Until now, capital gains on the sale of real estate by a private individual were realized — and taxable for income tax purposes as “other income”— if the property was being transferred for consideration within five years of its purchase and/or construction (Article 67(1)(b) of Italy’s Consolidated Income Tax Code, TUIR).
However, in ruling no. 133 of May 14, 2025, the Italian Revenue Agency recently stated that a) the sale of the usufruct to one person and b) the sale of the bare ownership to another person, in the same deed, by a person who is the full owner of a property, are in fact two separate transactions from a civil law perspective and are also subject to separate tax regulations.
The Italian Revenue Agency provided more details in this regard:
- the consideration deriving from the transfer of usufruct for consideration always constitutes “other income” pursuant to Article 67(1)(h) TUIR;
- the capital gain deriving from the transfer of bare ownership of real estate is taxable pursuant to the aforementioned Article 67(1)(b) TUIR.
In other words, by classifying the two cases (purchase of the right of usufruct and purchase of the right of bare ownership) under two different regulatory provisions, the Italian Revenue Agency no longer considers the five-year period from the date of purchase to be applicable, which renders the transfer no longer effective for tax purposes.
Consequently, the purchase of the right of usufruct, to be classified as the establishment of such right, will always give rise to capital gains for the seller for the portion of the consideration relating to the sale of that right.
This position taken by the Revenue Agency has been strongly criticized by professionals in the sector.
By Francesca Ferrari, Studio notarile Tassinari & Damascelli, Bologna – Member of Insignum (Italy)
