Rental Italy


Seasonal rental of an Italian vacation home is quite common and mortgage lending Italian banks are fine with it. Only when a property is overwhelmingly going to be the source of the (only) income in the future do people not want to finance it regularly. Rental income is taxed in Italy and not in the Netherlands. A tax return on this income must therefore be filed in Italy.

Italian banks have no problem with seasonal rental of a house bought with a mortgage based on existing income. What is important is that the property is not too commercial in nature. So existing Agritourisms, Bed & Breakfasts, hotels, or properties with multiple outbuildings to rent out or lots of rooms (with separate bathrooms) may lead the bank to conclude that there are plans other than purely private use and occasional seasonal rentals. When banks suspect that prospective clients have plans to “change course” and start or take over a tourism business in Italy, they conclude that the existing income will end and that the requested mortgage is in fact business financing is.

The tax treaty between the Netherlands and Italy provides that Italy may levy taxes on assets in the form of real estate located in Italy such as a second residence. As a result, the (net) value of an Italian house is taxed in Italy and no longer in the Netherlands (box 3). Rental income is taxed in Italy and thus a tax return should be filed in Italy on this.

Renting out an Italian home partially financed by a mortgage can be an interesting addition to retirement. When rental income covers the mortgage and other expenses then the house “comes to you” because after full mortgage repayment there remains a mortgage-free home that generates rental income.

There are several rental platforms for second homes. These platforms offer services of varying degrees. From rental mediation only (via a booking module) to complete outsourcing of the rental including local handling.