It seems Italian real estate will no longer be subject to an unpopular property tax following the country's latest election. Prime minister Mario Monti told SkyTG24 that he would alter the levy which his own government imposed. Former prime minister Silvio Berlusconi, who will be challenging Mr Monti, has also pledged to abolish the tax.

However, it currently seems that the honour of changing property levies and giving the market a much needed boost will not fall to Mr Monti. The prime minister, who was appointed in November 2011 after Mr Berlusconi quit amid a sex scandal, is currently leading an unelected right-left government. In a recent survey, it was revealed that the current formation is third in the rankings, behind a centre-right bloc led by Mr Berlusconi and a centre-left coalition led by Pier Luigi Bersani.

Nevertheless, the overriding feeling among those in the race for prime minister is that Italy's property tax has to be altered if recovery is to occur. Mr Monti explained to SkyTG24 that "taxes need to be cut", but stressed "no one should be making promises that cannot be kept". Analysts suggest that for the prime minister, this means a cut will not bring any revolutionary change to the measure, but will instead ensure that a greater proportion of the property tax is set aside for municipal governments, the Globe and Mail reported.

Whatever the reforms ushered in by the next government, they must help to reverse the downward trend in property prices. Like much of the rest of Europe, Italy is suffering from a price slump, with only prime real estate bucking the trend. In November 2012, Knight Frank's Italy Insight report revealed that demand for properties over €3 million (£2.4 million approx) was buoyant, at a time when the rest of the market has suffered 30 per cent falls since the second quarter of 2008. Knight Frank attributes this to a weakened euro attracting non-eurozone buyers from Russia and Belarus.



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