Why low property prices, teleworking and tax breaks mean it's time to invest in Southern Italy

The crisis caused by the coronavirus pandemic is having, and will continue to have, effects on many social and economic sectors in Italy. The world of real estate is no exception, however this is something that could precisely offer the best opportunities in markets that have remained marginal in Italy until now. Due to lower house prices, tax benefits and working from home opportunities, now may actually be the best time to invest in real estate in Southern Italy. Let's find out why.

The most evident effect of the COVID-19 health emergency, in fact, has been the acceleration of a real industrial revolution, one that will allow many Italians, as well as foreigners and expats, to work remotely, that is to say to work from home for a considerable part of the time. There are many companies that have already communicated to their employees that they will return to the office on a voluntary basis and that teleworking, also known as smart working, will be not only admitted, but even encouraged. This is also good news for those wanting to move to Italy: you can easily make the move without having to look for a new job and enjoy a new life in the sun. 

The impact of smart working in Italy

The consequences of the pandemic for employees mean that an employee with a contract based in Rome or Milan, for example, will be able to live and work from home in a municipality in another region, perhaps commuting to the big city office a few days a month. This gives rise to an enormous change of scenery that has effects not only on the social and family sphere, but also, and above all, on the economic one.

Being able to live in a town or city different from the one where the company you work for is based means you could make considerable savings, and if you choose to live in a city in Southern Italy, these savings would be considerable as property prices tend to be lower in this region. Leaving aside the cost of living, and focusing exclusively on real estate, the difference in house prices is clear. It would probably suffice to say that in Milan and Rome, the main Italian cities when it comes to job offers, property purchase prices per square metre are around 4,103 and 2,894 euros respectively. The average rental costs are 20 euro/m2 in Milan and 12.90 euro/m2 in Rome. These data, both for rental properties and properties for sale, refer to prices in the city and not in the province. 

House prices in Southern Italy

In the province of Isernia the average price per square metre of a house is 721.87 euros, in Caltanissetta 724.43 euros, in Enna 835.27 euros, just to point out the three provinces with the lowest prices. But the average sale price of properties remains below 1,000 euros per square metre in Agrigento, Reggio Calabria, Cosenza, Benevento, Avellino, Ragusa, Crotone, Campobasso, Syracuse, Catanzaro, Lecce.

On top of this, there is no lack of cases of municipalities in Southern Italy that put properties up for sale with symbolic prices, such as the famous "1 euro houses", with the intention of repopulating these small towns that in many cases are now almost uninhabited. This is the case of Taranto in Puglia, Sambuca in Sicily and Cinquefrondi in Calabria. In Molise, a different initiative was launched: an "Active Residence Income" consisting of payments of 700 euros per month for those who repopulate the municipalities in the region.

But the purchase of a property in Southern Italy, should not be seen as an opportunity only for a main residence. This region also stands out as a great option for those wanting to invest in a holiday home. Once again, returning to the theme of smart working, many workers this summer have already taken advantage of the flexibility of remote work to jet off with their families and work remotely in seaside or mountain resorts. Holiday homes for teleworkers are a trend that will grow exponentially in a short time.

Benefits for "returnees" and retirees

The real estate market in Southern Italy, is particularly attractive for Italians, expats and those who decide to return to Italy. A law designated for "returnees", provides a significant tax discount for those who, after at least two years of residence in a foreign country, move their residence to Italy. Basically, it is a temporary reduced tax regime.

"In order for this reduction to be applicable", reads the Italian Inland Revenue website, "two conditions must be met: that the worker has not been a resident in Italy in the two tax periods prior to the transfer, and that they return to Italy to reside for at least two years, with their work activity carried out mainly in the Italian territory".

The discount on taxable income of repatriated workers is equal to 70% for 5 years. However, there are some things to be aware of: if residence is moved to a municipality in the South of Italy (to the regions of Abruzzo, Molise, Campania, Apulia, Basilicata, Calabria, Sardinia, Sicily), the reduction rate rises to 90%. Moreover, in the case of purchasing a property where the residence is fixed in one of the municipalities of the southern regions, this tax benefit is extended for a further 5 years. In simple terms, considering the low prices in this region of Italy, what you save on taxation would serve for the purchase of home.

A 7% taxation is also foreseen for pensioners who have resided outside Italy in the last 5 years and who move their residence to a small town in Southern Italy, towns in the regions of Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia with less than 20,000 inhabitants.