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PROPERTY

What to expect from Italy’s property market in 2024

From new rules for tourist lets to a reform of the popular ‘superbonus’ scheme, there are significant changes in store for homeowners in Italy next year.

Published: 14 December 2023 10:07 CET
Updated: 31 December 2023 10:01 CET
Burano, Venice
Two people are pictured as they walk past the colourful houses of Burano, a small island in the Venetian lagoon, in September 2023. Photo by Gabriel BOUYS / AFP

Owning a house in Italy is a dream come true for many, but being a proprietario di casa brings with it a series of specific legal and financial obligations that are notoriously hard to navigate.

To further complicate things, property taxes and housing or renting regulations are for the most part subject to yearly changes, which can mean even the most attentive homeowners risk falling foul of the rules. 

Next year will be no exception as the new Budget Law and a number of smaller ministerial decrees have already outlined some key changes affecting the property market (and homeowners’ finances) in 2024.

Property market overview

After experiencing steady growth in 2021 and 2022, the Italian property market slowed down significantly in 2023 amid soaring inflation and a steep rise in mortgage interest rates.

The number of mortgages granted in the first half of 2023 was down by nearly 30 percent compared to the same period in 2022, according to data from Italy’s Consiglio Nazionale del Notariato (national council of notaries), whereas the latest study of the Italian market by Nomisma found that the overall number of real estate transactions was expected to register a final 13-percent year-on-year drop at the end of 2023. 

The negative trend should continue into next year, according to the latest predictions – though property prices should generally remain stable in the face of a further drop in transactions. 

Florence, Italy

A view of Florence’s Piazza Santa Croce in February 2021. Photo by Vincenzo PINTO / AFP

As for mortgage rates, the cost of borrowing in 2024 will largely depend on inflation levels across Europe and the European Central Bank’s future monetary policy decisions. 

In November, rates for a variable-rate loan stood at an average of six percent, whereas rates for a fixed-rate loan have now risen to around four percent, according to the latest data released by Italian banks on December 12th.

New national ID code for Airbnb rentals

Owners renting out their properties for short periods of time will be affected by two major changes in 2024, both part of a nationwide plan to combat tax evasion and curb tourist rentals amid a shortage of affordable housing in major Italian cities.

Under the Decreto Anticipi, which is expected to be made into law by the end of this week, it will be mandatory for all facilities offering short-term accommodation (this is defined as any rental period of 30 days or less in Italy) to have a national identification code (codice identificativo nazionale, or CIN) in 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 flouting the rule. 

A similar identification system is already in place as owners (or property managers) are currently supposed to hold a regional ID code (codice indentificativo regionale, CIR) and display it on all online listings. 

But, partly owing to the absence of a national framework, the enforcement of these rules has so far been loose and inconsistent, which is why the present regional code system will be replaced by a national one next year.

Hike in flat tax on short-term rental income

As of January 1st 2024, the rate of Italy’s flat tax on short-term rental income (the so-called cedolare secca) will increase by five percentage points, that is from 21 to 26 percent, for owners renting out two or more houses.

According to estimates from Italian property managers association Aigab, the incoming hike should affect around 600,000 owners around the country, who can expect an average 850-euro tax increase a year.

READ ALSO: Which of Italy’s home renovation bonuses can you claim in 2024?

The rate will remain at 21 percent for owners renting only one house. 

The cedolare secca is one of two ways property owners in Italy can declare and pay taxes on short-term rental income. The other one involves declaring any rental income as part of your overall income for the year and then paying Irpef (Italy’s main tax on individual income) on it.

Airbnb ban in Florence?

Florence may be the first Italian city to outright outlaw Airbnb rentals in 2024 after the city council preliminarily approved a ban on short-term lets within the historic centre amid a shortage of affordable long-term leases.

READ ALSO: Has Florence banned new Airbnb rentals in the city centre?

The final verdict on the subject is expected in May of next year, when Tuscany’s regional tribunal (TAR) will rule on the measure’s constitutionality. 

Other major Italian cities, including Venice and Milan, have previously considered plans to restrict the number of short-term lets available in a bid to free up housing for residents – but there’s no sign of them becoming a reality just yet.

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’s able to claim them and how following major reforms from Giorgia Meloni’s government earlier this year. 

Superbonus 2023

The facade of a building in central Rome is shown as it undergoes renovation work in February 2023. Photo by Tiziana FABI / AFP

In particular, the maximum claimable amount under the well-known superbonus 110 scheme will go down to 70 percent of the total cost of work from January 1st 2024 after it dropped to 90 percent in 2023.  

Further, barring some exceptions, the bonus will only apply to condominiums and small apartment buildings (two to four residential units) in 2024.

‘Capital gain tax’ on sale of superbonus buildings

Under Italy’s new Budget Law, homeowners choosing to sell a second home for which they claimed a superbonus discount within ten years from the end of the relevant renovation work will be required to pay a 26-percent tax on the capital gain (plusvalenza) resulting from the sale. 

Superbonus-related expenses will not be considered as counting towards the profit made through sale. 

READ ALSO: What’s happening with Italy’s building superbonus in 2024?

So, for instance, if a homeowner that bought a second home for 200,000 euros and carried out renovation works for 100,000 euros under the superbonus scheme sells the property for 400,000 euros, his taxable plusvalenza will be 200,000 (not 100,000).

No changes to Italy’s second-home property tax 

While it seemed that a long-delayed reform of Italy’s property tax on second homes – officially known as Imposta Municipale Unica (or IMU) – could come into effect in 2024, the plan has recently been postponed again. 

This means that IMU’s legislative framework, including its current tax coefficients and payment deadlines, will remain the same until at least the end of 2024.    

IMU is owed by all second-home owners in the country, but also applies to primary residences (prime case) in some rare cases.

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MONEY

What insurance is available for owners of holiday lets in Italy?

Protecting yourself and your property against unforeseen events may well be your top priority when renting out your second home in Italy – but there’s no one-size-fits-all insurance plan for owners.

Published: 2 July 2024 15:55 CEST
What insurance is available for owners of holiday lets in Italy?

If you own a second home in Italy and you’re planning on renting it out to holidaymakers when you’re not there, taking out an insurance policy to protect yourself and your property against unforeseen events is one of the first and most important things you’ll have to consider. 

Though contracting an insurance policy on a holiday let is not a requirement in Italy except in some specific cases (see more below), doing so is strongly advisable. 

Even the most mindful and considerate of guests can sometimes cause accidental damage to your property or belongings during their stay, especially if they happen to have small children or pets.

But taking out an insurance plan can also protect you from expensive claims made against you by guests in the event of injuries or damage suffered while in the property.

Though insurance policies for vacation rentals are grouped together under the umbrella term of assicurazione casa vacanze (holiday home insurance), there’s no one-size-fits-all plan and homeowners are granted the freedom to tailor their policies to their particular needs, as well as the features of their property.

Third-party liability coverage 

The polizza di responsabilità civile (literally, ‘civil responsibility policy’) is considered the most basic type of plan you can take out on your second home. 

This covers the costs associated with injury or damage suffered by guests during their stay in your property as well as any legal defence expenses you may face. 

A view of Alberobello, a village famous for its traditional 'trulli' houses in Puglia

A view of Alberobello, a village famous for its traditional ‘trulli’ houses in Puglia. Photo by Piero CRUCIATTI / AFP

To make a practical example, if a bookshelf in your home suddenly collapses, injuring one of the guests, this policy will cover the medical expenses faced by the guest as well as the costs of any legal proceedings you may be involved in.

READ ALSO: Is now a good time to buy a home in Italy?

It’s worth noting here that if you’re renting out your property through popular online platforms such as Airbnb, your home will in most cases be automatically covered by a liability policy managed directly by the platform. 

For instance, Airbnb has its own AirCover policy, which offers homeowners free-of-charge third-party liability coverage for claims of up to one million dollars.

That said, most platform-managed liability policies will only apply to bookings made directly through the platform, meaning that if you rent your property via any other channel, you’ll have to take out a separate plan. 

The cost of a basic responsabilità civile plan generally hovers around 150 to 200 euros per year.

Is a third-party liability plan mandatory?

Under Italy’s tourism laws, a liability insurance policy is only mandatory if you rent out your property as part of an ‘entrepreneurial activity’, meaning a registered business with a partita IVA (VAT number).

If you’re a private citizen occasionally renting out your second home to partly offset property costs and this is not your main professional occupation and source of income, you won’t be required to take out a liability policy (though you may still consider getting one for the reasons explained above).

If you have doubts on whether or not your activity qualifies as ‘entrepreneurial’, you’re advised to get in touch with a legal expert.

Damage insurance 

A basic liability policy won’t protect you against damage to your own property or belongings, which is why homeowners tend to complement this with a damage policy (assicurazione danni). 

This essentially covers the costs of material damage suffered by your property’s structure and contents, whether that be caused by guests or external factors. These can include fires, explosions, leakage, clogged drain pipes, burglary and vandalism acts depending on the type of plan you choose.

It’s worth noting that standard assicurazioni danni don’t generally cover damage caused by major natural disasters such as earthquakes and flooding.

Hoses pump water out of a building in Venice following a severe high tide event.

Hoses pump water out of a building in Venice following a severe high tide event. Photo by Filippo MONTEFORTE / AFP

If your property’s located in an at-risk area, most insurance providers will allow you to add natural disaster coverage to their damage plans.

READ ALSO: Reader question: Should I insure my Italian home against flood or earthquake damage?

Third-party liability coverage and damage coverage against the most common types of external factors are often sold as part of a single insurance package marketed as assicurazione multirischio (multi-risk insurance). Here, prices range from 200-250 euros per year for the most basic plans to 600-700 euros for more comprehensive plans.

Once again, if you’re renting out your property through some of the more popular online platforms, your home will in most cases be automatically covered by some type of damage policy managed directly by the platform. 

For instance Airbnb’s AirCover policy covers damage of up to 3 million dollars caused directly by guests (but does not cover damage caused by external factors).

Theft

Many standard insurance packages already provide coverage against theft. If that’s not your case, you can ask for an assicurazione furto (theft insurance) to be added to your plan.

However, this type of coverage only applies to break-ins (furto con scasso) and not to theft on the part of guests.

The presence of a short-term rental agreement (either signed in physical form or implicitly agreed upon via an online platform) between owner and guests makes it impossible under Italian law to consider acts of theft from guests as theft per se as these can only be categorised as misappropriation (appropriazione indebita).

To protect yourself against misappropriation, you can add a polizza di tutela legale (legal protection policy) to your package. This will cover legal expenses in a lawsuit for misappropriation filed against a guest. 

Picking the right provider 

It’s advisable to do at least some level of in-depth online research when choosing your second home insurance plan in Italy as there are nearly 100 different providers across the country.

Also, as appealing as it may be, simply opting for the cheapest coverage on the market may mean that you don’t get the product that’s right for you or your property.

READ ALSO: Five expensive mistakes to avoid when buying a house in Italy

When picking your insurance provider, it’s advisable to check customer reviews, feedback scores, and ratings beforehand, as well as enquire about the claims process and cancellation policies with the relevant company. 

Some providers also offer discounts or incentives for homeowners improving home safety measures or eliminating risk factors.

All forms of insurance in Italy are regulated by the Italian Insurance Supervisory Authority (IVASS). Make sure that the provider you turn to figures on the IVASS register. 

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