Property Tax Malta

 
The 2015 Budget has brought in changes to the system of taxation applicable to the transfers of immovable property.

Presently (pre-2015 budget), the fiscal regime adopted in Malta is a choice between a fixed 12% rate charged on the total of the transfer value or otherwise a 35% capital gains tax charged only on the increase in the value of the property. Presently, the transferor is afforded a choice of regime to adopt depending on which is most tax efficient for him/her.

A number of changes have been announced in relation to the sale and transfer of immovable property in Malta. The key changes are follows:

1. Taxation on transfers of immovable property
   
   

With effect from 1st January 2015 the current system will be replaced by one final withholding tax of 8% on the value of the property transferred, with the exception of transfers of properties which were acquired before 1st January 2004 which will be levied an increased rate of taxation of 10%. Transfers of immovable property, made by individuals who are non-property traders within five years from the date of acquisition of such property will be subject to a 5% final withholding tax.

It will no longer be possible to opt out of the final tax system and therefore the option to be taxed 35% on the gain shall no longer be available. Furthermore, no deduction of expenses will be allowed in arriving at the transfer value. The tax is payable on the date of the contract of sale.

The current rules will continue to apply for transfers of immovable property if such transfers were already notified to the Commissioner for Revenue through a promise of sale or transfer notice registered up to 17 November 2014.

Tax Exemptions

• Exemption from stamp duty for First-time buyers

First time buyers are exempted from paying duty on documents and transfers tax up to a maximum property value of €150,000. The additional value will be charged at the rate of 5%.

• Tax Exemption on property divided between Co-Owners

A tax and duty exemption will be introduced for transfers between two individual co-owners where the property has been acquired for the purpose of establishing therein or constructing thereon their sole ordinary residence.

• Tax Exemption on property sold when this is sole ordinary residence

Current exemptions on transfers of immovable property such as transfer of property which has been occupied as a residential property (main home) and owned for at least 3 years shall continue to apply.

• Tax Exemption on property sold during separation of divorce proceedings

• Tax Exemption on transfers between intra-group companies

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