Short-term rentals, comparison between big cities and villages: profitability and impact of new tax rules
The performance of short rentals varies between metropolises and smaller localities, influenced by property values and regulatory changes that may alter landlords' strategies.
by Dario Aquaro and Cristiano Dell'Oste
Short-term renting can yield more than 6% per annum, relative to the value of the house. But not always, not everywhere. Having avoided the 26% increase in the flat-rate tax on all short-rented homes, it is time to understand whether and how much this activity still pays off (even compared to other forms of investment).
With the flat tax confirmed at 21% on first home rental income, the novelty for 2026 is the lowering from five to three of the number of flats from which one is "entrepreneurs by law". A change whose impact can only be estimated for now, because it cannot be ruled out that landlords will revise their strategies to avoid opening a VAT number, for instance by diverting one or more houses to transient renting (lasting from one to 18 months).
Marco Celani, president of Aigab (Italian Association of Short-Term Rental Managers, ndr), takes a snapshot of the current market as follows: "According to our surveys, 2.5% of owners who engage in short-term rentals own three properties or more. There is a high incidence of joint owners: spouses or more often coheirs, mostly brothers. The weight on the total number of listings is about 8 per cent'. Locating these houses is not easy. According to Aigab's research office, 70 per cent of the multiple owners are in locations other than cities and 80 per cent of the multiple houses are in villages or in seaside and mountain resorts.
The geographical variable
It then becomes interesting to compare total takings and profitability between large cities and smaller localities. A one-bedroom apartment of 60 square metres in Palermo - with an average rate of 90 euros per night and an occupancy rate of 62% - generates a gross revenue of 19 thousand euros per year. A figure that translates into a nnet of 6 thousand euros (counting all expenses and the 21% coupon) and corresponds to a profitability of 6.6% when compared to the value of the property (92 thousand euros).
The results are not always so positive, as the calculations of the Aigab study centre show. The same two-room apartment in Area Navigli in Milan stops at 2.3%, despite a potentially higher occupancy rate (64%). This is because the higher value of the house also tips the scales. It is precisely the price of the property that drives profitability in smaller centres, often above the levels measured in large cities and tourist resorts. Suffice it to think of the 7.8% of San Severino Marche, which comes from a net of around 4,500 euro per year and a two-room apartment value of 57 thousand euro.
