From new rules for tourist rentals to an overhaul of the popular program 'superbonus', there are significant changes in store for property owners in Italy next year.
Owning a home in Italy is a dream come true for many, but owning a property comes with a number of specific legal and financial obligations that are notoriously difficult to navigate.
To complicate matters further, property taxes and housing or rental regulations are most often subject to annual change, which can mean that even the most attentive landlords are at risk of violating the rules.
Next year will be no exception, as the new Budget Law and a series of smaller ministerial decrees have already outlined some key changes that will affect the housing market (and homeowners' finances) in 2024.
Real estate market overview
After experiencing steady growth in 2021 and 2022, the Italian property market slowed significantly in 2023 amid rising inflation and a sharp rise in mortgage interest rates.
The number of real estate financing granted in the first half of 2023 fell by almost 30% compared to the same period in 2022, according to data from Consiglio Nazionale del Notariato de Italy (national council of notaries), while the latest study of the Italian market by Nomisma found that the total number of real estate transactions was expected to record a final decline of 13% year-on-year at the end of 2023.
The negative trend is expected to continue next year, according to the latest forecasts — although property prices are generally expected to remain stable in the face of a further drop in transactions.
As for mortgage rates, the cost of borrowing in 2024 will largely depend on inflation levels across Europe and future EU monetary policy decisions. European central bank.
In November, rates for a variable rate loan were averaging six percent, while rates for a fixed rate loan have now risen to around four percent, according to the latest data released by Italian banks in December 12th.
New national identification code for Airbnb rentals
Owners who rent out their properties for short periods of time will be affected by two key changes in 2024, both part of a national plan to combat tax evasion and curb tourist rentals amid a shortage of affordable housing in major Italian cities.
Under the Anticipi Decree It will be mandatory for all facilities offering short-term accommodation (defined as any rental period of 30 days or less in Italy) to have a national identification code (national identification code, or CIN) on 2024.
The CIN will have to be displayed on the accommodation website and in any online listing, including on platforms such as Airbnb, with fines of up to 5.000 euros for those who break the rule.
A similar identification system is already in place, as owners (or property managers) currently must have a regional identification code (cregional identification index, CIR) and display it on all online listings.
But, partly due to the absence of a national framework, enforcement of these rules has so far been loose and inconsistent, which is why the current system of regional codes will be replaced by a national one next year.
Increase in the fixed rate on short-term rental income
From January 1, 2024, Italy's flat tax rate on short-term rental income (so-called dry coupon) will increase by five percentage points, i.e. from 21 to 26 percent, for owners who rent two or more homes.
According to estimates from the Italian property managers association Aigab, the impending increase is expected to affect around 600.000 property owners across the country, who can expect an average annual fee increase of 850 euros.
The rate will remain at 21 percent for homeowners renting just one home.
A dry coupon It is one of two ways property owners in Italy can declare and pay taxes on short-term rental income. The other involves declaring any rental income as part of your total income for the year and then paying the Personal income tax (Italy's main individual income tax).
Airbnb ban in Florence?
Florence could be the first Italian city to completely ban Airbnb rentals in 2024, after the city council preliminarily approved a ban on short-term rentals in the historic center amid a shortage of affordable long-term rentals.
The final ruling on the matter is expected in May next year, when the Regional Court of Tuscany (TAR) will decide on the constitutionality of the measure.
Other major Italian cities, including Venice and Milan, have already considered plans to restrict the number of short-term rentals available in an attempt to free up housing for residents — but there is no sign of that becoming a reality so far.
Changes to Home Renovation Bonuses
All of Italy's main home renovation incentives will still be in place in 2024, but some key changes are set to affect who can claim them and how, following major reforms from Italy's government. Giorgia Meloni earlier this year.
Super bonus 2023
In particular, the maximum amount claimable under the well-known scheme superbonus 110 will decrease to 70 percent of total labor cost from January 1, 2024, after having fallen to 90 percent in 2023.
Furthermore, with some exceptions, the bonus will only apply to condominiums and small apartment buildings (two to four residential units) in 2024.
'Capital gains tax' on sale of superbonus buildings
Under Italy's new Budget Law, homeowners who choose to sell a second home for which they have claimed a discount superbonus within ten years from the end of the relevant renovation work will be required to pay a 26 percent capital gain tax (capital gain) resulting from the sale.
Expenses related to superbonus will not be considered as counting towards the profit obtained from the sale.
For example, if a homeowner purchased a second home for €200.000 and carried out renovation work worth €100.000 under the scheme superbonus and sells the property for 400.000 euros, his capital gain taxable amount will be 200.000 euros (not 100.000).
No change to Italy's second home property tax
Although it appeared that a long-delayed reform of Italy's second-home property tax — officially known as Imposta Municipale Unica (or IMU) — could come into force in 2024, the plan was recently postponed again.
This means that the IMU's legislative framework, including its current tax coefficients and payment deadlines, will remain the same until at least the end of 2024.
The IMU is owed by all second home owners in the country, but it also applies to main residences (prime case) in some rare cases.
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