Income tax on rented property

[richardgray]

I rent a flat in Italy to an Italian family. This is not my main home in Italy and i am not resident.
I have just been charged 30% tax on all income received from the second property and been told that, unlike the UK , i cannot claim relief on any expenses incurred on the property such as mortgage interest,management fees, repairs etc.
It seems incredible to me that the tax is levied on the top line of income and not profit on the rental property after expenses as is the case in the UK.

Does anybody know if this is correct as it makes the investment property a liability and one that i have decided to sell as a result.

[mipc]

I disagree, my accountant deducts relevant property expenses and i thus pay IRPEF on the net income value. I will call him to ensure this is correct and post up his response.
IRPEF and the italian tax system is not easy, but the average commercialista will handle your paperwork for a small fee.
I have a link to some good advise on italian income tax IRPEF on my mipc blog, which i would advise you to have alook at.

[mipc]

Well you learn something new everyday, I spoke to my accountant he says :

As an individual you are allowed a flat 15% deduction regardless the amount you actually spend or not on the property. So irpef applies to 85% of the property income.
There is a way to apply irpef to 55% of property income, instead of 85%, depending on certain factors, such as property location, rental amount etc. Also, depending on rental contract duration and other factors, there could me other ways to minimize the taxation.

Interesting...i will look into this further.
mipc

[NickZ]

Ya but since he isn't an Italian tax resident can he claim any of that? That may be the issue.

I wonder if he could setup the Italian version of a limited company but would it be worth the cost?

[richardgray]

Thanks for your comments. Yes i was told by the agent that because i was not a tax resident
i was not entitled to any allowances at all and just had to pay over 30% of the rental income regardless of expenses. (i do of course have a codice fiscali). If anyone has an English speaking Italian tax advisor i would be grateful for a number. It seems to be very unreasonable to be taxed even if you make a loss on the property. Further comments welcome.

[juliancoll]

Recommended by another forum member - it may help.

Italy Accountants- English speaking accountants in Italy. Accountants Italy.

[richardgray]

Thanks for all your comments. I have contacted the tax company that was recommended and await a reply.
I will let you all know what they say.

[italylaw5]

Hi,
if you are a file for income tax and want a advisor PLZ send a online query of legal firm

[cdavies]

This seems to be unclear, I filed a tax return here through my accountant and was told that his local tax office recognises the expenses and I paid tax on the difference. This was for tax year 2006 I have just received an additional tax demand for that year because apparently my local tax office won't recognise the expenses.

[Geotherm]

These couple of articles explain rental income and tax liabilities. Yes you can deduct 15%, but then you are liable for tax on the remaining balance.
Italian Tax System - Homes Overseas
www.ailo.org/downloads/Italy.pdf