Can Americans buy property in Italy? Yes. A 1948 treaty decides it, and your home state matters.

Can Americans buy property in Italy?

Yes. Italian law does not stop foreigners owning land or buildings, freehold. A buyer from outside the EU must meet the reciprocity condition in Article 16 of the preliminary provisions to the Civil Code, and for US citizens that condition is met through the 1948 Treaty of Friendship, Commerce and Navigation between Italy and the United States.

Reciprocity means a foreigner enjoys the civil rights of an Italian citizen only to the extent an Italian could do the same act in the foreigner's country. The notary who draws up the deed is the one who checks it, and the Italian notaries' own study of the rule records the dominant view that a purchase made without reciprocity is void. That is why the question is worth a page and not a line.

For Americans the answer is written into a treaty: the 1948 Treaty of Friendship, Commerce and Navigation, in force since 26 July 1949, whose Article VII sets the terms on which each side's nationals may own property in the other's territory. What a foreign owner holds once the deed is signed: foreign property ownership in Italy, explained.

What does the 1948 treaty actually say about American buyers?

Article VII lets Americans acquire, own and dispose of immovable property in Italy on terms no less favourable than those the American's own US state gives Italians. Italy does not have to give more than it gives its own citizens. So the treaty points back to your home state's law.

This is the detail that is easy to miss. The treaty does not say Americans buy in Italy on the same terms as Italians, full stop. It says the terms follow those accorded to Italians by the state, territory or possession where the American is domiciled. For an ordinary home, that is the normal case: the question only becomes live where a state restricts foreign buyers.

Some states do, mostly for farmland. The National Agricultural Law Center tracks a long and growing list of states with laws restricting foreign ownership of agricultural land, many of them aimed at named countries. If you are buying farmland, a vineyard or a rural estate rather than a home in a town, ask the notary to confirm reciprocity for your state in writing before you sign anything binding.

What does an American need before buying in Italy?

An Italian tax code, the codice fiscale, which a non-resident can get through an Italian consulate. Then a preliminary contract, the compromesso, registered within 30 days, and a final deed signed before a notary, who checks title and the cadastral records and pays the purchase taxes.

The notary is a neutral public official, not your lawyer. You may also hire your own lawyer; it is optional. The documents you will hear about are the visura catastale, the cadastral extract, and the floor plan filed with it, because the deed must state the cadastral data on pain of nullity: the visura catastale, explained.

Money moves by bank transfer or banker's cheque. Cash between people is capped below EUR 5,000, and the deed records how the price was paid. Getting the money there: sending money to Italy for a property purchase.

Does an Italian house get an American a visa?

No. Italy has never had a property golden visa. Its Investor Visa needs EUR 250,000 to EUR 2,000,000 in start-ups, companies, government bonds or a public-interest donation, and buying real estate is not one of the routes. Without a visa, an American stays under the Schengen limit of 90 days in any 180.

Owning the house does not extend the 90 days. If the plan is to live in Italy, the residence permit is a separate application with its own conditions, and the house is at most supporting evidence of accommodation.

Moving tax residence to Italy is a separate step again, with its own regime for new residents. It is not triggered by buying, and it is not covered here.

What does the purchase cost an American, and what does it cost to hold?

Buying a resale home from a private seller: 9% registration tax, minimum EUR 1,000, plus EUR 50 mortgage tax and EUR 50 cadastral tax. A private buyer can ask for the tax to be charged on the cadastral value rather than the price. Yearly, IMU on a second home runs from a base of 0.86%, set by each comune up to 1.06%.

The cheaper 2% prima casa rate needs the home to be in the comune where you live, or you must move your residence there within 18 months and say so in the deed. An American buying a holiday home normally will not qualify.

IMU is charged on the cadastral value, not the market price, and some comuni go up to 1.14%. Every one-off cost in one place: Italy property buying costs. The yearly taxes: Italy property tax for foreigners.

Does the IRS follow an Italian property?

Yes. The United States taxes its citizens on worldwide income, so rent from an Italian home is reported at home as well as taxed in Italy, and the Italian tax can generally be claimed as a foreign tax credit. The house itself does not go on an FBAR or Form 8938 when you hold it directly. The Italian bank account can.

The IRS comparison table is explicit: foreign real estate held directly is reportable on neither Form 8938 nor the FBAR. Held through a foreign company, the company is the reportable asset and its value includes the property.

The account you pay the price and collect the rent through is different. An FBAR is due when the combined value of your foreign financial accounts exceeded $10,000 at any time in the year. In Italy, rent is taxed under IRPEF at 23%, 33% or 43% on 95% of the contract rent, and a flat 21% option, the cedolare secca, exists for residential leases. Whether a non-resident should choose it is a question for an accountant who knows both systems.

What happens to the gain when an American sells in Italy?

In Italy, a gain on a building is taxable only if you sell within 5 years of buying it, unless it was your main residence for most of that time or you inherited it. Inside the 5 years you can ask the notary to apply a flat 26% substitute tax on the gain instead of ordinary income tax.

After 5 years Italy does not tax the gain. The United States still may, because it taxes citizens on worldwide gains, with a credit for any Italian tax paid. One trap on newer renovations: if Superbonus works on the property ended less than 10 years before the sale, the gain can be taxable even after 5 years.

The Italian income tax articles are renumbered from 1 January 2027 with the same substance. The full exit: selling property in Italy as a foreigner.

Header photo: Ray in Manila, CC BY 2.0, via Wikimedia Commons. All credits: image credits.