If you own a flat or house in Italy and rent it out, you have a choice about how the rent is taxed. You can add the rental income to your other earnings and pay normal progressive IRPEF (Italy's income tax). Or you can opt for the cedolare secca — a flat substitute tax that replaces IRPEF, the regional surtax, and the municipal surtax on that rent, all in one go.
For many landlords, the cedolare secca is simpler and cheaper. But it is not always the best option, and the rules changed in recent years for short-term lets. This guide explains how it works in 2026, what the rates are, and how to work out which choice leaves you with more money.
What the Cedolare Secca Actually Is
The phrase cedolare secca translates loosely as "dry coupon". In plain terms, it is a flat-rate substitute tax (imposta sostitutiva) on residential rental income. When you choose it, the rent you receive is taxed at a single fixed percentage and is taken out of your normal income tax calculation entirely.
Choosing the cedolare secca means three things happen at once:
- The rent is no longer added to your IRPEF taxable income
- You do not pay the regional surtax (addizionale regionale) or municipal surtax (addizionale comunale) on that rent
- You do not pay registration tax (imposta di registro) or stamp duty (imposta di bollo) on the lease
In exchange, you give up the right to claim certain deductions against that rent and you cannot increase the rent for inflation (ISTAT adjustment) during the years the regime applies.
The 2026 Rates: 21 Percent and 10 Percent
There are two main rates, and which one you get depends on the type of contract:
The standard rate is 21 percent. This applies to a normal free-market lease (contratto a canone libero), usually the classic 4+4 year residential contract.
The reduced rate is 10 percent. This applies to "agreed-rent" contracts (contratti a canone concordato) signed in towns with a housing shortage or high population density, where the rent is capped according to local agreements between landlord and tenant associations. The 10 percent rate is a strong incentive to offer tenants a more affordable, regulated rent.
Compare that with standard IRPEF, where rental income is added to your other earnings and can be taxed at anywhere from 23 percent up to 43 percent, plus the regional and municipal surtaxes on top. For most landlords with other income, the flat cedolare secca is clearly lower. You can model the difference with our rental income calculator.
A Worked Example
Say you rent out a flat in Bologna on a free-market contract for €12,000 a year, and you already earn a salary that puts your top income in the 35 percent IRPEF band.
Under standard IRPEF
Only 95 percent of the rent is taxable under IRPEF (there is a flat 5 percent allowance), so €11,400 is added to your income. At a 35 percent marginal rate that is about €3,990 in IRPEF, plus roughly €270 in regional and municipal surtaxes. Total: around €4,260.
Under the cedolare secca
The full €12,000 is taxed at 21 percent, which is €2,520 — and that is the end of it. No surtaxes, no stamp duty, no registration tax.
In this case the cedolare secca saves you over €1,700 a year. If you had an agreed-rent contract at 10 percent, the saving would be larger still. Run your own figures with the rental income calculator, and use the salary calculator to see which IRPEF band your other income falls into.
Short-Term and Holiday Lets
Short-term rentals (locazioni brevi) — leases of up to 30 days, including holiday lets booked through platforms — can also use the cedolare secca, but the rules tightened recently. For a single property the rate stays at 21 percent. However, if you rent out more than one property on a short-term basis, the rate rises to 26 percent on the second and further properties, reflecting the more business-like nature of the activity.
If you let out more than four properties short-term, the tax office may treat the activity as a business (attivita d'impresa), which means opening a partita IVA (VAT number) and a different tax treatment altogether. If you are heading in that direction, our self-employed tax calculator will help you understand the contributions and tax involved.
When the Cedolare Secca Is NOT the Best Choice
The flat tax is not automatically better for everyone. Here are the main cases where standard IRPEF could work out cheaper:
- You have low other income. If your total income sits in the lowest 23 percent IRPEF band and you have personal deductions to claim, normal taxation plus the 5 percent rental allowance may beat the flat 21 percent.
- You rely on the rent for deductions (detrazioni). Under the cedolare secca your rental income is excluded from your IRPEF base, which can reduce the headroom you have to absorb personal deductions for things like medical costs or dependent family members.
- You want inflation increases. While on the cedolare secca you cannot apply the annual ISTAT rent increase, so over a long lease you may forgo some rent growth.
If you have a family with dependants, it is worth checking how rental income interacts with your wider tax position using our family deductions calculator.
How to Choose and Apply the Cedolare Secca
You opt in when you register the lease with the Agenzia delle Entrate (Italy's Revenue Agency), or at a later annual renewal. The choice is yours as the landlord, but you must give the tenant written notice (a registered letter or PEC certified email) confirming that you are waiving the right to the annual ISTAT rent increase for the period the regime applies.
You pay the cedolare secca through your annual tax return, usually as an advance payment (acconto) during the year and a balance the following year, on the same deadlines as IRPEF. Keep good records of the rent received and the lease registration, because the tax office can ask to see them.
Do Not Forget IMU and the Other Property Costs
The cedolare secca only covers income tax on the rent. It does not touch IMU (the municipal property tax), which you still owe on second homes and rented properties at your local council's rate. Use our IMU calculator to estimate that separate bill, and remember that condominium charges, insurance and maintenance also eat into your real return.
The Bottom Line
For most landlords in Italy with a steady job or other income, the cedolare secca is the simpler and cheaper way to tax rental income in 2026. A flat 21 percent — or 10 percent on agreed-rent contracts — usually beats adding the rent to progressive IRPEF and paying surtaxes on top.
But it is not a blanket rule. If your overall income is low, if you have lots of personal deductions, or if you run several short-term lets, the standard regime or a business structure may serve you better. Spend a few minutes with our rental income calculator before you register your next lease — the right choice can be worth well over a thousand euros a year.