Let’s go back to talking about rents, and in particular, about the dry coupon, an always hot topic precisely because it collects the most disparate needs: you may in fact be interested in rentals as an owner-tenant, or as a potential tenant, but in both cases, it is good that you are adequately informed on everything that revolves around the subject of property rentals.
While reading, we will assume that you have already explored the topic of renting in its broadest and most basic sense, having therefore already read our guides dedicated to customer advice on this topic, so today we will focus exclusively on the topic of the dry coupon.
But how, you really don’t know what we’re talking about? Then you will have to run for cover and trust that at the end of the reading, you will be absolutely master of the subject.
In fact, we will explain to you what the dry coupon is, how the rental contracts to which it applies for work and why, in certain cases, it is really convenient to choose it.
Guide to the dry coupon: let’s start from the basics
The term “dry coupon” will certainly not be new to you, maybe you have heard it mentioned by the colleague who has just rented his property by opting for this solution, or read somewhere, who knows where on the web.
Now, however, the moment has come when the topic interests you personally, so let’s try to understand first of all what the dry coupon is, starting from its definition.
The term “cedolare Secca” means subsidized taxation applicable only by meeting certain requirements, to rental contracts between private individuals (therefore always a natural person and never a legal person or company) for residential properties.
As for commercial leases, in reality, the 2020 Budget Law did not extend what it was possible to do in 2019: the 2019 Budget law, in fact, had introduced the possibility of using the flat rate coupon at 21 % also for rents relating to commercial properties.
It will be the responsibility of the landlord of the residential property to opt for this solution as, since it is a simplified taxation, he will be the first to benefit from it.
In other words, the dry coupon allows you to apply a substitute tax with respect to ordinary IRPEF taxation, also replacing:
- the additional regional and municipal IRPEF;
- the registration tax;
- Stamp duty.
The dry coupon is governed by Legislative Decree No. 23 of March 14, 2011 and its subsequent amendments.
Is the dry coupon applicable to all lease agreements and to all types of real estate?
The rental real estate sector is certainly very vast but above all full of quibbles that you need to know thoroughly if you don’t want to risk running into unpleasant surprises once the contract is signed.
As for the dry coupon, after having understood what it is, we try to understand together with what particular requirements the properties and the contractual conditions must meet in order to be optioned.
In fact, if you are thinking of being able to choose this option with your eyes closed … well, keep reading, because this is not really the case.
As already mentioned, the owner of the property to be leased must declare that the housing solution in question meets certain requirements, before proceeding with this choice.
- Residential properties: belonging to categories A / 1 to A / 11, with the exception of category A / 10 which includes offices or private studios. It also applies to the related appurtenances leased together with the home and therefore garages, garages, cellars, parking spaces, etc., as long as they are mentioned in the contract.
- Commercial properties: as already mentioned, this possibility is no longer feasible, at least for the current year.
Contractual requirements to be able to take advantage of the dry coupon
After identifying the cadastral categories, it is essential to understand to which type of lease the dry coupon is applicable.
Although we have emphasized that the contractual agreement must be stipulated between natural persons, it should be noted, however, that the Law Decree on housing has introduced the possibility of opting for the coupon regime also for leases of housing units stipulated with cooperatives or entities without profit.
The prerogative, in the latter case, however, must be that the property is leased to university students with the renunciation of the ISTAT update.
Another type of contract that can apply this preferential taxation is that of short contracts, that is, those with a duration of less than 30 days. This is because, unlike all the others, on short leases, there is no obligation to register with the Revenue Agency.
Tax base and rate of the flat-rate tax
The rate of the dry coupon is:
- 21%, in the case of a free contract;
- 10%, in the case of a contract with an agreed fee.
The 10% rate was made “fully operational” by the 2020 budget law.
The tax base on which to apply the rate is given by the greater of the following amounts:
- rents accrued in the period of validity of the coupon dry;
- Cadastral income revalued by 5%.
The amount due must be paid in advance and balance, according to the terms provided for the IRPEF.
The advance is equal to 95% of the tax due for the previous year (it is not due in the first year of exercise of the option) and is due if the coupon for the previous year exceeds € 51.65.
The deposit must be paid:
- In a lump sum, by 30 November, if the amount is less than 257.52 euros;
- In two instalments, if the amount due is greater than 257.52 euros:
- the first, 40% (95%), by 30 June;
- The second, by the remaining 60% (95%), by 30 November.
The balance is paid by 30 June of the year following the one to which it refers, or by 30 July, with an increase of 0.40%.
For the payment of the dry coupon with F24, these codes must be used:
- 1840: Coupon dry leases – First instalment deposit
- 1841: Coupon dry lease – Second instalment or single payment
- 1842: Coupon dry leases – Balance
Probably, at this point of reading, after a slew of numbers and codes, you are wondering only one thing: but the dry coupon, in practice, what advantages does it bring to both contractual parties?
Here then, the answer to this question said between the lines of the paragraphs just read, is the following:
- The owner of the property, by choosing the dry coupon, renounces any update relating to the rent, and this means that for the entire duration of the contract he will not be able to make increases or changes to the amount initially agreed with the tenant.
- The advantages for the tenant: the dry coupon, also replacing the registration and stamp duty, relieves the tenant from the expense of this tax, generally charged by the landlord to the extent of 50%.
From theory to practice: here are the steps to take to apply the flat-rate tax to your lease
We are sure that you have a clearer and more complete picture of the definition of the dry coupon and its use in leases in Italy.
Now we just have to explain to you how to go from theory about all the information we have provided you to actual practice.
First of all, after having agreed with the tenant during the contractual discussion, the adherence to this facilitated taxation will be formalized during the contractual registration.
Here then, you will have to enter this specification in the RLI model which is used precisely for the registration of leases.
The renewal of this choice is not tacitly related to the contract renewal, which is why if you decide you want to use it also for the renewal of the rental contract, therefore after the first stipulation, it will be necessary for you to communicate this decision to the tenant by means of registered mail, at least 30 days before the expiry of the existing contract.
As for short contracts, i.e. shorter than 30 days, the choice of the dry coupon is directly applicable in the tax return phase, since it is not mandatory to register this type of contract.
What happens when the contract is extended or when the lease is terminated early?
Of course, it will be up to the landlord to take care of this. In fact, it is assumed that he has:
- Tax payments have been correctly made;
- Declared the rental income with coupon dry in the tax return;
According to the provisions of Legislative Decree 193/2016, it is envisaged that in the event of failure to communicate on the extension of the flat-rate lease agreement, the preferential taxation will not be forfeited if the taxpayer has maintained a consistent behaviour.
Coupon dry: are there cases in which “it is not convenient”?
The last point of this practical guide concerns precisely the possible cases in which using the dry coupon is not convenient (for the owner of the property).
In fact, since it is a fixed tax replacing the famous IRPEF brackets, there is perhaps only one condition in which presumably it is not entirely convenient at a tax level to choose the dry coupon.
The truth is that if we are talking about a tax subject with a not very high income in the declaration, then this choice will probably not bring the benefits that it guarantees in other cases.
Let’s explain: if you fall into a lower bracket that gives you the right to important tax deductions that reduce the part of income subject to tax, it is possible that the benefits that are lost on that portion of income subject to taxation with coupon dry, are higher if you remain in the ordinary IRPEF regime.
Everything will then depend on the “tax capacity” and the ability to reduce income taxes by taking advantage of the personal income tax deductions to which you are entitled as taxpayers.
This last point serves precisely to explain that the feasibility or otherwise of a similar choice will have to be assessed on a case-by-case basis, but more importantly, you should always let yourself be guided and advised by a licensed real estate agent who knows how to advise you with objectivity what is the best choice to make.
It is therefore clear that the dry coupon could potentially represent an excellent alternative in tax terms, but it is equally essential to know every aspect in order to better evaluate this important choice.