Cedolare Secca 2024, How Does It Work? A Guide to the Reduced Taxation for Rental Contracts
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The “cedolare secca” is a substitute tax regime for rental income under IRPEF (Personal Income Tax), which can be applied to contracts related to residential properties and provides for the application of three different tax rates.
The “cedolare secca” is set at 21% for most leases, but, under specific conditions, it is reduced to 10%, offering clear advantages in terms of the tax due, replacing IRPEF, additional taxes, as well as registration and stamp duties.
The option for the “cedolare secca” can be exercised when registering the contract, using the RLI form, or in the case of an extension of the same.
These are the general rules, on which the new provisions introduced by the 2024 Budget Law intervene.
Starting from January 1, the “cedolare secca” has three different tax rates, and in parallel with the 21% and 10% rates, a new 26% tax rate for short-term rentals has been introduced. This new tax regime will apply to leases for short periods of more than one apartment per year, and the following paragraphs will analyze the changes in detail.
21% “Cedolare Secca”: Calculation and Requirements
The 21% “cedolare secca” is the most widely applied because, apart from certain subjective conditions, there are no special limits to access it.
Individuals who are the owners or tenants of a property can opt for this rate, but only if they are not engaged in business, arts, or professional activities.
The properties that qualify for the substitute taxation must fall within the cadastral categories from A1 to A11 and must be for residential use. The “cedolare secca” also applies to the annexes of such properties.
It cannot be applied to commercial contracts, although there is a proposal to extend the “cedolare secca” to the rental of shops and offices within the scope of the fiscal reform delegated law.
In terms of benefits, the 21% “cedolare secca” not only provides a reduced tax rate compared to IRPEF, but also replaces municipal and regional additional taxes. Additionally, registration and stamp duties are not due during the contract registration.
10% “Cedolare Secca”: Which Municipalities, Contracts, and Properties Does It Apply To?
The more advantageous 10% “cedolare secca” is available for contracts with agreed rent, but only in the following cases:
- In municipalities with a lack of housing or densely populated areas;
- For contracts with university students;
- In municipalities affected by natural disasters;
- For temporary leases governed by Law No. 431/1998.
The municipalities covered by the first point include: Bari, Bologna, Catania, Florence, Genoa, Milan, Naples, Palermo, Rome, Turin, and Venice, as well as neighboring municipalities and other provincial capitals.
The conditions for applying the reduced 10% tax are stricter, and it can only be used for rental contracts with agreed rent, which must be supported by the property owners’ organizations and tenant organizations that signed the Territorial Agreement.
For unsanctioned contracts, a certificate must be issued by the organizations that signed the agreement, certifying the conditions for accessing the reduced tax.
26% “Cedolare Secca” for Short-Term Rentals in 2024
Starting January 1, the “cedolare secca” on short-term rentals increases. While the applicable rate was 21% until December 31, 2023, from January 1, 2024, the Budget Law increases the rate to 26%.
Specifically, the 26% rate will apply to leases of up to 30 days, including contracts that involve the provision of services such as linen and cleaning, entered into either directly or through intermediaries like real estate agents or online platform managers.
However, the higher tax rate will be applied only to those who rent more than one apartment for short periods in a year, with the exception of a single property.
When to Pay the “Cedolare Secca” Advance and Balance
The “cedolare secca” is paid according to the same deadlines set for the IRPEF.
Excluding the first year, for which the taxable base cannot be determined, the payment follows the advance and balance system.
The advance must be paid:
- In a single payment by November 30 if the amount is less than €257.52;
- In two installments if the due amount exceeds €257.52:
- The first installment (40%) by June 30;
- The second installment (60%) by November 30.
The balance must be paid by June 30 of the year following the reference year.
The tax codes to be used in the F24 form for payment are provided in the summary table.
Does the “Cedolare Secca” Benefit You? Evaluating the Choice
After clarifying the payment instructions and amounts, let’s now assess who benefits from opting for the “cedolare secca.”
The key factor is the calculation of the tax payable; if it is higher than the IRPEF, it would not be advisable to choose the substitute tax.
From a fiscal perspective, the following rules apply:
- The rental income under the “cedolare secca” regime is excluded from the total income;
- No deductible expenses or tax credits can be applied to the income subject to the “cedolare secca” or the tax itself;
- The income subject to the “cedolare secca” must be included in the income for the recognition or determination of deductions, tax credits, or benefits linked to income requirements (e.g., determining ISEE, or being considered a dependent).
The “cedolare secca” is advantageous if the 10% rate applies.
Otherwise, it is not immediately clear when it would be beneficial to opt for the 21% rate.
In any case, the taxpayer’s income must be considered.
It’s important to remember that if the income is below €8,125, no taxes are due.
In this case, it would be better to stay under the IRPEF regime, as the “cedolare secca” does not offer exemption thresholds, and payment would still be required.
For taxpayers within the “no tax area” (income up to €8,174), switching from IRPEF to the “cedolare secca” is not beneficial, as no taxes are due under IRPEF, unlike the substitute tax regime.
Similarly, taxpayers with higher incomes may benefit from the “cedolare secca” to avoid crossing into a higher IRPEF bracket, combining rental income and work income.
For intermediate situations, the amount of deductions should be calculated to ensure that the “cedolare secca” is beneficial, as no deductions apply to the rental income.
In essence, there could be cases where, despite the IRPEF tax rate being 23% to 43%, the IRPEF tax might still be more beneficial due to deductions and credits.
How to Pay the “Cedolare Secca”: Option with RLI Form and Compliance
The option for the “cedolare secca” can be exercised when registering the contract or later.
In the case of registration, the option must be communicated via the RLI form, which is necessary for contract registration.
Later, it can be exercised when renewing the lease, within 30 days of the contract’s expiration, using the same RLI form.
The same rules apply for extensions.
For short-term rentals, i.e., leases that do not exceed 30 days, since registration is not mandatory, the “cedolare secca” can be selected directly in the income tax return.
The landlord must notify the tenant via a registered letter when opting for the “cedolare secca.” This means waiving the right to adjust the rent, even if such an adjustment is specified in the contract.
If the waiver of rent adjustment is already stated in the contract, sending the letter is not mandatory.
If the letter is not sent, in the case of contract renewal, in some cases, the tax regime does not expire.
However, the landlord must have acted consistently by making the required payments and regularly declaring the income received.