Property related taxes

Malta Budget 2017

Deloitte Malta presents a summary and analysis of the Malta Budget 2017 speech presented to the House of Representatives by the Hon. Prof. Edward Scicluna, Minister of Finance on 17 October 2016.

Stamp duty exemption for first time buyers

Individuals buying their first residential property currently benefit from a stamp duty exemption on the first €150,000 paid. This exemption will be extended to acquisitions made in 2017.

Stamp duty reduction on Gozo properties

Persons who acquire a residential property in Gozo by the end of 2018 will benefit from a reduction in the stamp duty rate from 5% to 2% provided that the promise of sale agreement is registered with the Inland Revenue Department by the end of 2017.

Restoration grants for first time buyers

New schemes will be launched whereby first time buyers of immovable property situated within an Urban Conservation Area or certain scheduled properties will benefit from a grant of up to €100,000 on expenses incurred on the restoration of the said property.

Tax on transfers of inherited property

Transfers of inherited property made by means of a judicial sale by auction are currently chargeable to tax as follows:

  • 7% final tax charged on the transfer value if the property being transferred was inherited before the 25th November 1992; or
  • The applicable marginal rates on the gain derived (subject to 7% provisional tax) if the property being transferred was inherited after the 24th November 1992.

As a measure to simplify the tax collection process and to achieve parity of treatment between heirs, all transfers of inherited property by means of a judicial sale by auction will now be subject to a final tax at the rate of 7% on the transfer value.

Registration of rental contracts

Following the introduction of the favourable 15% tax regime on the rental of residential and commercial property, an anti-abuse measure is being introduced whereby all property rental contracts (including renewals) for a duration of at least three months, are required to be registered with the Inland Revenue Department either by the lessor or by the lessee. In the absence of registration, the lessor will be subjected to the penalties contemplated by law.

Disclaimer: This publication reflects high level announcements made in the Budget Speech on 17 October 2016, which are typically implemented through detailed legislative amendments and tax guidelines that have yet to be published. Clients are advised to seek appropriate professional advice following the publication of such detailed amendments or guidelines and prior to implementing any actions based on the information given in this publication.

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