Taxes to Pay When Buying Property in Malta

Real estate investment in Malta is an attractive proposition, both financially and politically. Not only can it yield high yields, but it can also help you and your family to obtain Maltese citizenship within 12 to 36 months. Find out the best info about Malta real estate.

But when buying property in Malta, certain taxes and fees will be attached to your purchase that must be paid as part of any economy and necessary for government revenue generation.

Capital Gains Tax

Capital gains tax (CGT) is a levy on gains accruing to people and companies when selling immovable property or shares in companies that own it, which are then factored into their taxable income for that year. Malta has specific rules which define which assets fall within the scope of CGT; exemptions may also be available depending on personal circumstances.

Maltese residents may be exempt from CGT when selling their primary residence in Malta, provided it had been owned and occupied as their only usual place of abode for three consecutive years before the sale (excluding periods spent away for work, holidays, illness, or study ). Their sale proceeds, including any profits, can be repatriated back home.

There are certain instances in which groups of companies can qualify for exemption from capital gains taxes, subject to meeting certain conditions and claw-back clauses. Furthermore, any residential or commercial property transfer is subject to a final withholding tax of 8%. This tax applies equally to both foreign residents and Maltese nationals alike.

Stamp Duty

Stamp duty is a property transfer tax charged when immovable property ownership changes hands, such as when buying property in Malta. This tax must be paid within 14 days after closing to avoid being subject to penalties from HM Revenue & Customs.

Stamp Duty is levied on transfers of immovable property between individuals at a rate of 5%. Stamp duty also applies to the inheritance of immovable property from non-EU citizens and to shares in Maltese companies or partnerships not considered property-focused (not being property companies or blocks). Stamp duty applies at two rates of 2% each time these events occur.

Before buying property in Malta, it is wise to seek professional assistance from professionals in various fields. In particular, hiring a notary public (for property searches and legal processes) and an experienced property law specialist lawyer are two musts for purchasing real estate here. Start searching early, and plan at least one trip to view properties personally in Malta.

Land Tax

Property taxes are essential to any country’s economy, contributing significantly to government revenue and providing buyers and sellers with an acceptable return on their investments. Malta is well-known for offering competitive property taxation systems that give buyers and sellers optimal returns for their investments.

When purchasing residential property in Malta, the first fifth of stamp duty must be paid when signing the original convened contract. A notary will conduct all relevant searches and ensure the buyer possesses a clear title before finalizing a purchase-sales agreement.

Once ownership of the property has been transferred from the seller to the buyer, notaries must submit a copy of the promise of sale to the Office of the Commissioner for Duty. A receipt for provisional duty is then issued; upon disposing of it again, it will be reassessed at progressive rates or 35%, depending on residency status.

Schemes have been put in place to lower stamp duty for properties located within Urban Conservation Areas or developed according to approved criteria, offering applicants looking for residency visas or citizenship through direct investment significant savings on stamp duty costs and making Maltese real estate even more enticing.

Sales Tax

Property taxes and fees are essential to any country’s economy, providing critical revenue streams that fund vital infrastructure projects and supporting overall market expansion. The Maltese system of property taxes stands out as particularly well-developed and practical, with several features that make investing and buying property advantageous experiences.

When disposing of long-term capital assets such as properties or land, such as in Malta, they may be subject to sales taxes which vary according to an individual’s tax bracket. Selling within one year of the initial purchase may qualify as short-term assets subject to different rates.

Transferring immovable property typically incurs a withholding tax of between 5% and 8%, depending on its circumstances. Non-residents can benefit from reduced withholding rates when they transferred property owned at the time of acquisition by them and used as their only ordinary residence or transferred directly to someone who immediately before its transfer occupied it as such a sole usual residence.

Rental income generated from properties in Malta is subject to progressive rates of up to 35%, depending on its amount. A unique tax scheme exists whereby all rental income, including interest payments and deductions, is brought under 15% taxation.

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