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Buying a property in Malta & Gozo

Malta is graced with a vast range of unique and authentic property, spanning from stylish apartments to historical palazzos and quaint farmhouses. Our small archipelago is limited in space; and throughout the year of development of our Maltese islands the demand for property has consistently risen and future projections indicate a continued growth in demand.

Kicking off your property hunt with an experienced real estate agent gives you a broader perceptive of the ins and outs of the current availability in the market. After a few viewings if your demands have been clearly understood then your property, your future home has been already chosen. Typically a formal offer would be made through the real estate agency to the seller. Once the offer is accepted, a notary appointed by the buyer is asked to draft the 'Promise of Sale,' an agreement which is signed by both parties stipulating all conditions of purchase including a deposit on account of the purchase price, bank loan if applicable and the duration until the parties must appear on the final deed of sale.

Here is some information on what to expect during the Promise of Sale.

The promise of sale should contain the following information: details of all the parties involved, a detailed description of the property including plans, the period for which the agreement is valid, the agreed price of the property, details on whether the price includes furniture, as well as other terms and conditions agreed upon between the parties. When the purchaser will be applying for a bank loan, the Promise of Sale should include a clause that states that the agreement is conditional to such bank loan. 

During the promise of sale the vendor should provide the following :
- A personal identification document such as a passport or Identity Card
- The property’s building permit as well as the block plan
- A copy of the contract of purchase which states how the property in question was acquired. In case the property was inherited the vendor also has to provide details about the date of death of the deceased from whom the testamentary disposition originated, a copy of the deceased’s last valid will and the deed of declaration of transmission causa mortis.
-If the immovable was acquired during marriage both spouses need to be parties to the transfer and their date of marriage is also requisite.
Power of Attorney in case the seller cannot be present during the agreement.
- In the case of a company, a copy of its Memorandum and Articles of Association or Resolution of the Board of Directors enabling such person to represent such company is needed.

If the vendor is not a Maltese national he/she also has to provide a tax registration number.

The prospective purchaser should provide the following:
-A personal identification document such as a passport or Identity Card
-A cheque to pay 1% of the purchase price on account of Duty on Documents
-A 10% deposit on the purchase price. This cheque is to be handed to the notary and will be redeemed at a point agreed between both parties, usually after the final deed is signed.

The duration of a promise of sale is agreed between the parties. Normally it is about three months. In other cases the duration may be extended to a maximum of six months, particularly in relation bank loan issues, issues with inheritance settlement, properties which are still being constructed or in the case where land is being sold with pending permits. During the period between the Promise of Sale and the Final Deed, the notary will carry out research on behalf of the prospective buyer. The notary normally checks: 

- that nobody has any legal obligations to obstruct the sale
- that there are no pending debts linked to the property
- that the vendor has a good title into the property
- that the construction is in observance of MEPA regulations
- that the property is not tied to any settlement issues. 

During this period the seller should provide the Notary with any additional information or documents that may have been requested (for instance for the detailed plans for the purposes of the land registry, any wills or death certificates, letters cancelling hypothecs from banks, documents for the purposes of tax computation etc.) in the shortest time practicable.

It is also important to ascertain, prior to the final contract, that any pending bills for electricity, ground rent, water, telephone or television/cable have been paid. Receipts are to be presented at the drawing of the final deed.

At promise of sale stage, the vendor is not obliged to provide the key of the property to the buyer, however the owner may ask for permission to revisit the property.

If the buyer is obtaining a loan from a local bank to purchase the property, the signing of the contract will take place at the Bank’s offices. During the contract, the following should be present: the buyer, the vendor, the notary appointed by the buyer and bank representatives. The final deed is read together, signed, payment is made and the vendor passes on the keys to the new owners.

Selling Taxes
The sale of an immovable property in Malta is subject to taxation which is imposed on the person that is transferring the property to the other party.

i. Taxes if property is being sold as a residence
The Final Withholding Tax is typically charged at a rate of 8% of the sale price (not the profit). Payment is made to the Notary during the selling process who then passes it onto the Inland Revenue.

ii. Taxation in case of inheritance
For those individuals who inherited the real estate in which they currently reside, stamp duty is paid at a rate of 3.5%, for a maximum property value of €175,000. This is an increase from the previous maximum property value of €150,000.

iii. Taxation in the Case that the Property is in an Urban Conservation Area
The acquisitions of properties situated in a UCA are subject to a reduced stamp duty rate of 2.5%, as opposed to the standard 5%.

iv. Selling an investment
Income and capital gains earned by companies are generally taxed at a flat rate of 35%. Income-generating expenses are deductible when calculating taxable income.

Tax & Stamp Duty Incentives Extended Until December 2021

•    Income tax on the sale of property will be reduced from 8% to 5% for the first €400k on contracts
•    Stamp duty will be levied at 1.5% instead of 5% for the first €400k on contracts

Applicable on all purchases of property for those individuals signing a promise of sale agreement by December 2021, and the final contract by June 2022!

The Gozo Property Scheme

When acquiring residential property in Gozo by end of 2021, the Maltese government offers a 2% Tax benefit. Duty has been reduced from the standard rate of 5% to 2%. The Promise of sale agreement must be registered by December 2021 for this incentive to apply.

Contact us now
Engel & Völkers
Licence Partner Malta Regional Market Center
  • Triq L-Esportaturi Central Business District, Zone 3, Mriehel
    CBD 3010 Birkirkara
  • Phone 79494884
    Fax: +356 2347 0199

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0900hrs - 1300hrs Saturday

Sunday Closed

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