* Real estate transactions to rebound after 6-year fall
* Rome to reintroduce housing levy under new name
* House prices to fall in 2014-15 as market digest new levy
* Property tax was at centre of two last political campaigns
By Francesca Landini and Claudia Cristoferi
MILAN, Jan 14 Plans by the Italian government to
preserve a much-hated property tax, albeit under a different
name and structure, are likely to hamper the fledgling recovery
of the residential property market after six years of
Sector experts predict housing transactions in Italy will
increase this year for the first time since 2007, after which
the country was hit by the global financial crisis and
subsequently by its longest economic recession in 60 years.
But prices are expected to continue to fall, further eroding
Italy's private wealth - which is 60 percent invested in real
estate assets - and hitting bank balance sheets.
"The Italian real estate market is still on the mend and the
new tax system will reduce the profitability of buying a house
to rent it," said Mario Breglia, president and founder of real
estate think tank Scenari Immobiliari.
Property tax is a politically sensitive issue in Italy,
where 80 percent of citizens own the houses they live in, and it
has been central to the last two political campaigns.
Former centre-right leader Silvio Berlusconi won the 2008
general election largely because he promised to get rid of the
detested property tax, known as IMU, and forced the coalition
government of Enrico Letta to cancel the levy last year after it
had been reintroduced by premier Mario Monti.
However, since Italy's coffers are nearly empty and local
governments derive a big chunk of their resources from the
property levy, Rome has no alternative but to continue to tax
real estate, even though it will do it under a different name.
Revenues from the IMU tax totalled 24 billion euros in 2012,
of which 4 billion came from primary residences. Experts say the
new tax system, to be approved by the government over the next
two weeks, will raise no less than this amount.
Real estate expert Breglia said property transactions would
rebound by 10 percent in 2014 from a 30-year low in 2013.
But house prices, already down by 15 percent in nominal
terms since their 2006 peak, are expected to fall by a further
3-4 percent in nominal terms this year, said Luca Dondi,
director general of think tank Nomisma.
LIMITED WIGGLE ROOM
The new real estate tax, dubbed TASI, will affect both main
and secondary houses and will be tied to a tax on garbage and an
existing levy on secondary homes. The three taxes will all bring
resources for cash-strapped local governments.
While the entire taxation structure is still under
discussion, analysts expect the TASI to hit the purchases of
holiday houses or secondary residences.
"The introduction of a new and more complicate system will
be a drag for families wanting to invest their savings to buy a
non-primary houses even if prices have now reached attractive
levels," said Daniele Mancini, CEO at Casa.it, the most popular
Italian website for real estate.
Italy has seen purchases of houses halve since 2006, as the
sovereign debt crisis cut citizens' disposable income and made
access to loans more difficult and costly.
The number of property transactions fell in 2013 to 400,000
from more than 800,000 in 2006, when the market was enjoying a
buying spree. Analysts see them recovering to around 440,000
this year, as the Italian economy braces for 1 percent growth.
The government plans to leave to local authorities the
responsibility to decide both the tax rates of the TASI and
deductions for poorer families.
"The government has not the resources to do without a levy
on housing, so its wiggle room is limited," said Carlo Stagnaro,
chief economist at think tank Bruno Leoni.
"The new tax has a much more complicated structure that
Italians will have to digest," Stagnaro said, adding that
leaving to local authorities the power to decide the form of the
tax on their territory could even bring a net increase of the
fiscal burden on housing compared with the old system.
(Editing by Lisa Jucca/Mark Heinrich)