Buying property in Malta, Selling Property in Malta

Tax Information

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 €200,000, 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 €200,000 of the value of a property, providing a unique opportunity to first time buyers to save up to €7,000. When buying a property in an Urban Conservation Area the purchaser, if qualified, does not pay stamp duty, as long as all the criteria are satisfied. It is always suggested to confirm with the notary to make sure that you have the latest updated stamp duty information.

Sellers

When Selling a property, the rule is 8% final withholding tax on the value of the property being transferred (For selling one's own residence, or inherited property or donated property, kindly see the relevant section below). Brokerage fees are excluded from tax. 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. With respect to properties acquired before 01/01/2004, the applicable rate is 10%. Other rules apply to transfers of property depending on the particular case at hand and the root of title. It is always suggested to check with the notary to make sure that you have the latest updated tax information.

Exemptions when transferring property

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.

Other exemptions

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.

Selling Property deriving from an inheritance or from a donation

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.