Italian real estate environment: how to purchase and manage prestigious estate

Article published in the magazine We Wealth of June 26, 2023

A favorable tax solution for non-residents is to acquire a vincolato property and lease it through a trust

Vincolato properties cannot be demolished or modified without authorization

The decision to purchase a prestigious property with historical and artistic restrictions requires careful consideration for non-residents in Italy
Italy boasts a rich artistic heritage, but the purchase and preservation of historical and artistic properties involve specific regulations (referred to as “vincolato” properties).
For non-residents, it is crucial to understand the general rules that apply to the acquisition and conservation of these properties, as well as the special restrictions on their sale.
These obligations are partly offset by more favorable tax provisions compared to those applicable to other properties.

The “vincolato” properties in Italy
Which properties fall under these special regulations? The Italian law defining vincolato properties is Legislative Decree No. 42 of 2004 (link to the law).
Before making a purchase offer for a property, it is important to inquire whether it is subject to any restrictions under this law. The existence of such restrictions can be easily verified by consulting the “Conservatoria Pubblica dei Registri Immobiliari” (Public Registry of Real Estate).

It is worth noting that vincolato properties cannot be demolished or modified without authorization. The owner is responsible for the expenses related to the preservation, protection, and restoration of the property. In the event of a sale, notification must be given to the Italian government, which has a right of first refusal (rarely exercised).

Tax issues
Direct taxes on vincolato properties:

  • Locally rented properties are subject to a reduced taxation rate of 35%. If the property is not rented, the only tax to be paid is the Municipal Property Tax (IMU), which is reduced by 50% compared to not-vincolato properties.

Donation and inheritance taxes:

  • Fixed taxes of €200.00 apply to donations of properties, while inheritance tax does not apply to these properties upon the owner’s death.

In conclusion, the decision to purchase a prestigious property with historical and artistic restrictions requires careful consideration for non-residents in Italy. The law imposes conservation rules on the owner, and maintenance, renovation, or modification works can only be carried out in compliance with specific regulations. To offset these constraints imposed by the government, the tax legislation for direct taxes is more advantageous, especially in the case of rented properties. Even more advantageous is the law on donation and inheritance taxes that apply upon the owner’s death.

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