When inheriting a property, there are several procedures to follow. One of the most important steps is calculating the property’s value for inheritance purposes, which is essential to determine the taxes due.
In this article, we’ll explore the steps needed to carry out this valuation.
Calculating Property Value for Inheritance: Start with the Cadastral Income
Before diving into the details of calculating a property’s value for inheritance, it’s crucial to understand what cadastral income means.
This value, assigned by the Italian Revenue Agency (Agenzia delle Entrate), represents the potential income that a property could generate. It is a key parameter for determining the fiscal value of the property, which serves as the taxable base for inheritance, cadastral, and mortgage taxes.
Cadastral income is calculated by combining several factors: assessment rates, the property’s intended use, location, and size. This information can be obtained from the Territorial Agency or the local cadastral office.
Once you have the cadastral income, the next step is to calculate the cadastral value.
This value serves as the taxable base for several taxes, such as IMU (property tax), inheritance tax, and mortgage tax.
It is important to note that the cadastral value differs from the market value, which reflects the actual sale price of the property.
To obtain the market value of the property, you can request a real estate appraisal.
How to Calculate the Value of a Property for Inheritance
To calculate a property’s value for inheritance purposes, a specific process must be followed.
First, the cadastral income must be increased by 5%. The resulting figure is then multiplied by a coefficient corresponding to the property’s cadastral category:
• 110: for a primary residence
• 120: for properties in categories A and C (excluding A/10 and C/1)
• 140: for properties in category B
• 60: for buildings in categories A/10 (private offices and studios) and D
• 40.80: for properties in categories C/1 and E
• 90: for land classified as agricultural (non-buildable)
Practical Example
Suppose you inherit a primary residence with a cadastral income of €700. Increasing this income by 5% and multiplying it by the coefficient of 110 (reserved for primary residences) results in a cadastral value of €80,850.
This value will serve as the taxable base for calculating inheritance taxes.
Inheritance Tax: How to Calculate It
To determine the inheritance tax amount, a declaration of inheritance must be submitted to the Italian Revenue Agency (Agenzia delle Entrate). This declaration must include all inherited assets, both movable and immovable, as well as debts.
The difference between assets and liabilities constitutes the net estate, which will be used to calculate the tax.
The inheritance tax rate varies depending on the relationship to the deceased:
• 4% for direct relatives (parents and children)
• 6% for siblings
• 8% for all other cases
For example, if the net estate is valued at €100,000, the inheritance tax for a child would be 4% of that amount, i.e., €4,000.
Cadastral and Mortgage Taxes
In addition to inheritance tax, other taxes must be paid when inheriting real estate:
• Cadastral tax: 1% of the property value
• Mortgage tax: 2% of the property value
However, if the heir qualifies for a primary residence, both taxes are replaced by a fixed payment of €200 each.
Allowances and Exemptions
Allowances are exemption thresholds that reduce the amount of inheritance tax due.
For spouses and children, the allowance is €1,000,000 per heir, while for brothers and sisters, it is €100,000. This means that if the inherited estate falls within these thresholds, no inheritance tax is due. However, cadastral and mortgage taxes still
apply in these cases.
If the inherited property exceeds the allowance, the tax applies only to the portion above the threshold:
• Direct relatives: €1,000,000 allowance, 4% tax on the excess
• Brothers and sisters: €100,000 allowance, 6% tax on the excess
• Other relatives or individuals: no allowance, 8% tax on the total value
In summary, accurately calculating the value of a property for inheritance purposes is essential to comply with tax obligations and take advantage of any exemptions.
If you have inherited a property and want to know its market value to consider selling it, you can request a free valuation! A Hasamia agent will conduct an on-site inspection and provide an accurate estimate of the price at which you could sell your property.
