Italy: Italy’s government is preparing to abolish a tax break on income from short-term rentals as part of its 2026–2028 draft budget law a move that has sparked political disagreement and pushback from the country’s property sector.
Under the current system, private landlords can apply a reduced 21 per cent tax rate on income from one short-term rental property, while all additional properties are taxed at 26 per cent. The new proposal, introduced by Prime Minister Giorgia Meloni’s government, would impose a flat 26 per cent rate across all short-term rental income.
The measure is part of a broader effort to streamline Italy’s tax code and increase transparency in a sector that has faced mounting scrutiny for its role in overtourism and housing shortages. However, it has immediately divided members of Meloni’s right-wing coalition. Forza Italia, a key partner in the ruling alliance, has voiced firm opposition, arguing the change was drafted without consultation and would unfairly penalise small landlords.
Raffaele Nevi, Forza Italia’s spokesperson, described the proposal as a “profoundly mistaken choice”, while industry representatives have warned of potential unintended consequences. Marco Celani, head of Italy’s short-term rental association Aigab, said the decision risks driving more operators into the informal market. “This would penalise mostly middle-class homeowners and encourage tax evasion through off-the-book rentals,” Aigab said in a statement, calling the measure “a stunning own goal”.
Economy Minister Giancarlo Giorgetti did not refer to the taxation changes when presenting the budget on Friday, though details seen by Reuters confirm the plan is included in the government’s 110-page budget document.
The draft will now be debated in parliament, with a final vote expected before the end of December. While amendments are likely, the discussion reflects growing pressure in Italy and across Europe to align tax rules and curb the rapid expansion of the short-term rental sector an issue increasingly tied to wider debates on overtourism, affordability, and urban planning.
Highlights:
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Italy’s 2026–2028 draft budget proposes ending the 21% reduced tax rate for one short-term rental property.
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A single flat 26% tax rate would apply to all short-term rental income.
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The measure aims to simplify Italy’s tax system and address overtourism and housing pressures.
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Forza Italia, part of PM Giorgia Meloni’s coalition, opposes the move saying small landlords weren’t consulted.
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Industry body Aigab warns the change could drive more off-the-books rentals and penalise middle-class homeowners.
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The proposal forms part of a 110-page draft budget presented by Economy Minister Giancarlo Giorgetti.
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The budget is now headed for parliamentary debate, with a final vote expected by year-end 2025.