Holiday Home or Permanent Residence?

Holiday Home or a Permanent Residence?

After took the decision to buy a property in Italy, one thing to consider is will the property be a holiday home or a permanent residence. At first you may think that they would both have different considerations, but there’s very little to separate them.

But before you make any decision, consider this, many holiday home owners eventually become full time residents when they decide to retire.

The differences:

Holiday home

A holiday home or second home is usually a property most people use for vacation purpose, although a second home can also have other functions and pros. Buying a holiday home is an emotional decision. And owning your piece of paradise can deliver many years of good times, relaxation and happy memories.

To alleviate the expense of owning a holiday house you can rent it out either with long term or short contracts.

Buying a holiday house no tax benefits are provided; this means that all the taxes related to the property will be entirely paid, regardless you are a foreigner or italian, in addition to IMU and TASI taxes that are paid to the Municipality where the house is located and in accordance with the percentage applied.

Permanent Residence

A primary home is the property where a person lives everyday and where the fiscal residence is.
Most importantly, on a primary home there may be several tax breaks when the following conditions are fulfilled:
the property must be the first one (timeframe speaking) bought on the national territory of Italy, using the “prima casa” fiscal benefits.
The owner of that house must have or bring in 18 months from the purchase his/her fiscal residence.
The owner should use the house constantly, as "primary home", at least for 5 years after the purchase.

The costs

Buying from a private owner

  • As resident taxes are 2% calculated on the Cadastral Value
  • As not resident taxes are 9% calculated on the Cadastral Value

Buying from a company

  • As resident 4% VAT on price
  • As not resident 1% VAT on price