A Final — I Think — Post About Residency

It looks like the residency question has sorted itself out, just a few days before a decision had to be made.

house made of euro paper moneyRemember, the big reason to consider becoming a formal Italian resident is financial: we can save 7-9% of the purchase price when a resident, or 30,000-40,000€. But it makes us liable for Italian taxes on both income and assets.

Financially, it’s probably more or less a wash on income tax. The rates in the US and Italy seem comparable for unearned income, and we can deduct the Italian tax on our US return.

The financial problem is on assets. The Italians tax worldwide financial and real estate assets. These taxes we can’t deduct in the US.

But here’s the practical resolution, which I hadn’t understood clearly before: we’d need to become residents within 18 months of the time we sign the purchase and construction contracts. That puts us in the spring of 2018, well before we’d be able to be there for long enough of an extended period to become residents.

So we’ll have to bite the bullet and pay the extra taxes.

Image source
Licensed from aeolos via 123rf.com

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