In judgment no. 11786/2025, the Italian Supreme Court of Cassation has issued a landmark ruling on the tax treatment of capital gains arising from the sale of residential property. The key provision is Article 67 of the Italian Income Tax Code (TUIR), which provides for significant tax consequences where property is sold within five years of its acquisition, unless the property served as the seller's actual principal residence.
Principal residence test: actual use is decisive
Capital gains arising from the sale of residential property within five years from acquisition are subject to IRPEF unless the property was used as the owner's actual principal residence. What matters is the dimora abituale, namely the place actually used as the main home, and not merely the residenza anagrafica, that is, the officially registered address. This distinction is of considerable practical importance: a person who merely registers a property as a principal residence without genuinely living there cannot rely on the tax exemption.
No proof of speculative intent required
Unlike in some other jurisdictions, taxability under the TUIR does not require proof of a speculative intention to resell. Tax liability depends solely on the five-year period and on the lack of actual use as a principal residence, regardless of whether the seller acted with economic intent or disposed of the property for other reasons.
Standards of proof: written statements by third parties are admissible
Written statements by neighbours, building managers or other third parties attesting to the actual residential use of the property are in principle admissible as evidence and may not be dismissed by the courts in a blanket manner. Rather, all available indicia must be assessed in an overall evaluation.
Practical guidance for property owners
Owners intending to sell a property within five years of acquisition and claim the exemption should carefully document the property's actual use as a principal residence. Suitable evidence may include utility contracts for electricity, gas and water, postal correspondence sent to the address, school enrolments in the relevant district, health insurance and medical records, and confirmations from the building manager. By contrast, short holding periods, large advance payments in preliminary contracts and a lack of energy consumption may be regarded as indicia against genuine use as a principal residence.
Relevance for German-Italian cases
For German nationals owning property in Italy, for instance holiday homes on Lake Como or in Tuscany, the ruling is of immediate relevance. The gain arising from the sale of such a property within five years of acquisition is subject to IRPEF in Italy unless the property was used as the actual principal residence. Under the German-Italian double taxation treaty, it must also be examined to what extent such a gain may additionally be taxable in Germany.