Renting Out Property in Italy as an Israeli Resident: Lease Types, Cedolare Secca, Short-Term Rentals and Tax in Both Countries

1What types of residential lease exist in Italy?

Italian law (Law 431/1998) recognises several types of residential lease, and the differences affect both how long you are committed to the tenant and the tax. According to the Italian tax authority's (Agenzia delle Entrate) instructions for the lease registration form, these are the main types:

• Free market, 4+4 (canone libero). The rent is agreed freely between the parties. The lease runs for four years and renews for another four. For the landlord this is a long commitment, so it is worth understanding the exit terms in advance.
• Agreed rent, 3+2 (canone concordato). The rent is set within ranges fixed by local agreements. In exchange for a capped rent, the landlord enjoys tax benefits, including reduced registration tax and a 10% cedolare secca in municipalities where it applies.
• Transitional lease (transitorio). For a period of up to 18 months, where there is a temporary need. There is also a special transitional lease for university students.
• Short-term rental (locazione breve). A contract of up to 30 days between private individuals who are not acting in the course of a business. This is the typical platform rental, and it may include ancillary services such as cleaning, linen and wi-fi. Additional services, such as breakfast or car hire, turn the activity into a business.

A tourist letting that lasts more than 30 days is not a "short-term rental", so the registration requirement of an ordinary lease applies to it. It is worth choosing the type of lease before you buy, because it determines the expected income, the tax and your flexibility with the property.

2Must the lease be registered, and how is it done from Israel?

Yes. A lease whose total duration exceeds 30 days in a year is registered with the Agenzia delle Entrate within 30 days of signing, on form RLI. A lease of up to 30 days is registered only if the need arises (in caso d'uso).

If you do not choose the cedolare secca, on registration you pay registration tax of 2% of the annual rent for an ordinary lease, and 2% of 70% of the rent for an agreed-rent lease, plus stamp duty. If you choose the cedolare secca you are exempt from both. The choice is made on form RLI itself, and you can also switch to this regime in later years of the lease.

Online registration requires an Italian digital identity (SPID, CIE or CNS), which Israeli investors usually do not have. In practice, registration is handled by an Italian tax adviser (commercialista), by the letting agency, or at any office of the authority. A prerequisite is your codice fiscale, your Italian tax number. If you do not intend to travel to Italy, you can grant a power of attorney to manage the property and sign leases, with an apostille and a translation.

3How much tax is paid in Italy on long-term rentals?

A non-resident is taxed in Italy on income produced in Italy, and rent from a property in Italy is such income. There are two regimes: ordinary taxation under IRPEF, or the cedolare secca at a flat rate.

Ordinary regime (IRPEF). Under article 37(4-bis) of the Italian income tax code (TUIR), taxable income is the contractual rent less a notional 5% deduction, where this is higher than the property's cadastral income (rendita catastale). Actual expenses are not deductible. The IRPEF brackets apply, which according to PwC are, for 2026, 23% up to EUR 28,000, 33% up to EUR 50,000 and 43% above that. Regional and municipal surcharges apply on top, as does the registration tax on the lease.

Cedolare secca. A flat tax that replaces IRPEF, the regional and municipal surcharges, registration tax and stamp duty. The rate is 21% of the full rent, without the 5% deduction, and 10% for a canone concordato lease in municipalities where the reduced rate applies. Two conditions matter: the option is open only to owners who are individuals, not to a company, and for the period of the option you waive any rent update, including indexation to the ISTAT index. The tenant must be notified of the waiver in advance, otherwise the option is not effective.

A simple calculation explains why many landlords living abroad choose the cedolare secca: under the ordinary regime, even the lowest bracket (23% on 95% of the rent) comes to about 21.85% before the surcharges and registration tax, and part of the income may move into the 33% bracket. The comparison may change once Israeli tax is also taken into account, as shown below.

4What changed in 2026 for short-term rentals?

The rates did not change: 21% on one unit of your choice and 26% on the rest. What changed is the number of flats: from 2026, anyone letting more than two flats a year on a short-term basis is presumed to be running a business.

The 2024 Budget Law (Law 213/2023) provided that for short-term rentals the cedolare secca rate is 26%, and 21% only for one unit, chosen in the annual return. The 2026 Budget Law (Law 199/2025, article 1(17)) narrowed the regime: until the end of 2025 it covered up to four flats, and from 2026 only up to two. Beyond that, the activity is presumed to be a business regardless of who carries it on. The consequences: an Italian VAT number (partita IVA), bookkeeping, taxation as business income and filing a notice of commencement of activity with the municipality (SCIA). This is set out in the Italian tax authority's guide of April 2026.

For short-term rentals the tax is calculated on the full amount paid, including ancillary services whose price is included, and the 5% deduction does not apply. If you have two flats, it makes sense to assign the 21% rate to the one that earns more.

5Comparison: tax regimes for rental income in Italy

6What do platforms withhold, and what does it mean for you?

An intermediary or platform that collects payment from the guest withholds 21% at source and remits it to the tax authority, as an advance on account of the tax, regardless of the regime you chose. If 26% or the ordinary regime applies to you, you pay the difference in the annual return. If the withholding exceeds the tax, it can be offset or a refund can be claimed.

Platforms also report the contracts to the authority, including the property's CIN code, by 30 June of the following year, and issue you a certificate of the withholding. A platform not resident in the European Union and without a permanent establishment in the EU must appoint a tax representative in Italy, and if it fails to do so, companies of the same group operating in Italy are jointly liable with it. Whoever collects the payment is also responsible for collecting the tourist tax (imposta di soggiorno) where the municipality levies it.

7What is needed before you start short-term letting?

Every flat let on a short-term basis or for tourist purposes needs a national identification code (CIN), basic safety equipment and a procedure for identifying and reporting guests. The requirements were laid down in article 13-ter of Decree-Law 145/2023, and the CIN obligation has applied since 1 January 2025.

• CIN. It is requested in the Ministry of Tourism's national database, displayed outside the building and stated in every listing. The fine for letting without a CIN is EUR 800 to 8,000, and for failing to display it EUR 500 to 5,000 per property, in addition to removal of the listing.
• Safety. Every unit needs gas and carbon monoxide detectors, and accessible, visible fire extinguishers: one per 200 square metres and at least one on each floor. Missing equipment carries a fine of EUR 600 to 6,000 per violation.
• Police reporting. Guest details are sent to the police through the Alloggiati Web system within 24 hours of arrival, and immediately on arrival for stays of less than 24 hours. According to a judgment of the Council of State (Consiglio di Stato) of November 2025, the guest must be identified against their document. Self check-in without visual verification is not enough, but real-time video identification can meet the requirement.
• Tourist tax and local rules. Each municipality decides whether to levy the imposta di soggiorno and at what amount, and regions and municipalities may have additional rules. Check them before you buy, not afterwards.

8Which return is filed in Italy, and what about IMU?

A non-resident with rental income in Italy files an annual Redditi PF return, even when the platform has already withheld tax at source. The general filing deadline is 31 October of the year following the tax year (in 2026 it moved to 2 November, because 31 October falls on a Saturday). Filing is online, directly or through an authorised intermediary, and in practice usually through a commercialista. In the return you also choose the unit taxed at 21% for short-term rentals and offset the amounts withheld at source.

IMU, the annual municipal property tax, continues to apply when the property is let. The exemption applies only to the main residence, meaning a home where you are registered as resident and actually live, and the flat of an Israeli living in Israel is not one. The rate is set by each municipality. IMU and the purchase taxes are covered in our separate guide on purchase taxes and IMU in Italy.

9How is the Italian rental income taxed in Israel?

An Israeli resident is taxed in Israel on worldwide income, so the rental income from Italy is also reported in Israel. The Israel-Italy double taxation treaty does not remove Israeli tax; it determines how double taxation is avoided.

Under article 6 of the treaty, signed in Rome on 8 September 1995, income from immovable property may be taxed in the state where the property is situated, and this includes rental income. Under article 24(3)(a), Israel grants a credit for the Italian tax, up to the Israeli tax attributable to that income. In Israel you have two options:

• The 15% track (section 122A of the Income Tax Ordinance). Tax at 15% on rental income from real estate outside Israel, provided it is not business income. Only depreciation may be deducted, and there is no entitlement to any offset, credit or exemption, including a credit for the tax paid in Italy. In practice you pay the Italian tax plus 15% in Israel.
• The regular track with a credit. The net income, after expenses and depreciation, is taxed at your marginal rates, and the tax paid in Italy is deducted from the Israeli tax, up to the Israeli tax on that income.

A simple numerical example: annual rent of EUR 12,000 under a long-term lease with the cedolare secca. The tax in Italy is EUR 2,520 (21%). Under the 15% track, without depreciation, the tax in Israel is another EUR 1,800, and the total tax is EUR 4,320, 36% of the income. Under the regular track, if your marginal tax on the income is higher than the Italian tax, you pay only the difference in Israel. If it is lower, the credit reduces the Israeli tax to zero, but the excess is not refunded. Which track is better depends on the level of income, the expenses, the depreciation and your other income, so the choice is made with your Israeli accountant before the return is filed.

At high income levels, surtax (mas yasaf) may also apply. Keep the leases, the platform's withholding certificates and the receipts for tax paid in Italy, because without them it is hard to claim a credit. It is also advisable to transfer the funds to Israel from a bank account in your own name and to keep the documents, because your Israeli bank may ask for an explanation of the source of the money.

10Checklist before renting out property in Italy

1. Obtain a codice fiscale and open a bank account to receive the rent.
2. Decide on the type of letting: a long-term lease (4+4, 3+2 or transitional) or short-term rental, and check the municipality's local rules.
3. For a long-term lease: register the lease on form RLI within 30 days, and decide in advance whether to choose the cedolare secca, including the notice to the tenant.
4. For short-term rentals: obtain a CIN, install detectors and extinguishers, and decide who identifies the guests and reports them on Alloggiati Web.
5. Count the flats: from 2026, short-term letting of more than two flats is presumed to be a business activity.
6. Appoint a commercialista to file the Redditi PF return and make sure IMU is paid on time.
7. In Israel: choose with your accountant between the 15% track and the regular track with a credit, and keep all the documents.
8. If you are not in Italy: prepare a power of attorney with an apostille to manage the property and sign leases.

11What to do before renting out property in Italy, and how we accompany you

The important decisions are best made before the purchase: whether the property is suitable for short-term rental in its municipality, in whose name to register it, and how many flats you will let. Local acts, such as registering the lease, filing the Italian return and procedures with the municipality, are performed by licensed local lawyers, notaries and tax advisers in Italy. We coordinate the work from Israel, review the contracts and documents, prepare powers of attorney where needed, and look at the whole picture from the perspective of an Israeli investor, including Israeli reporting and tax.

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