My husband and I are thinking of buying a small apartment in Longobardi, Calabria for holidays and eventually maybe to retire to in 20 years. I live in NJ and tried to apply for an Italian mortage. I was told I would have to apply for Italian Residence. Some one told me if I apply for Italian Residence I will have to pay Italian tax.

I found on a website... it sounds like it may be true, can you give me some advise before I go ahead with this?

Buying property in Italy and paying tax

Taxation is very high in Italy, with Italians handing over up to 45 per cent of their gross income to the authorities. But there is an upside for foreigners here. You have to pay your tax somewhere, but you can elect to be a taxpayer in Italy or at home (we’d obviously advise you to keep your tax affairs at home). By doing so, you’ll enjoy the cheap cost of living in Italy, while sheltering yourself from the usurious tax laws … and you’ll be better off as a result.


Real estate in Italy — your bank account

You have to steer a little carefully to ensure you don’t become liable to Italian taxation. One of the prime areas is the location of your assets. Don’t transfer all your money into an Italian account as not only are the bank charges high (and Italian banks have a long way to go to match the efficiency and competitiveness of their UK and American counterparts), but you may become liable for Italian tax. Maintain a home (or offshore bank account) and only transfer cash into an Italian account as you need it. After all, with debit and credit cards, electronic and internet banking and the rest, you don’t need a local bank branch these days (you possibly don’t have one anyway). You must inform your home tax authority in the US whether you are to be resident in Italy or at home, and where you should be assessed for tax purposes; otherwise you risk being taxed in both countries.

Thank you,

Diane