Property Tax in Malta

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Buying property in Malta is full of perks and privileges

climbing the property ladder means that you are making investments on the islands and hoping to turn a profit with future sales or rentals or securing a home to call you own.

But much like all products and services acquired in life, property comes with a tax percentage that needs to be calculated when looking to buy a property. The new rate of final withholding tax on property is 8% on the value of the property transferred. While this percentage has been in place since 2015, checking for recent updates before committing to a sale will ensure you have all the accurate information you need to make an informed decision.

If you are buying your property through the services of Simon Mamo Real Estate Agency, our experts will guide you and make sure you are always updated with the latest information before signing any contracts or leases.

Understanding Property Taxes

When buying property in Malta, two main taxes come into play: Stamp Duty and Capital Transfer Tax. Stamp Duty is borne by the buyer and is typically 5% of the property’s selling price. For first-time buyers, an exemption applies on the first €175,000. The Capital Transfer Tax, calculated on the market value difference, is the seller’s responsibility, ensuring a fair distribution of fiscal duties in property transactions.

Detailed Tax Breakdown

  • Stamp Duty: This is generally set at 5% of the property’s sale price, payable by the buyer. There’s a special concession for first-time buyers where the rate for the first €175,000 of the property price is exempt.
  • Property Transfer Tax: Properties purchased after January 1, 2004, are subject to an 8% rate, though this might vary based on specific conditions.

Notary Fees and Other Costs

Notary fees typically range between 1%-3% of the property’s sale price, depending on the notary you choose. The Acquisition of Immovable Property (AIP) permit, necessary for non-residents, incurs a fee, alongside registration fees and searches which might add up to around €60

The Process of Buying a Property

The process of buying property in Malta typically begins with signing a Promise of Sale (POS) agreement, outlining the terms and conditions of the sale. This agreement includes a deposit and sets a timeframe for the final deed of transfer. Following this, due diligence, such as searches and checks, are conducted. Once all conditions are met, the final deed is signed, transferring ownership, with the remaining balance and applicable taxes paid at this time. For a detailed guide, consulting a notary or real estate professional in Malta is recommended.

Government Incentives and Schemes 

Malta’s government provides several schemes to make property ownership more accessible, such as the First-Time Buyers Grant, which offers significant financial aid. For properties within Urban Conservation Areas or those reflecting traditional Maltese architecture, additional incentives are available, aiming to encourage the preservation of Malta’s unique heritage. Comparatively, Malta’s property tax system, with its specific buyer-friendly incentives, stands out in the EU for its support of homeownership and cultural preservation, offering a more advantageous environment for both local and foreign investors in real estate.

Comparative Overview of EU Property Taxes

In the EU, property tax rates and structures vary widely. For example, in France, buyers face notary fees and taxes up to 7-10% for older properties, with VAT at 20% for new builds. In Spain, transfer taxes range from 6-10%, plus additional notary and registry fees. Portugal’s property transfer tax varies based on property value and location, with significant tax benefits for primary residence buyers. Compared to these, Malta offers specific incentives for first-time buyers and those investing in heritage properties, making its real estate market attractive for its lower effective taxation and support for cultural preservation.

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FAQ

Is there no property tax in Malta?

Malta does not impose annual property taxes on homeowners, making it unique compared to many other countries.

Is Malta a good tax haven?

Malta is considered attractive for its favorable tax policies, especially for foreign investors and businesses, due to its effective tax rate and double taxation treaties.

How much tax will I pay in Malta?

Taxes in Malta vary based on transactions and income, with specific incentives reducing the tax burden for property buyers and investors.

Is Malta a high tax country?

Malta offers competitive tax rates, especially for property transactions, making it appealing compared to higher-tax countries in the EU.

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