Italy’s 2027 Budget: Rental Tax and Renovation Bonuses
On 28 October the Italian Council of Ministers approved the 2027 budget bill. It contains three measures that matter to property owners and buyers. Note that it is still a bill: the Italian Parliament can amend it before final approval, due by the end of the year. Everything below refers to Italian tax law and applies to property located in Italy.
1. Flat tax on shop rents
For leases signed in 2027 on shops (land-registry category C/1) of up to 200 square metres, the owner will be able to choose a flat tax of 21% on the rent instead of Italian income tax (IRPEF). In the main cities of Italy's metropolitan areas the rate drops to 10%: in Liguria that is only Genoa, so in Sanremo, Bordighera and Imperia the rate is 21%. Owners who choose the flat tax cannot index the rent to inflation (ISTAT).
2. Regulated home rents: flat tax down from 10% to 5%
For home leases at a regulated rent (canone concordato, a rent capped by the local agreement of the municipality) signed in 2027, the flat tax (cedolare secca) falls from 10% to 5%, and to 1% if the tenant is under 36 when the lease is signed. For a flat let all year round, this can beat a market-rate lease: worth running the numbers.
3. Renovation tax deductions kept for 2027
Without the budget law, from 1 January 2027 the deductions for building works would have dropped to 36% on the main home and 30% on other properties. The bill keeps the 2026 rates for 2027: 50% for works on the main home and 36% on other properties, on up to 96,000 euros of spending per unit, deducted over ten years. These are deductions from Italian income tax, so they help only if you pay income tax in Italy, for example on Italian rental income. For most foreign buyers an Italian holiday home is not their main residence, so the 36% rate applies.
What it means for buyers and sellers on the Riviera
Investors in a shop or a small flat to let get a lighter tax bill to factor into the yield. Buyers of a home to renovate keep the higher deductions for at least another year. We will follow the bill through Parliament and update this article with the final text.
Talk to us
Aquamarina Real Estate has helped buyers, sellers and landlords in Sanremo, Bordighera and the Riviera di Ponente since 2003. Call +39 0184 26.16.87, email info@aquamarina.email or visit our offices in Sanremo (Via Roma 32) and Bordighera (Via Vittorio Emanuele 302).
Read also: Taxes and Costs of Buying Property in Italy · Selling a Home on the Italian Riviera: Price, Timing, Mistakes
For information only, based on the 2027 budget bill and summaries from trade associations; it does not replace advice from a tax adviser.
