Cedolare secca: Italy's flat tax on rent

The cedolare secca — literally "dry coupon" — is an optional flat tax on residential rental income. Elect it and one fixed percentage replaces progressive income tax, regional and municipal surcharges, registration duty and stamp duty on the lease. It is available to individual landlords, resident or not.

The three rates

• 21% — the standard rate: ordinary long-term residential contracts and your first short-term rental property.
• 10% — agreed-rate contracts (canone concordato, typically 3+2 years) in municipalities with housing agreements. The rent is capped by local tables, but the tax saving often outweighs the cap.
• 26% — short-term lets from the second to the fourth property. From the fifth, the activity is deemed a business and the flat tax is no longer available at all.

What you give up

The flat tax is charged on 100% of the rent with no deductions of any kind. Three consequences matter:

• No expense deductions — condominium charges, insurance, agency fees are irrelevant to the tax.
• No renovation or energy-efficiency tax credits — these offset IRPEF, and under the flat tax you have no IRPEF to offset.
• No ISTAT inflation updates to the rent for the duration of the election on long-term contracts.

When ordinary taxation wins

Precisely because of those lost deductions, a landlord about to renovate can find IRPEF cheaper over a multi-year horizon: renovation credits are spread over ten years and need IRPEF capacity every single year to be used. Whether the credit you'd recover beats the flat-tax saving depends on the size of the works, the rent, and how long you'll keep the property. It is a calculation, not a guess — and it is exactly what our written flat tax vs ordinary taxation analysis (€200) and renovation tax-credit assessment (€350) are for.

How it is elected

For registered long-term contracts, the election is made when the lease is registered (form RLI) or at a later annuality, and the tenant must be notified — the ISTAT waiver is part of the deal. For short-term lets, the election is simply exercised in the tax return. Get the mechanics wrong and the tax office can deny the regime for the year: it is cheap to do right and expensive to repair.