The loan for use—commonly known by its Italian name comodato—is a contract that allows an owner to give a good to another person for a determined purpose without any payment. Although the Civil Code provisions govern this relationship, formalities are minimal for validity: the agreement can be verbal.
Still, in practice a written document is highly recommended to make the gratuitous nature explicit and to document duration, permitted uses and responsibilities, reducing disputes and scrutiny from tax authorities.
Key civil obligations and how the relationship works
Two actors define the arrangement: the lender (comodante) and the borrower (comodatario). The borrower must use and protect the asset with the diligence of a prudent person and only
for the agreed purpose. Unauthorized transfers or uses allow the lender to demand early return and compensation for damage. At the end of the agreed term, or when the asset cannot serve the intended use, the borrower must return it. Concerning deterioration, the borrower is generally responsible when the damage stems from misuse or extended use beyond the agreed scope. Ordinary upkeep falls to the borrower; extraordinary repairs remain
with the lender.
Borrower duties in practice
The duty of custody requires active care and limited use. Practical examples include prohibitions on subletting without consent and obligations to avoid changes that reduce the asset’s value. Failure to comply can trigger restitution, damages and loss of the right to remain in possession. Clear written clauses that define permitted activities and maintenance responsibilities help prevent later civil claims and clarify who covers routine versus extraordinary expenses.
Handling loss, deterioration and expenses
When the asset perishes for reasons tied to improper use or prolonged enjoyment, the borrower can be held liable. The split between ordinary expenses (cleaning, minor fixes) and extraordinary expenses (structural maintenance, major replacements) should be explicit. This allocation protects both parties and clarifies who must act if the asset becomes temporarily unusable for the agreed purpose.
Fiscal treatment and registration: what changes the tax outcome
From a tax standpoint the comodato is typically neutral for VAT because no consideration is paid. However, ownership keeps the fiscal burden for property taxes like IMU and local duties. To prevent a tax authority from interpreting the arrangement as a lease, it is advisable to collect documentary proof of gratuitousness: a dated written contract, stamped pages or registrations, and supporting correspondence. A written contract relating to real estate generally must be registered to activate certain benefits and to meet formal requirements for public records.
Long-term rentals vs short-term rentals
If the borrower puts the property on the market for medium- or long-term leases (typically over 30 days), tax rules assign the resulting income to the owner: the tax system follows the right in rem, not the physical collector. In contrast, short-term lets (less than 30 days) are treated under a different tax category as miscellaneous income in many regimes; in those cases the borrower who manages short stays may be the taxable person and can even opt for substitution regimes like a flat withholding where available. The distinction is crucial because it determines which party must declare income and pay taxes.
Risks of reclassification and administrative controls
Revenue agencies can reclassify a nominally free loan into a lease when evidence points to an exchange of value: recorded payments, continuing collection of rents by the borrower, or contractual patterns that mirror a commercial relationship. Automated cross-checks of registered contracts, bank flows and property registers increase the chance of discovery. Improperly declaring a rental income under a different party’s tax code or using repeated short contracts to evade rules exposes participants to reassessment, penalties and interest.
Practical solutions and precautions
When the objective is to align legal control and tax liability there are practical alternatives. Establishing a formal usufruct or right of habitation converts the beneficiary into the taxable right holder but requires a notarial act. A second path is a bona fide lease with an explicit clause allowing subletting: the owner collects a documented rent and the intermediary declares the spread as income. For family cases, specific registration can unlock local tax benefits—such as IMU reductions—provided statutory conditions are met and certified in municipal declarations. Regardless of the chosen route, keeping transparent, dated documentation and consistent financial traces reduces the risk of administrative challenges.
Final recommendations
Use clear written agreements that state the gratuitous nature of the loan, register contracts when required to access tax benefits, and separate ordinary maintenance from extraordinary repairs. If the borrower intends to rent the property, identify whether the operations qualify as long-term rentals or short-term rentals and choose the appropriate legal vehicle—usufruct, lease or regulated subletting—to avoid reclassification and penalties. Careful planning, consistent records and legal advice will protect both the lender and the borrower from civil and fiscal surprises.