Italy's real estate market in 2025 is experiencing a transformative shift, thanks to a series of updated tax incentives aimed at stimulating investment, promoting sustainability, and attracting international buyers. Whether you're a seasoned investor or considering your first property purchase, understanding these changes is crucial to maximizing your investment potential. 

1. Enhanced Tax Deductions for Renovations

The Italian government's 2025 Budget Law has introduced significant updates to tax deductions for property renovations, focusing on energy efficiency and sustainability:

• Ecobonus: Offers a 50% tax deduction for energy-efficient upgrades on primary residences, such as installing solar panels or replacing outdated heating systems. For secondary homes, the deduction is 36% .
• Sismabonus: Provides up to 85% tax deductions for seismic risk reduction measures, making properties in earthquake-prone areas more attractive to investors .
• Bonus Ristrutturazioni: Continues to offer a 50% deduction for general renovations, including aesthetic improvements and system upgrades, with a spending cap of €48,000 for primary residences .

These incentives not only reduce renovation costs but also enhance property value, offering investors a compelling reason to consider Italian real estate.

2. Introduction of the Architectural Barriers Bonus

A new addition to Italy's tax incentive landscape is the Architectural Barriers Bonus, which provides a 75% tax deduction for expenses related to removing architectural barriers, such as installing lifts or modifying bathrooms for accessibility. This incentive is available for both residential and commercial properties and can be spread over 10 annual installments .

3. Attractive Tax Regime for Foreign Investors

Italy continues to offer a favorable tax environment for foreign investors:

• Flat Tax Regime: High-net-worth individuals can opt for a flat annual tax of €100,000 on foreign income, excluding capital gains from certain shareholdings during the first five fiscal years. This regime has been extended and remains a significant draw for wealthy foreigners considering relocation to Italy .
• Reduced Property Taxes for Primary Residences: Foreign buyers planning to make Italy their primary residence benefit from lower property taxes, including a reduced registration tax of 2% of the cadastral value, compared to 9% for second homes .

4. Superbonus 110%: A Gradual Phase-Out

The Superbonus 110% program, which previously offered a 110% tax deduction for energy-efficient renovations, is being gradually phased out. For 2025, the deduction applies exclusively to interventions already started by October 15, 2024, with specific conditions met. While the program is being reduced, it still presents opportunities for investors who have initiated eligible projects.