Tax Credit and “First Home” Benefits

In Italy, when you sell your first home and purchase another property to be used as your primary residence, you can obtain a tax credit.

Here’s how it works in a simple and practical way:

When the Tax Credit Arises

The tax credit is generated if all these conditions are met:

1. You purchased a home with “first home” benefits.
2. You sell that home.
3. Within 12 months of the sale:
   • you purchase another non-luxury property (eligible cadastral categories A/2, A/3, A/4, A/5, A/6, A/7, A/11),
   • and use it as your main residence, thus meeting the “first home” requirements.

The credit arises at the moment you purchase the new home.

Value of the Tax Credit

The tax credit is equal to the lesser of:

• the registration tax or VAT paid for the first subsidized purchase;
• the registration tax or VAT paid for the second purchase.

Simple Example

• First home: VAT paid = €5,000
• New home: Registration tax = €4,000
  Tax credit = €4,000

How to Use the Credit

The credit is not refunded in cash. You can use it as follows:

1. To offset the registration tax due on the new purchase (right at the time of the deed).
2. To reduce future taxes:
   • IRPEF in the income tax return,
   • registration, mortgage, cadastral taxes on other deeds.

1. To offset through F24.

It cannot be used to pay IMU, TARI, or municipal taxes.

How to Request the Tax Credit?

There is no need to submit a separate application:
The notary, during the act of the new purchase, includes the appropriate declaration with which you request the credit.

The Regulatory Framework

The tax benefits for purchasing a first home are mainly governed by:

• Note II-bis of the Tariff, Part I, attached to DPR 131/1986 (Consolidated Text on Registration Tax), which regulates the requirements and benefits at the time of purchase.
• Article 7 of the Law of December 23, 1998, no. 448, which grants a tax credit to those who sell a property purchased with benefits and repurchase within 12 months a new home to be used as a primary residence.
• Law no. 207/2024, which introduced a significant change: the extension from one to two years of the period within which to sell the owned home to avoid losing the “first home” benefits in case of a new purchase.

This last modification has raised interpretative doubts, particularly regarding its impact on the tax credit provided by art. 7 of Law 448/1998.

Pay Attention to Deadlines

You have 12 months to purchase the new home after the sale or to sell the old home after the new purchase (but in this second case, you are not entitled to the credit, but only avoid losing the benefits).

The issue of the tax credit in the repurchase of the first home has returned to the forefront thanks to recent clarifications provided by the Revenue Agency with theRuling no. 297/2025, published following the changes introduced by the Law no. 207/2024.
The intervention of the financial administration has precisely defined the scope of application of the new extension of the deadlines, avoiding interpretations not aligned with current regulations.

The Novelty of Law 207/2024: Sale Within Two Years to Retain the Benefit

With Law 207/2024, the legislator established that when a taxpayer purchases a new property with “first home” benefits while already owning one purchased with benefits, the sale of the previous property can occur within 24 months of the repurchase, without incurring the loss of the benefit.

This extension was introduced to facilitate changes of residence, especially in situations where the sale timelines are longer than in the past.

What Ruling 297/2025 Clarifies

The Revenue Agency, with ruling no. 297/2025, specified a crucial point:
the extension to two years does not apply to the tax credit provided by art. 7 of Law 448/1998.

Here are the key points of the clarification:

1. First Home Benefit: Sale Within Two Years

If the taxpayer purchases a new home with first home benefits, even though they already own one, the sale of the first property can occur within the second year following the new purchase.

In this case, the “first home” benefit remains valid.

2. Tax Credit for Repurchase (art. 7 L. 448/1998): Sale Within One Year

Conversely, to qualify for the tax credit, the sale of the property previously purchased with benefits must occur within 12 months of the new purchase.

If the sale occurs between the 13th and 24th month, the situation is as follows:

• ✔️ The buyer retains the “first home” benefit on the new property.
• ❌ The tax credit for the repurchase is not earned.

3. Distinct Areas

The Revenue Agency therefore emphasizes that:

• the extension introduced by Law 207/2024 operates only to prevent the loss of the first home benefit;
• it does not modify in any way art. 7 of Law 448/1998, which remains firm in requiring the sale within one year for the tax credit.

Why This Clarification is Important

The document from the Agency avoids misunderstandings and potential future disputes.
According to the financial administration:

“The extension from one to two years applies exclusively within the scope of the first home benefit in the strict sense and does not apply for the purpose of earning the tax credit referred to in art. 7 of Law no. 448/1998.”

For real estate agents and taxpayers, this means being able to manage with certainty:

• the timing of sales and repurchases,
• the planning of taxes at the deed,
• expectations regarding available tax benefits.

Conclusion

Ruling 297/2025 represents a fundamental clarification for the real estate sector: although the new legislation has extended the time to avoid losing the “first home” benefit, the benefit of the tax credit for repurchase remains contingent on the sale within one year of the new purchase.

Proper information allows taxpayers to better plan real estate transactions and agents to offer precise and updated advice.