Stamp Duty on the Acquisition of Immovable Property in Malta.
What is the standard rate of duty when purchasing immovable property in Malta?
A standard rate of duty of 5% (of the value) applies on the purchase of immovable property. In terms of the payment of this amount, 20% is payable upon the signing of the Promise of Sale, with the rest to be settled upon the signing of the purchase contract.
Does this apply even when I am purchasing my sole ordinary residence?
In the event that the purchaser is acquiring his/her sole ordinary residence, a reduced rate of 3.5% (of the value), applies on the first Eur 150,000 of the purchase price with the standard rate of 5% levied thereafter.
What if the property I am purchasing is located in an Urban Conservation Area (‘UCA’)?
In this case duty shall be applicable at a rate of 2.5% as opposed to the standard 5%. This reduction has been extended into 2020 as part of the last budget.
Are there any exemptions for the payment of stamp duty?
A stamp duty exemption applies for individuals who never owned immovable property before and purchased the property as their residence. The exemption applies on the first Eur 175,000 of the value of such property (increased from Eur 150,000).
Exemptions also apply:
- In cases where property is assigned between spouses or former spouses, consequential to a judicial separation or divorce, or dissolution of the community of acquests.
- Transfer of ordinary residence between spouses.
- Upon the death of one spouse on the partition of property between the surviving spouse and heirs of the deceased spouse.
- Intragroup transfers of property
What if I am a second time buyer?
To the extent that an individual does not own any other property, such individuals who sell their first residential property to acquire another residential property are currently eligible to a refund of stamp duty of up to Eur 3,000 (or Eur 5,000 in the case of disabled persons).
Are there any benefits from a duty perspective when purchasing property in Gozo?
Yes, individuals who purchase property in Gozo are subject to stamp duty at 2% on the acquisition (as opposed to the standard 5%).
Does duty apply if I donate my property to my descendants?
In the case that this donation was made in order for your direct descendants to establish their sole ordinary residence, no stamp duty should be chargeable on the first Eur 200,000 value of the property transferred. Duty shall be applicable at 3.5% on the rest of the value.
The above is subject to certain conditions and is subject to ‘claw backs’ in the event the donated property is disposed of within 5 years from donation.
This blog was written by Zanzi Homes Co – Founder Michael Mercieca. Should you have any queries please do not hesitate to contact Michael on firstname.lastname@example.org or on 2010 8777.