Being growed so mutch the business of foreignreal estate (according to Bank of Italy almoust 20 trillion of euro), often, understanding the fiscal treatment should be not really clear for italian fiscal resident.
Before of all, since 2011 italian fiscal residents that own an apartment obroad has to pay the IVIE, equal to 0,2% of the cadastral value (where it exists) or the purchase value for the real estate in Europe, or the market value for the real estate outside Europe. The tax on property paid in the foreign country where the apartment is must be deducted from the IVIE.
On the other side, from the point of view of direct taxation on the rent, this income must be trated as “other incomes” (in the income’ catagories) and taxed according to art. 70 of Italian Direct Income Tax Code (DPR 917/86). If the income is not taxed in the foreign country where the real estate is, in the italian tax return it must be declared the rent less 15% of forfait expences, i.e 85% of the rent without the possibility to deduct any expences.
If the rent is taxed in the Country where the real estate is, in the italian tax return it must be taxed the income declared in the foreign country, i.e. the difference between the rent and the expences, as regulated in many countries. Moreover, it’s not possible to consider the standard deduction of the tax payer, but only the specific deduction on the rent.
Finally, it’s possible to deduct the tax credit for the income taxes paid in the foreign country. In France, for example, it’s possibile to deduct 50% on the rent, so that it’s possible to declare 50% of the rent considering a tax credit equal to the tax called l’impot sur le revenue” paid there.