The flat tax is the preferential tax regime for the taxation of rents. How does it work and when is it convenient? Focus on requirements and conditions for the application
There dry coupon allows natural persons who rent properties for residential use to benefit from a preferential taxation on fees collected.
For the majority of cases, the flat rate tax applies to the extent of 21% but, under specific conditions, it is reduced to 10% with therefore clear advantages in terms of lower taxes due compared to the ordinary IRPEF regime, for which the lowest rate is equal to 23%.
If from a first analysis it may therefore always seem convenient adhere to the flat rate tax on rental payments, it is good to specify that advantages and disadvantages are to be considered on a case-by-case basis, based on the specific income situation of the taxpayer.
How flat rate tax on rent works
To understand when it is convenient opting for the flat tax regime is best to start from an analysis of the general rules.
First of all, remember that the flat rate tax provides for the application of asubstitute tax for IRPEF and additional taxes on income deriving from the rental of properties for residential purposes and, in addition, there is an exemption from the payment of stamp duty and registration tax due in the event of registration, termination or extension of rental contracts.
Two le rates expected:
● the flat rate tax applies to the extent of 21% in most cases;
● a reduced rate of 10% for agreed fee contractsprovided that the rented home is located in one of the municipalities with a lack of housing availability (Bari, Bologna, Catania, Florence, Genoa, Milan, Naples, Palermo, Rome, Turin and Venice, of the municipalities bordering these and other provincial capital municipalities) or in municipalities with high housing tension.
The possibility of applying the flat rate tax of 10% is also recognized in the case of rental to students, as well as in municipalities affected by natural disasters. In all cases foreseen, however, the stipulation of a contract is binding agreed feetherefore established on the basis of the specific parameters set by the individual territorial agreements, which determine the maximum rental amount that can be expected.
Also worth highlighting are the rules established on short rentals, also in light of the innovations envisaged by the 2024 Budget Law draft.
To date, in the case of rentals of up to 30 days, the law applies flat rate tax with a rate of 21 percent. The possibility of opting for the IRPEF replacement regime is, however, only foreseen in the case of short-term rental of a maximum of four apartments during the year, a limit beyond which the presumption of carrying out the activity in an entrepreneurial form is triggered.
The 2024 Budget Bill approved by the Government and being discussed in the Senate intervenes on the current rules which, starting from next year, increases therate for short-term rentals at 26%. An increase which, however, will not apply in the case of rental for periods of up to 30 days of the first home.
Advantages and disadvantages of flat rate tax on rent
From what has been analyzed above it emerges that the first advantage of the flat rate tax is being able to benefit from a taxation at a reduced rate compared to the provisions of the ordinary IRPEF regime, for which the lowest rate is equal to 23%.
Those who opt for the flat rate tax will also not have to pay stamp duty and registration taxes and the additional regional and municipal IRPEF taxes are also included in the percentage due.
On the other hand, exercising the option for flat rate tax entails the loss of the possibility of update of the rent, even if established by the contract. The value owed by the tenant therefore remains the one envisaged at the stipulation stage and increases are not permitted, even in the event of an increase in the ISTAT consumer price index for workers and employees.
When it is not convenient to opt for flat rate tax
Accessing the flat tax rate is not always convenient and, on the contrary, in specific cases it is best to remain within the ordinary tax regime for IRPEF rates and brackets.
On a general level, please note that income taxed with flat rate tax is excluded from and on the overall income therefore no deductions or deductions can be applied.
The sums taxed with flat rate tax must in any case be considered in the overall income for the purposes of recognizing benefits and concessions for which specific income requirements are foreseen.
From what has been highlighted above, let’s see the cases in which it results inconvenient apply the dry tax rate.
First of all, they are the taxpayers with particularly low incomes having to carefully evaluate whether to access the replacement regime or remain in the IRPEF regime. In the second case, the so-called no tax area is envisaged and, in practice, no taxes are due up to the threshold of 8,125 euros of total income.
For those who therefore believe they will not exceed this value during the year, access to the flat rate tax is particularly disadvantageous as, unlike the IRPEF, There are no exemption thresholds and 21% of the income collected will still be due.
It is not advisable to access the flat rate tax even in the case of numerous deductible or deductible chargesto avoid the risk of incompetence in the IRPEF due.
However, it is advantageous to opt for the replacement regime in case of high incomes, for whom the expected IRPEF rate therefore exceeds the first threshold of 23%. In this case, in fact, you will be able to benefit from a lower taxation of rental income, which will not be included in the calculation of the total to be subjected to ordinary taxation and will not entail the risk of applying a higher rate.
What emerges clearly is that it is therefore necessary to analyze case by case when the flat rate tax is less burdensome than the IRPEF, considering not only the tax rate but the other relevant variables, such as for example the presence of deductible or deductible expenses from the IRPEF.