Can you rent your first home?

A series of rules and various benefits provided by law revolve around the so-called "first home", a term used to indicate the first home owned. These are tools that the law makes available to help owners, allowing them to lighten the costs associated with purchasing a home. But are these charges lost if the property is rented out?

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First home benefits

As regards the purchase of the "first home", both the registration tax, if purchased from a private individual, and the VAT, if purchased from a company, are reduced. Furthermore, stamp duty, special cadastral taxes and mortgage taxes are not due on deeds subject to registration tax and those necessary to carry out the obligations at the land registry and real estate registers.

Furthermore, as a further relief if a mortgage is taken out to purchase the property to be used first, a deduction of 19% of the interest expense, the related ancillary charges and the revaluation quotas paid in relation to the mortgages is envisaged.

Be careful though, those that belong to certain cadastral categories, namely A/1 (elegant homes), A/8 (homes in villas) and A/9 (castles and palaces of eminent artistic and historical merit), are not included in the category of first home properties.

Furthermore, the building must be located in the municipality in which the buyer has (or intends to establish) his residence or work. Furthermore, the latter must not be the owner, throughout the national territory, of rights of ownership, use, usufruct, residence or bare ownership, on another property purchased, even by the spouse, taking advantage of the benefits for the purchase of the first home

Forfeiture of "first home" benefits

There are various circumstances that determine the forfeiture of the "first home" benefits enjoyed when purchasing the property. These include the falsehood of the declarations required by law, made when registering the deed, or the failure to transfer residence to the municipality where the property is located within 18 months of purchase.

In case of forfeiture, the beneficiary will have to pay the difference between the ordinary registration tax and the taxes paid for the transfer deed, as well as a penalty equal to 30% of the same taxes and the payment of default interest.

The risk of losing benefits is therefore particularly felt and often the subject of discussions. Among the questions widespread among owners is the one connected to the leasing of the house purchased with the benefits.

First house rented: will the benefits be lost?

The answer to this question is no: leasing does not imply the forfeiture of benefits as there is no loss of possession of the property.

In fact, to take advantage of the "first home" tax breaks, it is not necessary for the property purchased to be used as a home for oneself and/or for family members, so much so that a rented or rented home can also be purchased with the "first home" benefits after purchase, therefore it is not even necessary to maintain residence in that home (see Revenue Agency circulars no. 38 of 12 August 2005, no. 19/E of 1 March 2001 and n. 1/E of 2 March 1994).

However, the important thing is to respect the other conditions established by law, for example the buyer will have to maintain residence in the municipality where the property is located, even if he does not reside in that house.

Furthermore, they must not be luxury properties or own other homes purchased benefiting from the "first home" benefits. Furthermore, to continue enjoying the benefits, the property cannot be sold before 5 years from purchase, unless another one with the same requirements is purchased within one year.

IMU exemption and mortgage interest deduction

Letting out the property, even for short periods, has different consequences, however, on the IMU exemption and on the deduction of interest expense on the mortgage. In the first case, in fact, if the house is rented it is no longer considered a main residence, therefore habitual residence, for the purposes of the Single Municipal Tax).

In the second case, i.e. if the first house was purchased after taking out a mortgage loan, it will be possible to rent it out without paying surcharges or penalties. However, the law requires that, in order to be able to "discharge" 19% of the interest expense on the mortgage from the IRPEF, the house purchased must necessarily be the home in which one resides, or where the owner and family members usually live. This circumstance must occur for the entire period in which you wish to take advantage of the benefit.