Tax relief for foreigners on the purchase of a so-called “primary residence” ("prima casa")

Italian law attempts to facilitate and encourage people to buy their own primary home (their so-called “primary residence” ["prima casa"]) through various reductions in taxes for the purchaser. Specifically, at the time of purchase, the purchaser pays 3% (stamp duty) if he buys from a private person or 4% (VAT) if he buys from a company (except for a few odd cases), plus a fixed charge for registering the transfer and mortgage (presently a total of Euro 336.00).

A foreigner, too, may take advantage of “primary residence” tax relief if he has the requisite qualifications, which are obviously the same as for Italians.

Article 40 of the Unified Text 286/98 provides for the so-called right of access to a primary residence.

Resident foreigners registered with the official employment agency or who are employed or self-employed have a right of access, on the same terms as Italian citizens, to public housing  and facilitated credit for the building, purchase or rental of their primary place of residence.

Other tax benefits linked with the purchase of a “primary residence” have to do with the income tax deductibility (to a certain extent) of interest paid on mortgages taken out for the purchase of a so-called primary residence.

Finally, income produced by the “primary residence” is not subject to income tax.