Property related measures
Malta Budget 2016
- Extension of the stamp duty exemption on first time property buyers
- Vacant properties
- 15% final tax on rental of immovable property
- Capital allowances on office premises
Extension of the stamp duty exemption on first time property buyers
Until 30 June 2015 an incentive was in place for first time property buyers consisting of an exemption from duty on the first €150,000 of a property’s value. A new measure has been announced through which first time property buyers will benefit from a saving of up to €5,000. This measure applies retrospectively from 1 July 2015 and will continue to apply until the end of 2016.
Litigation between heirs in connection with inherited property is one of the principal reasons for the significant number of vacant properties. Currently, where a majority, but not all, of the heirs have agreed on an inherited property’s selling price, the property can only be sold after five or ten years from the inheritance date, depending on when the inheritance took place. As a measure to reduce the number of vacant properties, such properties that have been inherited or will be inherited in the future may be sold after the lapse of three years.
Another measure intended to reduce the number of vacant properties will be in the form of a reduction in stamp duty, from 5% to 2.5%, levied on transfers of property within an Urban Conservation Area (UCA), if the contract is executed between 1 January and 31 December 2016. Furthermore, the rate of final withholding tax that will be levied on transfers of restored property within an UCA, effected in 2016, will be reduced from 8% to 5%.
15% final tax on rental of immovable property
Income derived from the rental of residential property may, at the option of the taxpayer, be chargeable to 15% final tax.
This 15% final tax regime will now be extended to cover income from the rental of commercial property, but will exclude rents between related parties.
Capital allowances on office premises
Buildings that are eligible for capital allowances (tax depreciation) purposes currently comprise industrial buildings or structures, hotels, and car parks. This list will now be extended to also include office premises.