Italy Rental Income Tax Guide 2026 — Cedolare Secca (21%/10%)

Overview of Rental Income Taxation

Income from renting residential property in Italy is classified as reddito fondiario (property income) and is generally taxed as part of the landlord's overall income. Italian tax law provides two main options for taxing rental income: (a) inclusion in the landlord's IRPEF progressive rate (23-43%) on the higher of the contractual rent or the cadastral rent (rendita catastale), or (b) the cedolare secca (flat-rate substitute tax) at 21% (or 10% for agreed-rent contracts in certain municipalities).

The cedolare secca regime was introduced to simplify taxation, reduce the tax burden on landlords, and encourage the declaration of rental income. It replaces IRPEF, regional surcharges, municipal surcharges, and stamp duty and registration tax on the lease agreement. Once opted in, the regime applies for the entire duration of the lease contract and automatically renews unless the landlord opts out.

Cedolare Secca (Flat-Rate Substitute Tax)

The cedolare secca is an optional regime available to landlords who rent residential properties (categorie A/1 to A/11, excluding A/10 offices). It covers rental income from residential leases only — commercial/industrial property rentals (categorie C, D, E) are not eligible.

Standard Rate — 21%: Available for any residential lease contract (libero mercato — free market rent). The tax is calculated on the contractual rent agreed between the parties, with no deductions allowed for expenses. The 21% rate is final — the rental income is not included in IRPEF taxable income, and no regional or municipal surcharges apply. The landlord also benefits from exemption from the annual imposta di registro (registration tax) on the lease (normally 2% of the annual rent for residential leases).

Reduced Rate — 10%: Available for concordato (agreed-rent) leases in municipalities with high housing demand (comuni ad alta tensione abitativa — including Milan, Rome, Naples, Turin, Bologna, Florence, and many other major cities). The rent is determined within agreed ranges set by local territorial agreements (accordi territoriali) between landlords' and tenants' associations. The reduced 10% rate is designed to encourage affordable rental housing. The 10% rate applies for the entire duration of the lease contract (typically 3+2 years or shorter transitional periods). Landlords may also benefit from a reduced IMU rate (see below).

How to Opt In: The landlord must indicate the choice for cedolare secca on the registration form (modello RLI) when registering the lease contract with the Agenzia delle Entrate. The choice applies to the entire contract. The landlord pays the cedolare secca annually using the F24 form (codice tributo 1840 for the 21% rate, 1841 for the 10% rate) by the standard tax deadlines (30 June first instalment, 30 November balance).

Cannot Opt Out for Individual Years: Once you choose cedolare secca for a lease contract, you cannot revert to IRPEF for that contract in later years. The choice is binding for the duration of the contract. However, you may choose a different treatment for different properties (e.g., cedolare secca on one apartment, IRPEF on another).

IRPEF Treatment (Without Cedolare Secca)

If the landlord does not opt for the cedolare secca, rental income is included in the landlord's total income and subject to IRPEF at progressive rates (23%, 33%, 43% with regional and municipal surcharges). The taxable amount is the higher of: (a) the actual contractual rent, or (b) the cadastral rent (rendita catastale) of the property, increased by 5% (the "rivalutazione").

Cadastral Rent Floor: Italian law provides that rental income for tax purposes cannot be less than the cadastral rent (increased by 5%). This means that even if the landlord charges a low rent or the property is temporarily vacant, the minimum taxable amount is always the cadastral rent + 5%. This rule prevents landlords from declaring artificially low rents to reduce their tax burden.

Deductions: Unlike the cedolare secca (where no deductions are allowed), under the IRPEF regime the landlord may deduct: 15% of the total rental income for owner-occupied buildings with apartments (general maintenance and management allowance — this is a flat deduction that covers most expenses without itemisation), or actual documented expenses for: condominium fees (spese condominiali), maintenance and repair costs, IMU property tax (if paid by the landlord), agency fees, legal costs for eviction, insurance premiums, and interest on mortgages related to the property. The standard deduction (15%) is simpler and often more advantageous than itemising actual expenses, especially for properties with low maintenance costs.

IMU on Rented Properties

Rented properties are subject to IMU (municipal property tax) at the applicable municipal rate (see Property Tax guide). The principal residence exemption does not apply if the property is rented out. The IMU is paid by the landlord (or, in some cases, the tenant may agree to reimburse the landlord).

Reduced IMU for Agreed Rents: Municipalities may apply a reduced IMU rate for properties rented under affitto concordato (agreed-rent) contracts. The rate can be reduced by up to 0.25 percentage points below the standard rate. For example, if the standard municipal IMU rate is 1.06%, the reduced rate might be 0.81%. The reduction is determined by each municipality's council (delibera comunale). Landlords should verify the applicable rate in the comune where the property is located.

Vacant Properties: Properties that are empty (sfitte) still attract IMU at the full rate. There is no exemption or reduction for vacant residential properties (unless the property is uninhabitable due to structural issues). If the property is being renovated or restructured, the IMU may be reduced by 50% for the duration of the works (up to 2 years).

Registration Tax and Stamp Duty

Residential lease contracts (contratti di locazione) must be registered with the Agenzia delle Entrate within 30 days of signing. The registration is done using the modello RLI (online through the Agenzia delle Entrate portal).

Without Cedolare Secca: The annual registration tax (imposta di registro) is 2% of the annual rent, with a minimum of €67 per year. The stamp duty (imposta di bollo) is €16 for every 4 sides of the contract (typically €32-€48 for a standard lease). These are paid for each year of the lease or for the entire duration in a lump sum at registration.

With Cedolare Secca: The registration tax and stamp duty are replaced by the cedolare secca payment. No separate registration tax is due for the years in which the cedolare secca applies. However, the contract must still be registered (the registration is free if only the cedolare secca applies).

Short-Term Rentals (Turistiche)

Income from short-term rentals (affitti brevi — less than 30 days) through platforms like Airbnb, Booking.com, and Vrbo is subject to a separate regime. For short-term rentals of up to 30 days, the income is classified as reddito diverso (other income) and subject to:

Flat 21% Substitute Tax (Cedolare Secca for Short Rentals): A flat 21% tax on gross rental income (no deductions allowed). The platform operator (Airbnb, Booking.com) is required to withhold 21% of the gross rental amount and remit it to the Italian tax authority as a sostituto d'imposta (withholding agent). This is known as the Airbnb tax (tassa Airbnb). In addition, the platform must report the rental income to the Agenzia delle Entrate annually. The income is not included in IRPEF taxable income.

IRPEF Option: Alternatively, the landlord may include short-term rental income in IRPEF taxable income (at progressive rates) and deduct a flat 15% of the gross rental amount as a cost allowance (or actual expenses if higher). This option must be exercised annually.

Municipal Limits: Some municipalities (Milan, Florence, Rome, Venice) have introduced limits on short-term rentals, including minimum stay requirements and registration obligations (codice identificativo). Non-compliance may result in fines. Landlords should verify local regulations before offering short-term rentals.

FAQs

Is cedolare secca always better than IRPEF?

Not always. The cedolare secca (21% or 10%) is advantageous if your marginal IRPEF rate is above 21%. For example, if you earn €60,000 from employment (marginal rate 43%), using cedolare secca at 21% on rental income saves 22 percentage points compared to IRPEF on that additional income. However, if your total income is low (e.g., below €28,000, marginal rate 23%) and you have significant deductible expenses (mortgage interest, maintenance), the IRPEF regime might be better because you can deduct those expenses and pay tax only on the net amount at 23%, versus no deductions at 21% under cedolare secca. The decision depends on your marginal IRPEF rate, the level of rental income, and your deductible expenses. Use the calculations above to compare.

Do I pay tax if the property is empty?

Yes. If the property is not rented and not used as your principal residence, the cadastral rent (rendita catastale + 5%) is deemed to be the taxable income. This is called reddito fondiario of the building (reddito dei fabbricati). The cadastral rent is typically very low compared to market rent, so the tax on an empty property is modest. However, if the property is your second home (used by you or your family occasionally), you still pay IRPEF on the cadastral rent, and you also pay IMU (municipal tax) on the property. If the property is offered for rent but remains vacant, you cannot claim a tax deduction for the lost rent unless you have a court-ordered eviction or the property is uninhabitable.

What are the tax implications of selling a rented property?

If you sell a rented property, the capital gain (if any) is generally not taxable for individuals if the property was held for more than 5 years from the date of purchase, or if it was the seller's principal residence for most of the holding period. If sold within 5 years of purchase and not as a principal residence, the gain is treated as reddito diverso and subject to IRPEF at progressive rates. The presence of a tenant does not change this rule. However, the buyer inherits the lease contract (the lease remains in force even after the sale — vendita con locazione in corso). The new landlord steps into the seller's position under the lease. The tenant has a pre-emptive right to purchase the property if the landlord decides to sell (diritto di prelazione). There are no specific tax consequences for the seller beyond the standard capital gains rules.

Disclaimer

This guide is for informational purposes only and does not constitute tax advice. Consult a qualified commercialista or tax advisor for advice specific to your situation. Rules and rates for 2026 are based on legislation enacted by June 2026.