Buying property in Malta is a relatively straightforward process and starts with the signing of a contract known as a konvenju (promise of sale). This is basically a preliminary agreement that commits both the seller and the buyer to a specific time frame to finalise the sale, subject to certain conditions.
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After the konvenju has been signed, a notary public will carry out legal searches to verify the title deed and ownership. Checks will also be made to ensure there are no debts or claims against the property. Some Non-Maltese and EU citizens may have to apply for an AIP or Acquisition of Immovable Property by Non-Residents permit where applicable. The deed of sale is then finally signed.
EU citizens intending to acquire a property as their primary residence or who have lived continuously in Malta for five years do not have to apply for the AIP permit. EU and non-EU citizens buying immovable property in Specially-Designated areas also are not required to apply for an AIP Permit. The following places are currently Specially Designated areas:
- Kempinski Residences
- Fort Cambridge
- Fort Chambray
- Tigne Point
- Tas-Sellum Residence
- Ta’ Monita
Stamp Duty on Property
Five percent Stamp Duty is payable on buying property in Malta. On signing of the konvenju (Preliminary Agreement), 1% provisional stamp duty is paid by the buyer. The remaining 4 percent on the Stamp duty is payable when the title deed is signed. Value Added Tax (VAT) is not levied on property sales in Malta.
Tax on Capital Gains
Property used by the seller as the primary residence for three years and not vacated for more than one year, does not incur capital gains tax or withholding tax.
When the property sold has been the main residence of the seller for less than three years, the seller is subject to capital gains tax or a final withholding tax. The applicable rate is dependent on the seller’s residence status.
Applicable Tax Rates
The seller pays an applicable Tax on capital gains on the actual profit or 12 percent final tax on the selling price minus agency fees. A property acquired for more than five years (seven years during fiscal years 2010 and 2011), is subject to provisional tax only.
Transfers by Foreign Nationals
Notary publics appointed to draw up the deed of sale for non-Maltese persons are required to inform the Commissioner of Inland Revenue of the sale in advance. The Commissioner may have to determine if taxes are outstanding on the sale of the property.
Foreign nationals can repatriate the proceeds from property sales without restriction after all outstanding tax issues have been settled. No VAT is due on the transfer of property. There are no property or local taxes when buying property in Malta.