Buying in Rome vs back home: the prima casa, the notary and the IRS

Americans can buy an apartment in Rome with no permit. Make it your main home and Italy taxes the purchase lightly. The IRS still wants its look at the sale.

The short version

• Americans can buy in Italy, resident or not. Non-residents rely on reciprocity, which Italy applies country by country [1].
• A first home (prima casa) bought from a private seller pays 2% registration tax on the cadastral value, usually well below the price, plus EUR 50 each in mortgage and cadastral tax [1]. Second homes pay 9%.
• Sell within five years and the gain can be taxed in Italy, at 26% if you choose the notary's substitute tax, unless it was mostly your main home [2].
• Rent it out and Italy's cedolare secca taxes the rent at 21%, or 10% on regulated contracts in Rome [3].
• The IRS taxes your worldwide gain, in dollars, with Section 121 and the foreign tax credit to soften it [4][5].

USD conversions use the Federal Reserve H.10 rate of October 30, 2026 (USD 1.1163 per euro), rounded.

Can Americans buy in Rome?

Yes. Italy lets foreigners buy property in three ways: EU citizens and long-term residents freely, legal residents with a valid permit, and everyone else under an international treaty or reciprocity, meaning Italians must be able to buy in your country [1][6]. Americans buy in Italy all the time, from Trastevere walk-ups to Monteverde apartments with a terrace, including from home in the States.

What you'll need:

1. A codice fiscale, Italy's tax code. You can get one from an Italian consulate in the US or the Agenzia delle Entrate [1]. See our guide to the codice fiscale.
2. An Italian bank account for the payment.
3. A notary. In Italy the notary (notaio) is a public official who checks title and planning compliance, reads the deed aloud, registers it and collects the taxes. If you don't speak Italian, the notary must be told, and you'll need an interpreter and a translation of the deed [1].
4. Patience with the three steps: a signed offer (proposta), a preliminary contract (compromesso) with a deposit, then the final deed (rogito) [1].

Historic buildings can carry state pre-emption rights, and some condominium rules have their own [6]. In the centro storico, ask the notary early.

Getting a loan: Italian bank or US lender?

In Rome. Italian banks do lend to foreigners, more readily to residents with Italian income. Expect a lower loan-to-value for non-residents, a pile of translated documents and a longer approval than you're used to back home.

Back home. Many Americans pay cash, or borrow against US savings or a US home. See US mortgages for Americans living abroad.

The currency trap. The IRS measures a euro mortgage in dollars. If the euro weakens while you owe it and you then pay it off, you can owe US tax on a currency gain even though you repaid exactly what you borrowed, and a loss on a personal home loan usually isn't deductible. Our guide to currency gains on a foreign mortgage shows how it happens.

Costs side by side

Rates as of November 2026.

Illustration only. Say you buy a EUR 450,000 apartment in Prati (about USD 502,300) from a private seller, and its cadastral value is EUR 150,000. As a prima casa, registration tax is 2% of that, EUR 3,000 (about USD 3,350), plus EUR 100 in fixed taxes. As a second home it's 9%, EUR 13,500 (about USD 15,070) [1]. Notary and agent fees come on top. Cadastral values vary, so ask the notary for the real number before you sign.

Tax when you sell

The Italian side

Italy doesn't tax every home sale. The gain is taxable only if you sell within five years of buying, and even then it's exempt if the home was your main residence (or a family member's) for most of the time you owned it [2]. Inherited homes are outside the rule too.

When the gain is taxable, you choose:

• The substitute tax: 26% of the gain, calculated and paid by the notary at the deed [2].
• Ordinary income tax (IRPEF): the gain is added to your other income at your bracket [2].

There's a twist for Americans who keep a home stateside. Italian residents generally pay IVIE, a yearly tax on property held abroad, and report it on the RW section of the Italian return. Our guide to IVAFE and IVIE covers what that means for a house back in Boston.

The US side

Uncle Sam taxes your worldwide gain, measured in dollars:

1. Section 121 can cover a Rome apartment. Own it and live in it for at least 24 months of the 5 years before the sale, and up to USD 250,000 of gain (USD 500,000 for most joint filers) is excluded. You generally can't use it again within two years [4].
2. The euro moves the math. Purchase and sale prices are converted to dollars on each date, so a break-even sale in euros can still be a dollar gain or loss.
3. The foreign tax credit. Italian income tax or substitute tax on the gain can go on Form 1116 against US tax on the same gain [5]. Registration tax and IMU aren't income taxes and don't qualify.
4. Depreciation recapture. If you rented it out, gain from depreciation after May 6, 1997 can't be excluded [7].

Often both countries leave a main home alone: Italy after five years or main-residence use, and the US under Section 121.

Your old home in Boston

The 2-of-5-years clock keeps ticking after you move. Stay away more than three years and the exclusion on your Boston home is usually lost, and Massachusetts can still tax the gain on Massachusetts property while you live in Rome. Our guide to selling your US home after moving abroad covers the timing.

Renting it out

The Italian side. Individuals can opt for the cedolare secca, a fixed tax on rent: 21% on free-market contracts, and 10% on regulated (canone concordato) contracts in Rome and other listed cities. Short-term rentals pay 21% to 26% [3]. Rome also has registration rules and a tourist tax for short stays, so check before you list on a vacation-rental app.

The US side. Report the rent on Schedule E. A Rome apartment is used predominantly outside the United States, so you must depreciate the building under the Alternative Depreciation System (ADS) over 30 years, not the 27.5 years a Boston rental gets [8][9]. Italian tax on the rent can be credited on Form 1116 [5].

If the rental is your place back home, see rental income from a US property.

Which makes sense for whom

• Staying long term. Rome can make a lot of sense. Register your residence, buy as a prima casa, and both the purchase tax and a later sale can come out light on both sides. Our guide to Italian taxes for Americans explains residency.
• Retiring in Italy. Common, often on the elective residence visa. Plan the estate early: Italy has its own inheritance tax and forced-heirship rules, and the US taxes your estate too. See wills and estate planning across two countries.
• Moving back in a few years. Renting is usually the no-brainer. Buying costs (notary, agent, registration) are real money, a sale inside five years of a home that wasn't mostly your residence is taxed, and Rome resales can take months.
• Buying to rent out. Possible, with the cedolare secca on one side and ADS depreciation and recapture on the other.

A US expat tax preparer (or an Italian commercialista) can check your situation before you sign. Swap notes with other buyers in our community group for Americans in Italy at /join/.

Sources

1. Buying a property in Italy if you are a foreigner – idealista (updated April 2024)
2. Plusvalenza cessione di immobili: aspetto fiscale e normative – PartitaIVA.it (December 2023)
3. Cedolare secca – Confedilizia
4. Topic no. 701, Sale of your home – IRS
5. Foreign tax credit – IRS
6. Buying a house in Italy: a short guide for foreign buyers – We Wealth
7. Publication 523 (2025), Selling your home – IRS
8. Publication 527 (2025), Residential rental property – IRS
9. 26 U.S. Code § 168, alternative depreciation system – Cornell Law School LII

Keep reading

• Italian taxes for Americans: how they fit with your US return
• Renting in Rome
• IVAFE and IVIE: Italy's taxes on foreign assets
• Keeping or renting out your US home after you move abroad