it has always been recommended to “invest one’s savings in the purchase of a home”…
The housing shortage of 2024 is a phenomenon that is causing many professionals to rethink their lives, their choices and their places of residence.
If the current trend continues, Italy will become a country where very few families will own their homes, a trend that seems to be supported at the European level.
In Italy, it has always been recommended to “invest one’s savings in the purchase of a home”.
Owning real estate is synonymous with security and stability, a concept that has been ingrained since the economic boom of the 1950s.
Figures show that there are currently about 78 million real estate units in the Italian landscape, of which a not insignificant portion will generate substantial cadastral income in 2022.
The year 2024 is shaping up to be a year of heavy tax burdens on property owners, as a result of the new Budget Law and the tightening of property taxes, which are aimed not at exacerbating the deficit but at increasing property taxes to offset it.
The tax measures are intended to protect jobs and families, but in fact, paradoxically, the new property taxes are intended to burden the latter.
Among the planned changes to the housing tax are an increase in the VAT on green homes and changes to the dry coupon and superbonus.
The land registry reform, which is expected to take effect in 2024, aims to more accurately reflect the real value of real estate, with an immediate impact on taxation.
In the area of tax increases, there will be an increase in the withholding tax on renovation transfers and an increase in the capital gains tax on the sale of renovated properties.
There will also be an increase in the dry coupon tax on short-term leases.
Foreign investment funds’ long hands
Green policies, the real estate crisis and the interest of foreign investment funds in the Italian real estate market are changing the historical image of the Italian homeowner, who was once seen as the holder of a large capital stock.
Rather, the state seems to see property as a fiscal resource rather than a security for its citizens.
The transformation of the Italian real estate market is accentuated by the growing interest of foreign investment funds…
The transformation of the Italian real estate market is accentuated by the growing interest of foreign investment funds, which aim to transform Italians from owners to renters, probably on less advantageous terms.
This highlights an important cultural and economic issue, since home ownership has always been a symbol of independence and financial security, rooted in the Italian way of life.
At the same time, tax policies are increasing the burden on those who own real estate, whether for personal use or as an investment.
These policies include the possible increase in the tax on the real estate located abroad (IVIE), which could increase significantly, further affecting homeowners who have invested across borders.
This series of changes and the housing sting will not only affect homeowners, but also the entire real estate industry.
Professionals in the industry may find their business models changing, with an increasing need to adapt in an environment where the rules of the game are increasingly dictated by political decisions and global economic pressures.
Fees and taxes reduce property values
In addition, the tightening of taxes is likely to discourage renovation and buying and selling, directly affecting the quality and value of properties.
The future of the real estate market in Italy after the real estate crisis seems increasingly uncertain, with numerous issues that will require Italians to adapt to new realities.
Not only families, but also investors and professionals in the sector will have to navigate between increasing tax pressures and the consequences of a cadastre reform that could profoundly alter property valuations.
The balance between protecting real estate traditions and the country’s fiscal and economic needs will be crucial in the coming years.
But in the meantime, the squeeze on housing will be followed by the squeeze on assets.
It will most likely be Italy that starts the sovereign debt crisis.
And the desperate attempt to stay in the EU will (unfortunately) be the curse for years to come.
The danger, of course, comes (as usual) from Brussels.
Most likely, the fuse that will act as the detonator will be the EU’s demand to increase (nay, triple!) the inheritance tax.
It is well known that Italy has a very low inheritance tax.
In Germany, for example, rates range from 17% to 50%, depending on the degree of kinship with the deceased.
The European average is around 15% for the closest relatives.
While in Italy this taxation is still very favorable (the only one in a Soviet-like landscape) : 4%.
Specifically, Italian legislation provides for the following rates :
4% for the surviving spouse and children, with an exemption of €1,000,000 for each beneficiary
6% for the brothers and sisters of the deceased, with an exemption of €100,000 for each beneficiary
6% for relatives of the deceased up to the fourth degree of consanguinity and other relatives of the spouse up to the third degree of consanguinity. In this case there is no exemption
8% for transfers to persons outside the family. Again, there is no exemption
But what is the crux of the matter ?
The inheritance tax applies to all the deceased’s worldwide assets only if he or she is resident in Italy.
If the (deceased) person lives outside Italy, it will apply only to assets (of the deceased) in Italian territory.
But what is the crux of the matter?
The average Italian has historically invested their savings in bricks and mortar, precisely because inheritance tax has always been extremely low.
This is the reason why a lot of people own almost exclusively real estate.
Most of which is virtually unsaleable at the moment.
As a result, many people who have lost their jobs now have as their only income the rental income from some of the real estate they own.
And even that income is not secure, as defaults by delinquent tenants are increasing exponentially.
But the rental income already pays an exorbitant income tax (from 23% to 43%, so certainly not subsidized, with a tax-free area – the so-called deductible – ridiculous 3000€), in addition to periodic (but often necessary) maintenance expenses (not always deductible and certainly not cheap).
Moreover, cadastral values have not been revised for years: in most cases, they have been fixed since the 1980s.
That’s why every year the local authorities increase other taxes such as IMU and TASI.
For this reason, if the inheritance tax were tripled, as Brussels has been proposing for years, Italy would immediately experience the biggest property crash in modern history.
Such an increase in inheritance tax is in fact comparable to a 50% tax on savings deposited in a bank.
Moreover, the sudden collapse of real estate values would permanently destroy the balance sheets of the banks.
So far, they have managed to avoid bankruptcy only because they have been counting the (inflated) value of their real estate holdings on their balance sheets since 2008.
But if the total value of real estate suddenly collapsed, Italy’s major banks would immediately default.
Making their immediate nationalization necessary.
Of course, the (failed) Italian government knows the whole situation very well.
And that is precisely why they – in concert with the equally bankrupt EU – are desperate to avoid a bank run by current account holders.
As well as an “immediate” digitization of the €.
Everything is too well organized, down to the smallest detail, to be the result of chance.
And the great masses, as usual, have still not understood what is happening right in front of their eyes.
But this end for the ECB is really hard to save, if not now completely lost.
This plan – which in my opinion will be implemented very soon – will most likely fail miserably.
Simply because ordinary people will never accept this dictatorial diktat.
Violent unrest, riots and – should the situation finally get out of hand – outright war will follow.
