The recent regulatory changes regarding short-term rentals in Trentino have sparked significant debate among property owners and stakeholders in the real estate market. Following the government’s latest budget maneuver, substantial adjustments have been made to address the growing trend of tourist accommodations. This
legislation aims to clarify and create fairness in the rental landscape, though its effectiveness in reshaping market dynamics remains uncertain.
As the new law takes effect, property owners who rent their second homes as tourist accommodations will now face a flat tax rate of 26%. Furthermore, those managing more than two rental properties must register for a VAT number. These provisions are intended to regulate the short-term rental market
and ensure equitable taxation for all participants.
Concerns from property owners and industry experts
Severino Rigotti, president of the Italian Federation of Real Estate Agents (Fimaa) in Trentino, has expressed strong concerns regarding these new regulations. He asserts that merely increasing taxes will not deter property owners, who are likely to continue maximizing profits through short-term rentals. Rigotti stated, “The changes in policy will not
alter the existing situation; property owners are inclined to pursue the higher earnings that come from leasing their homes to tourists.”
Impacts on the tourism market
Despite the introduction of these regulations, many experts believe that the demand for short-term accommodations in Trentino will remain strong. The region, known for its tourism appeal, is experiencing a continual rise in the need for temporary housing solutions. Investors may devise innovative strategies to navigate the new legal framework while maintaining profitability in this competitive market.
Potential consequences of increased taxation
One of the most pressing concerns among property owners is the rise in taxation, which could drive many to withdraw from the short-term rental market. Such a shift would likely reduce the availability of accommodations for tourists, consequently driving up rental prices and making holidays in Trentino less affordable for some visitors. Nonetheless, some owners may choose to pivot towards a more quality-focused tourism approach rather than concentrating solely on quantity.
Future of the rental market in Trentino
The regulatory changes concerning short-term rentals in Trentino signify a substantial transformation in the region’s real estate sector. However, the true impact on the behavior of property owners and other stakeholders remains uncertain. Ongoing discussions between property owners and authorities indicate an evolving landscape, and it will be crucial to observe how this situation unfolds over time.
Additionally, the recent budget law has removed the distinction between individual property owners and those utilizing intermediaries or online platforms for rentals. The National Inter-Association Consultation for Real Estate Intermediation (FIMAA-FIAIP-ANAMA) has praised this aspect, noting that it allows all property owners to benefit from a flat tax rate of 21% on their first rental property, regardless of their rental method.
However, the requirement for a VAT number beginning with the third property rented has raised concerns. According to the consultation, this provision reflects a misunderstanding of the rental market, as most owners typically manage only one property. The majority of individuals renting out properties for tourism are private owners seeking additional income rather than commercial landlords. The new legislation could inadvertently infringe on property rights and jeopardize family incomes.
As the rental landscape continues to evolve, it is essential for property owners in Trentino to stay informed about these changes and explore their options. The introduction of a VAT number from the third property onwards may lead to increased operational costs, prompting some owners to consider alternative arrangements to avoid the new requirements. For instance, owners could limit their short-term rentals to two properties while transitioning others to long-term leases. This strategy would enable them to sidestep VAT obligations while still generating income from their real estate investments.
Another potential strategy is for owners to transfer ownership of additional properties to family members, allowing them to maintain the benefits of short-term rentals without incurring new tax obligations. However, such arrangements must be approached with caution, as they may introduce complications in the future, particularly concerning inheritance or divorce settlements.
As the new law takes effect, property owners who rent their second homes as tourist accommodations will now face a flat tax rate of 26%. Furthermore, those managing more than two rental properties must register for a VAT number. These provisions are intended to regulate the short-term rental market and ensure equitable taxation for all participants.0