italy to be subject to a substitute tax applied to their foreign income. The total due for each fiscal year is 100,000 Euro, and the regime is extendable to family members.
Capital gains tax and property tax in Italy
But there’s more. First and foremost, pursuant to Italian law, foreign nationals who purchase real estate in Italy, choose not to move their residence to Italy, and re-sell the asset they have bought within a time span of 5 years are not subject to capital gains tax. If instead you buy a house, or an apartment or any kind of real estate in Venezia, or Firenze or elsewhere in the Italian “boot”, and choose it as your main residence, you are exempt from property tax (IMU, i.e. Imposta Municipale Unica in Italian).
Income tax on short-term rentals
As I briefly mentioned above, Italian law offers fiscal advantages for those who purchase real estate in Italy for commercial purposes too, specifically for those who buy property to rent it out as a vacation home. This is very interesting for investors, seeing as the country’s appeal to tourists is not likely to waver. In Italy, short-term rentals, also called short-term leases or touristic rentals, are those that have contracts with a duration equal to 30 days at the most. Their owners are subject to a special taxation regime called cedolare secca or 21% flat tax. Basically, the proprietor of a vacation home rented for a maximum of 30 days will pay a fixed percentage (21%) on his/her income.
Location location location!
This last fact shows how very profitable it can be to own and rent property in the major Italian art cities, for instance real estate in Firenze or Venezia, or a holiday home in a popular mountain or seaside resort. Which, intuitively, brings us to location. Needless to say, whether you’re buying for yourself, to secure your children’s future or to make a profitable investment, location is key.
The three best places in Italy to buy real estate in 2022
These three very different, and spectacular regions, are, as of today, the best places to buy real estate in Italy. Each boasts uniquely entrancing features that range from the landscapes to the history, as well as a distinctive character and typical charm.
What makes these three regions unique?
Different as they are, they share four traits that, as of today, set them apart from all other Italian regions:
- A pleasurable, wholesome lifestyle (which includes soul-satisfying local fare and award-winning wines in all three regions!)
- A carefully safeguarded, and magnificent, natural environment. You’ll find hills, mountains and countryside in Tuscany, a spectacular lagoon, hills and fertile plains in Veneto, and a wild mountainous inland, Caribbean-like water and white powdery beaches in Sardinia
- Beautiful main cities filled with world-class art and architecture, among which are Florence, Siena, Pisa, Venice, Verona, Cagliari and Nuoro, and fascinating towns rich in tradition.
- An undying appeal to travelers (which make for excellent returns in investment)
Average prices in the main cities of the 3 best regions to buy in Italy
The real estate market in all three above-listed regions is thriving and vital. Let’s take a look at current prices in the main cities of Tuscany, Veneto and Sardinia.
Average home price in Florence, Italy
As of May 2022 the average prices per square meter for homes for sale in the Florence province was €3.093, minus 1.09% compared to May 2021 (when it was €3.127/m²). Over the last two years the average home prices in the province of Florence, Italy peaked in April 2019, hitting €3.159 per square meter. Prices for houses in Florence city center, are higher: this last May the most costly ones for sale were those in the Michelangelo and Porta Romana neighborhoods, where the average price per square meter stood at €5.064 per square meter.
Average house price in Venice, Italy
As of May 2022, the average house price in Venice, Italy was €2.335 per square meter, showing an increase of 0.69% compared to one year ago. This as regards the whole province of Venice. Amazingly enough, the highest average house price in Venice, Italy, was not in the municipality of Venice, where it stood at €2.872, but in Jesolo, where houses sold for up to €3.506.
Average price per square meter for homes in Cagliari, Sardinia
As of May 2022, the average price per square meter for homes in Cagliari, Sardinia was €1.903, showing a significant increase, +3.88%, compared to May 2021. Not surprising, seeing as the city ranked number 1 in Italy among the cities where retirees live best and longest!
Seeking the perfect holiday retreat for yourself and your family, or to rent out as a vacation home on the Emerald Coast? Or a smart apartment in Cagliari? Get an insider’s view, a comprehensive list of the best beaches and useful tips for buying here.
How to choose the best destination in Italy for your real estate investment
First, focus on your personal preferences and the use you intend to make of the house.
Do you plan to rent it out, move there, just fly over a couple of times a year on holiday? And then again, are you a fan of city life, art, and shopping? If so, nothing can beat classical Italian real estate in Firenze! Are you looking for a restful, tranquil countryside or seafront retreat? Choose a house for sale in Tuscany, Italy to restore it to your liking, or opt for a rambling sea view mansion in beautiful southern Sardinia! Do you have growing children who might benefit from studying abroad? In Veneto, they could attend preeminent schools like the University of Padova, the Iuav and Ca’ Foscari in Venice; and Tuscany boasts three of Europe’s most important universities too: Pisa, Florence and Siena. Factor in all the above, and other items that come to your mind, and then start looking for your dream home.
Budget counts, especially when deciding to buy property, so assess how much you are willing to spend, and then start your search focusing on the region that most meets your needs and desires.