Derelict Properties and First Home Tax Relief: The Supreme Court Opens Up to F/2Buildings

With Ordinance No. 3913 of February 16, 2025, the Italian Supreme Court (Corte di Cassazione) has intervened on a matter that has sparked much debate in recent years: the applicability of the “first home” tax relief to the purchase of a derelict property, i.e., one registered under cadastral category F/2. This decision marks a clear departure from the previously restrictive stance of the Italian Tax Agency (Agenzia delle Entrate), which had denied the benefit in a prior ruling, arguing that such buildings, being uninhabitable and lacking cadastral value, could not qualify as “residential dwellings.”

The Legal Principle Affirmed by the Supreme Court

The Court articulated a clear and innovative legal principle:

“With regard to the first home tax relief [...], the benefit can also be granted to the purchaser of a derelict property, [...] as long as the purchased property is suitable, with the appropriate building works, to be designated for residential use.”

According to the Court, even a degraded or unusable property may fall within the scope of the tax benefit, provided that it can realistically be restored and converted into a residence.

The Position of the Tax Agency

Until now, the position of the Tax Agency had been far more rigid: in its view, the first home tax relief could not be applied to derelict properties, as these did not possess the characteristics of a residential dwelling nor could they be considered “under construction.”

The Agency distinguished between:

Properties under construction (cadastral category F/3), which are eligible for the relief; and derelict properties (F/2), which are not, as they are considered entirely unusable.

However, the Supreme Court rejected this distinction, deeming it overly formalistic and inconsistent with the spirit of the law.

The Supreme Court’s Rationale

The Court reiterated that the tax relief provision requires only that the property be destined, even in the future, for residential use, so long as it is not registered under the excluded cadastral categories (A/1, A/8, and A/9). Although F/2 denotes a building in disrepair or one that is uninhabitable, such classification does not in itself preclude the application of the tax benefit, provided that the property can reasonably be converted into a residence within three years of the purchase.

As clarified in the ruling, neither the structural degradation nor the need for demolition and

reconstruction disqualifies the property from eligibility. What matters is the purchaser’s intention (and the technical feasibility) to convert the building into a home. The Court held that a declaration of intent by the buyer to designate the derelict property as a residence is sufficient to access the relief—so long as the residential use is realized within the three-year term for verification by the tax office (Art. 76, paragraph 2, Presidential Decree No. 131/1986).

Ordinance No. 3913/2025 provides an important clarification and marks a significant interpretative shift in favor of taxpayers. In a context where the renovation and recovery of existing real estate assets is supported by multiple incentives (such as the ecobonus, superbonus, and sismabonus), the Supreme Court’s stance aligns with a systemic and coherent approach to real estate tax benefits.

With this ruling, the Court definitively overcomes a formalistic and restrictive view of the concept of "residential dwelling" reaffirming the principle that, for the purposes of the “first home” relief, what truly matters is the purchaser’s intent to use the property as a home, even when the property is derelict at the time of acquisition.