News · Accounting · – 7 October 2026
By judgment no. 26363 filed on 7 October 2026, delivered after a public hearing because of the importance of the issue for the uniform interpretation of the law, the Tax Division of the Corte di cassazione (Italian Court of Cassation) laid down a principle of law on receivables for residential rents relating to investment-type properties, that is, properties neither used in the business nor held as trading stock. Under art. 90, paragraph 1, of Presidential Decree no. 917/1986 (TUIR, the Italian consolidated income tax Act), the income from these properties is included in business income according to the rules for income from land and buildings (redditi fondiari), and the cross-reference extends to art. 26 of the same decree, under which residential rents are taxable even if not received. It follows that losses on receivables for unpaid rents and additions to the allowance for doubtful receivables relating to those rents are not deductible, because a deduction would defeat the taxation laid down by art. 26. The Court held that the basis for this conclusion is not art. 90, paragraph 2, of Presidential Decree no. 917/1986, which concerns maintenance expenses and the expenses necessary to produce the income. It identified as the means of recovery the tax credit that art. 26 grants for the taxes paid on rents established in the convalida di sfratto per morosità (court confirmation of an eviction for rent arrears). In our view, this rules out the application of arts. 101, paragraph 5, and 106 of Presidential Decree no. 917/1986 to these items.
The principle, stated contrary to the submissions of the Procuratore generale (Prosecutor General at the Court of Cassation), concerns the text of art. 26 in force before the amendment made by art. 3-quinquies of Decree-Law no. 34/2019, converted into law by Law no. 58/2019. That earlier text made the exclusion from tax conditional on the completion of the confirmation proceedings. The current text excludes from income residential rents that have not been received, provided that non-receipt is evidenced by the intimazione di sfratto per morosità (eviction summons for rent arrears) or by the ingiunzione di pagamento (court order for payment), and art. 6-septies, paragraph 2, of Decree-Law no. 41/2021, converted into law by Law no. 69/2021, extends this effect to rents not received on or after 1 January 2020. In our view, the reasoning of the judgment remains relevant for unpaid rents not covered by such a summons or order, which remain taxable on an accrual basis; for those covered, which are excluded from income, a deduction of the loss would duplicate the relief. For non-residential rents, to which no exception applies, the conclusion is likely to be the same, without the tax credit. In the financial statements, art. 2426, paragraph 1, point 8, of the Italian Civil Code (c.c.) and paragraphs 59 and 60 of the Italian accounting standard OIC 15 require a write-down of receivables where it is probable that the receivable has lost value. Since the loss also remains non-deductible in future periods, the difference is permanent under paragraph 15 of OIC 25 and, under paragraph 39, gives rise to no deferred tax assets; the tax credit arising from the confirmation proceedings is recognised when its conditions are met.
Summary note by the CommercialistiAvvocati network, based on specialised legal and practice sources. The text does not reproduce original contributions and does not constitute professional advice.