When Buying a property the rule is that a person has to pay 5% duty on the value of the property being transferred. No duty is charged on the value of movables or furniture contained therein. However, if a person is buying his sole ordinary residence, he pays duty at the rate of 3.5% on the first €150,000, and 5% on the remainder. If he already has a sole ordinary residence, he pays 5% stamp duty, but can claim a refund if he sells the first property within a year of purchasing the second. Currently, the Government is providing an incentive for first time buyers by removing completely the 3.5% stamp duty on the first €150,000 of the value of a property, providing a unique opportunity to first time buyers to save up to €5,250. This only applies if deed is published and registered by not later than 2017. Currently, when buying a property in an Urban Conservation Area the purchaser, if qualified, pays only 2.5% duty, as long as the transfer is made and registered by not later than 2018, and when purchasing a residence in Gozo the buyer pays a reduced duty of 2%.
When Selling a property, the rule is 8% final withholding tax on the value of the property being transferred. Brokerage fees are excluded. However, individuals who do not normally trade in property pay only 5% on the value of the property being transferred if the property is transferred before 5 years from date of acquisition. In the case of promise of sale agreements registered after 17/11/2014, with respect to properties acquired before 01/01/2004, the applicable rate is 10%. Other rules apply to transfers of property in respect of which a promise of sale agreement had been registered before 17/11/2014. These rules are subject to certain exclusions (such as when selling to the Government of Malta in terms of the Land Acquisition (Public Purposes) Ordinance, or in the case of property used for business for at least 3 years and is replaced within a year by a new property for the same business).
Donations to relatives
Donations made by a person to his spouse, to his descendant or ascendant in the direct line, or to the spouse of any such descendant or ascendant, or, in the absence of any descendants in the direct line, to his brother or sister or to a descendant of his brother or sister, or to a philanthropic institution approved for the purposes of article 12(1)(e).
TRANSFER OF OWN RESIDENCE
Transfer of own residence (if owned and occupied for at least 3 years preceding date of transfer). However, if own residence is transferred before the lapse of 3 years, the applicable rate is 2%.
Transfer to spouse
Assignment of property between spouses following a separation or divorce, or following the dissolution of the community of acquests or the partition of property between a spouse and the heirs of his/her deceased spouse.
- A transfer of property from one company to another forming part of the same group.
- The transfer of property upon the incorporation of a business or a partnership en nom collectif as a going concern into a limited liability company.
- The settlement of property on trust, or the distribution or reversion of property settled on trust, or the transfer of all the property of a trust involving only a change in the trustee of a trust and where there is no change in the beneficiaries or in the beneficial interest.
- A transfer of property by a company to its shareholder or to an individual related to its shareholder in the course of winding up or in the course of a distribution of assets pursuant to a scheme of distribution.
In the case of property deriving from an inheritance, if the property was inherited after the 24/11/1992, final tax is charged at 12% on the difference between the transfer value and the value declared on the transfer Causa Mortis. If, on the other hand, the property being sold was inherited before 25/11/1992, a final tax of 7% is charged. In the case of property deriving from a donation, if the property being transferred was acquired by the transferor by means of a donation made more than five years before the date of the transfer in question, tax shall be charged at 12% of the excess, if any, of the transfer value over its acquisition value.
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