Property and capital gains tax

I think that if you pay much more in Italy than in the UK,  that difference is lost and you cannot recover it.

The capital gain is due in Italy, therefore paid in Italy, In this case it has nothing to do with the UK, or where you are fiscally resident, as it is not a cross border tax - AFAIK

I am no expert but can only go from experience.  When we sold our flat in Italy there was no capital gains tax payable in Italy as we had owned it for more than 5 years.  However, as we were tax resident in UK then we had to pay UK CGT.  Do you mean that you have owned the property for less than 5 years?

    Ram said "The capital gain is due in Italy, therefore paid in Italy, In this case it has nothing to do with the UK, or where you are fiscally resident, as it is not a cross border tax - AFAIK" - ---------- However, this is a quote from the HMRC website, about CGT “Most assets are liable to Capital Gains Tax when you sell or dispose of them. These include shares, property, business assets and personal possessions - whether they're in the UK or overseas. But some assets are exempt – such as your car and, in most cases, your main home.”   So you probably are liable if you are a UK taxpayer

 but - as the poster is UK resident, then his Italian house cannot be his main home, but a second home, and not exempt.   By paying any capital gain direct to the notaio at the point of sale he would benefit from the preferential 20% tax rate.  However, you can opt to pay the tax yourself included in your tax return at whichever rate is applicable to you.  Some people - choose this route, leave the country and hope never to be discovered.  

Depends on what you mean by rebuild.  A new house on a piece of land incurs plusvalenza from the moment the build is finished.  A restoration does not necessarily incur plusvalenza unless you knocked it down and started again.  IT depends on how much work you did to the house, and whether it was substantially enlarged.