A guide to renting out your holiday home in Italy
Renting out your holiday home in Italy is a great way to help fund the upkeep of the property and make some extra cash. A good quality villa in Italy that sleeps four people can fetch up to £2,000 a week in peak season!
Whether you’re considering investing in a rural retreat in Tuscany or a city pad in Rome, holiday lets in Italy can offer a significant return on investment in comparison to other Mediterranean countries. If you’re thinking of buying a property in Italy to rent out as a holiday let, there are a few things that you need to take in account to protect your assets and ensure it’s all legit though!
Do your sums
Before deciding on a property to buy in Italy do the maths! If you’re relying on a set amount of rental income to fund the purchase and/or the upkeep of your property in Italy you need to factor in a number of things including:
- Monthly running costs – find out how much utilities including local council taxes will be, so you can budget accordingly.
- Additional expenses – management fees, cleaning and maintenance charges should be accounted for.
- Vacant periods – depending on where in Italy your property is located you may find that there are quiet spells out of peak season, so don’t expect a rental income 24/7. Find out what local capacity rates so you can factor this in to your budget.
- Unexpected costs – just when everything is going swimmingly, you’ll find the boiler packs in, the fridge breaks and the tap in the bathroom needs to be fixed! Have a ‘buffer pot’ for unplanned emergencies so you don’t have to find large sums of money unexpectedly.
There may be additional aspects that you need to consider too. If you have a mortgage, you may need to give yourself some leeway in terms of currency exchange rates. Don’t forget that properties with communal facilities, such as gardens, a swimming pool are usually subject to an annual service charge too!
Are you legally allowed to rent a property in Italy as a holiday let?
In Italy, every local authority has its own regulations concerning the processing of holiday rentals. In some regions, you must inform the local authorities when your guests arrive and provide a list every month detailing all guests, which also outlines the payment of a visitor’s tax, which must be collected from each guest. Make sure you’re aware of the rules regarding Italian holiday lets with the relevant local authority or tourism office.
How to manage a holiday let in Italy
If you’re considering an investment property and don’t permanently live in Italy (or have friends or family who can help), you will need to consider who will manage your Italian holiday let. Who will handle the bookings? How will you receive payments? Who will be responsible for the cleaning, laundry and greeting guests?
Using travel websites like AirBnB or Home Away, for instance, means you can handle bookings and payments remotely from anywhere in the world. However, you’ll still need someone on site to handle cleaning, laundry, general maintenance and either greeting guests with keys or ensuring keys are left in a secure location for guests. You may wish to use either a local property management company or find a trustworthy local individual, to offer a more personal touch.
Remember that it may be more difficult to find someone willing to help in rural areas. Many companies offer services for urban areas but are not necessarily willing to take on these duties in remote areas. So, before committing to buying a property in Italy do some research into who offers these services in your area. Be aware that some estate agents in Italy can be keen to get a sale over the line and promise such services, which they are unable to deliver on.
Top tip: When viewing properties in Italy, ask around in the local area for first-hand reviews and recommendations of holiday letting management firms or individuals who provide these services in the region. Look out for other holiday lets in the area and find out who they use!
What taxes are due for holiday lets in Italy?
Any profit earned on a holiday let in Italy is subject to income tax in Italy. This must be declared on your personal income tax return. The taxable amount is based on the difference between the ‘cadastral income’ and the actual net rental income. Expect to pay a flat-rate of 15 per cent of the gross income. This may vary depending on whether you are considered to be a resident or non-resident in Italy. If someone spends 183 days or more (consecutive or otherwise) during a tax year in Italy, they are considered to be resident in Italy for tax purposes. Rules can also vary if you rent as a private owner or if you have an activity with a VAT number. We suggest that you consult an accountant or tax advisor for details.
Tourist taxes must be paid on all holiday accommodation in Italy. In the past, many holiday homeowners overlooked this, so the Italian government has introduced a law to tackle this, which means agencies and online websites such as Airbnb are required to automatically pay 21 per cent of the rental fee in tax to the authorities on the property owner’s behalf. If you do not use an agent you are responsible for the collection and payment of these taxes yourself, which are regulated by the local authority. We recommend seeking advice for precise information about the amount due and how to collect it.
Non-resident property owners in Italy are subject to a capital tax named ICI (Imposta Comunale sugli Immobili) – a local property tax (similar to a UK local council tax). It is payable to the local authority twice a year, the first payment is usually in July and the second payment is due in November. The rate of the tax will vary depending on the cadastral value and location of the property in Italy.
Ensure your property in Italy is insured
Make sure that your property in Italy is sufficiently insured as a holiday home, not just covered by a buildings and contents policy. Check whether the policy covers public liability insurance? Are you covered for when your property when is not occupied? Does it cover you for loss of rent or income?
You may require additional cover if the property has a swimming pool, for instance. Some policies will also cover you if you need to make an emergency unplanned trip to the property for any reason. So, make sure you check exactly what’s covered and whether the policy meets your requirements.
Your insurer may insist that there is a local representative, who is a key holder, to keep an eye on the property, arrange for any urgent repairs and check the security of the property regularly.
Top tip: Consider using a trusted broker or compare a number of quotes, as prices can vary.
Article published: June 18, 2018