Deductions with no tax to absorb them
If you have many deductions and little income, you may have no tax left to reduce: taking the rent out of your IRPEF taxable income makes you lose room to use them.
Individuals · Property
Cedolare secca: is the flat tax on rent worth it
A substitute tax on rent in place of ordinary IRPEF (Italian personal income tax). It almost always pays for people on middle to high incomes, much less for those with low tax rates and deductions to use. The calculation is done on the numbers, not on hearsay.
01 · The mechanism
Cedolare secca: one flat tax on rental income instead of three
The cedolare secca is an optional regime for taxing income from letting residential property. It replaces IRPEF, the regional and municipal surcharges, registration tax and stamp duty on the contract.
The rent taxed is 100% of what you receive, without the 5% flat-rate deduction allowed under the ordinary regime. In return, the rate is fixed and is not added to your other income.
There are two rates: 21% as standard and 10% for canone concordato (agreed rent) contracts signed in municipalities with high housing pressure or under local agreements, provided the required conditions are met.
| Aspect | Ordinary regime | Cedolare secca |
|---|---|---|
| Taxable base | 95% of the rent | 100% of the rent |
| Rate | Progressive IRPEF on total income | 21%, or 10% for agreed rent |
| Regional and municipal surcharges | Due | Not due |
| Registration tax | Due, 2% of the rent | Not due |
| Stamp duty | Due | Not due |
| ISTAT adjustment (inflation indexation) | Applicable | Not applicable while the option lasts |
| Effect on deductions and ISEE | The rent is part of total income | Still counts for deductions, ISEE and family allowances |
Watch out for a common misunderstanding: income taxed under the cedolare secca does not form part of your total IRPEF income, but it still has to be taken into account in working out whether you are entitled to deductions, allowances and income-linked benefits, and it counts towards the ISEE (the Italian indicator of household financial situation).
02 · Requirements
Who can opt in, and for which properties
The option is reserved for individuals who let property outside the course of a business, trade or profession. Companies, organisations and anyone letting as part of a commercial activity are excluded.
The property must be residential, in land registry categories A/1 to A/11 excluding A/10, together with any appurtenances let with it.
The tenant must not be acting in the course of a business or self-employment: a residential lease to a company that uses it for its employees is generally excluded.
- Allowed: open-market 4+4 contracts, agreed rent 3+2, temporary contracts, university student contracts.
- Allowed: jointly owned properties, with each co-owner able to opt for their own share.
- Excluded: business and commercial property, category A/10 and categories C and D.
- Excluded: lettings made in the course of a business, trade or profession.
- Excluded: contracts where the tenant acts as a business owner or professional.
Short-term lets
For short lets of no more than thirty days, the cedolare secca applies under its own rules, with a limit on how many properties the same person can place under the regime.
- Above the set number of properties, the activity is treated as a business
- Intermediaries and online platforms apply withholding tax to the rent
- The rate may differ between the first property and any further ones
- The rules have changed several times: check them against the current year
03 · The calculation
How to tell whether the flat tax on rent pays
The comparison has to be made on the total tax burden, not on the headline rate. With the cedolare secca you pay 21% on 100% of the rent; under the ordinary regime you pay your marginal IRPEF rate on 95%, plus the surcharges, plus 2% registration tax shared with the tenant.
The break-even point lies roughly where your marginal IRPEF rate, plus the surcharges, drops below 21% adjusted for the flat-rate deduction. In practice: if you are in the first IRPEF income band, the cedolare secca often does not pay; from the second band up, it almost always does.
There are, however, two factors that can overturn the arithmetic.
Giving up ISTAT
With the cedolare secca you give up the ISTAT adjustment for as long as the option lasts. On a long contract, in times of inflation, that is a real cost.
Agreed rent
The 10% rate makes the cedolare secca almost always the most sensible choice, but it requires the certificate confirming compliance with the local agreement.
Several properties let
Adding up several rents pushes you into a higher IRPEF band: the advantage of the cedolare secca grows with the number of lettings.
Unpaid rent
Both under the cedolare secca and under the ordinary regime, rent not received remains taxable until the eviction order is confirmed, with the exceptions provided for residential property.
Dependent spouse
Income under the cedolare secca still counts when checking the income limits for dependent family members.
04 · How to opt in
Opting in, extending and revoking
You opt in when the contract is registered, by filling in the dedicated section of the RLI form (the form used to register leases). If you do not opt in straight away, you can do so at the start of any later year of the lease, by the deadline for paying that year's registration tax.
The option binds the landlord for the whole length of the contract or its extension, but it can be revoked for each year after the one in which it was chosen. Revoking it means paying registration tax for the remaining years.
An essential condition is advance notice to the tenant by registered letter or PEC (certified email), in which the landlord gives up the right to ask for rent increases. Without this notice the option has no effect.
- At registrationFirst optionDedicated section of the RLI form, at the same time as registering the contract
- Later yearsLate optionBy the deadline for paying that year's registration tax
- Before opting inNotice to the tenantRegistered letter or PEC giving up rent increases: without it, the option has no effect
- June and NovemberPaymentsThe balance and advance payments of the substitute tax follow the IRPEF deadlines
- Each yearRevocationPossible, with registration tax due again for the remaining period
Where a property is jointly owned, each co-owner can opt separately for their own share. A co-owner who does not opt in keeps paying their share of registration tax under the ordinary rules.
Frequently asked
The questions that keep coming up
With the cedolare secca, can I raise the rent in line with inflation?
No. Choosing the option means giving up, for as long as it lasts, the right to ask for rent increases, even if the contract provides for them.
This weighs on long contracts: on a 4+4, the waiver potentially covers eight years of increases. It has to be put into the comparison together with the tax saving.
Does income under the cedolare secca count for the ISEE?
Yes. Even though it is not part of your total income for IRPEF purposes, income taxed under the cedolare secca counts when working out the ISEE, your entitlement to deductions and allowances, and the income limits for dependent family members.
It is a point that causes confusion: the cedolare secca reduces the tax, it does not make the income invisible.
Can I switch to the cedolare secca partway through a contract?
Yes. If you did not opt in at registration, you can do so at the start of any later year of the lease, by the deadline for paying that year's registration tax.
You still need to give the tenant advance notice waiving rent increases: without it, the option is not valid.
If the tenant does not pay, do I still have to pay the tax?
Generally, yes: rent not received remains taxable until the eviction order for non-payment is confirmed. For residential lettings, however, there are specific rules that, under certain conditions and from the point set by the law, allow unpaid rent not to be taxed.
It is a situation to examine case by case, because it affects both the tax return and any recovery of tax already paid.
Does it also apply to a garage or cellar?
Yes, if the appurtenances are let together with the home under a single contract. An appurtenance let separately to a different person follows the rules of its own land registry category.
A garage let on its own, being in category C/6, does not fall under the cedolare secca regime.
Let's talk
The comparison takes five minutes and holds good for years
All you need is the annual rent, the rendita catastale (the land registry value of the property) and your total income. From there the calculation is arithmetic.