Monday 19 March 2012

Italy’s Austerity Measures mean tax increases for property owners

Wealth Tax on Real Estate Property Located in Italy:

Rules on wealth tax due by owners of real estate properties located in Italy have been significantly changed. The new tax is called “IMU” (the Italian acronym for “Unified Municipal Tax”) and will replace the old “ICI” tax (the Italian acronym for the “Municipal tax on real estate”) starting from January 2012. The basic rate for IMU has been set at 0.76 percent per year on the value of the real estate. The taxable value for IMU is calculated based on the cadastrial values – i.e., standard values – attributed to each property in the official register. Furthermore, wealth tax is now due also on the individual’s main abode. This tax had been abolished by the former Berlusconi government, but has now been reintroduced. For real estate owned as one’s main abode, local municipalities can reduce the wealth tax rate to 0.4 percent, and allow a flat deduction up to EUR 200.

Wealth Tax on Real Estate Property Located Abroad:

Starting from 2011, for any real estate properties held abroad by Italian fiscal residents, the government is introducing a new wealth tax of 0.76 percent per year on the value of the property. Taxable value is equal to the purchase cost, as noted in the purchase contract, or, in the absence of this, is equal to the fair market value of the property. Taxpayers will be able to claim a tax credit equal to the amount of wealth tax already paid in the country where the property is located.

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