Almost always worth it
Where the agreed rent is close to the market rent: the lower income is modest and the tax saving clearly exceeds it.
Property · Lettings
Agreed rent contract (canone concordato)
You collect less rent and pay much less tax. For most landlords in Turin the balance is positive, but not for everyone: it depends on how far the agreed rent is from the market rent in your area.
01 · The mechanism
What an agreed rent contract is
It is a residential lease in which the rent is not freely negotiated: it falls within a range of values set by a local agreement between landlords' associations and tenants' associations, which differs for each Comune (municipality).
In exchange for the cap on the rent, the law grants a package of tax benefits that, in most cases, is worth more than the difference in rent.
| Open-market rent 4+4 | Agreed rent 3+2 | |
|---|---|---|
| Length | Four years plus four | Three years plus two |
| Rent | Freely negotiated | Within the range of the local agreement |
| Cedolare secca (flat tax on rental income) | Ordinary rate | Reduced rate |
| Registration tax | On the full amount | Reduced taxable base, if you do not opt for the cedolare secca |
| IMU (municipal property tax) | The Comune's ordinary rate | Reduction provided by law, plus any municipal discounts |
| Tenant deduction | Available, at the ordinary level | Available, at a more favourable level |
The benefits are not automatic just because "canone concordato" is written on the contract: they depend on the local agreement actually being followed and, where required, on the certificate issued by a signatory association.
02 · The rent
How the rent is set
You do not choose it: you work it out. The local agreement for the Comune divides the area into homogeneous zones and sets a range of values per square metre for each one, which is then adjusted by a series of objective factors.
- The zone where the property lies, according to the local agreement's map.
- Floor area calculated using the criteria of the agreement, which do not always match the land registry figures.
- Objective factors: condition of the property, lift, independent heating, garage, terrace, furniture.
- Energy class, which in many agreements affects where the rent sits within the range.
- The length chosen, which in some agreements allows adjustments.
In Turin the local agreement is the one in force for the Comune, and the zones match neither the city's administrative districts nor the common perception of neighbourhoods. A property you think of as "central" may fall into a different range from the one you expect.
03 · The forgotten step
The certificate of compliance
This is the step that most often costs people the benefits. When the contract is not drawn up with the assistance of the signatory associations, you need a certificate confirming that the contract complies with the local agreement.
Who issues it
An organisation that signed the local agreement, either for landlords or for tenants. The cost is modest.
When you need it
When the contract was drawn up without the assistance of the associations. If they were involved, the certificate is not needed separately.
What it is for
It is the document that supports the tax benefits if there is a check: without it, the Agenzia delle Entrate (the Italian Revenue Agency) can disallow them.
When to ask for it
Before registration, or in any case before claiming the benefits in your tax return.
What the certificate checks
It is not a rubber stamp: it is a check on the substance.
- That the rent actually falls within the range for the zone
- That the floor area is calculated with the agreement's criteria
- That the objective factors declared are true
- That the length and the clauses follow the required template
04 · The advantage
The tax benefits
There are three, and they add up. It is their total that has to be compared with the lower rent collected, not each one on its own.
- Cedolare secca at the reduced rate: this is the main benefit, and it replaces income tax, the local surcharges, registration tax and stamp duty.
- Reduced taxable base for income tax, for landlords who do not opt for the cedolare secca.
- IMU reduction provided by law, to which Comuni can add a reduced rate of their own.
- Reduced registration tax, if you do not choose the cedolare secca.
- More favourable deduction for the tenant, which makes the property more attractive on the market.
The IMU reduction is the item people most often forget to claim. It is not automatic in every Comune: where a locally approved reduced rate exists, it has to be applied in the calculation and sometimes requires notice to the Comune.
05 · The sums
When an agreed rent contract really pays
The sum is simple and has to be done on the figures of each individual situation: market rent minus ordinary taxes, against agreed rent minus reduced taxes.
Worth it
For landlords with other high income: the reduced cedolare secca rate produces a proportionally larger saving.
Needs working out
In zones where the market is well above the agreed range: there the lower rent can outweigh the benefit.
Less worthwhile
For landlords with very low total income, where ordinary taxation would be light anyway.
To bear in mind
The shorter length (three years plus two) gives less stability than the 4+4, but also more flexibility if you plan to move back into the property.
A positive side effect
The more favourable deduction for the tenant makes the property easier to let and shortens empty periods.
06 · The variants
Student and temporary contracts
The same framework of local agreements governs two other types of contract, which matter in Turin because of its two universities.
- University student contract: from six months to three years, reserved for students enrolled in a Comune other than the one where they are resident, with the same benefits as the agreed rent contract.
- Temporary contract: from one to eighteen months, for documented temporary needs of either party.
- Both require the need to be documented and stated in the contract: otherwise the contract can be reclassified as an ordinary one.
- Both follow the rent ranges of the Comune's local agreement.
- For students, the university ISEE (the Italian indicator of household financial situation) and EDISU grants are a related topic, on the tenant's side.
The temporary contract is not a shortcut around the minimum length: the temporary need has to be proved, and if it is not, the contract is reclassified, with effects on its length and on the benefits already enjoyed.
Frequently asked
The questions that keep coming up
Can I convert an open-market contract that is already running?
It is not converted: the existing contract is terminated by mutual agreement and a new agreed rent contract is signed, which has to be registered.
You also need to consider the effect on the tenant's position, because the length and the renewal rules change. It is not something to do without looking at both sides.
Is the certificate always needed?
It is needed when the contract was drawn up without the assistance of the associations that signed the local agreement. If the associations were involved in drawing it up, it is not needed separately.
It is the document the benefits rest on if there is a check: it costs little and is worth far more than it costs.
Does it also apply to a furnished property?
Yes. Furniture is one of the objective factors that place the rent within the range, and it generally pushes it towards the upper value.
It has to be stated in the contract together with the inventory, otherwise it is not taken into account in the calculation.
With the cedolare secca, can I increase the rent?
No. Opting for the cedolare secca means giving up rent increases for the whole period of the option, including the ISTAT adjustment (indexation to the national inflation figure).
It is the hidden cost of the cedolare secca, and on a long contract it has to be weighed together with the tax saving.
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The comparison is made on the two numbers, not on the idea
Market rent against agreed rent, and the tax in each case. With the details of the property, the answer takes ten minutes.