Real Estate / Immovable Property

General information
Acquisition of property in Malta mainly involves the entering into a preliminary (promise of sale) agreement, otherwise known as the 'konvenju' , the carrying out of title and ownership searches, applying for an AIP (Acquisition of Immovable Property by Non-Residents) permit , where applicable, and entering into the final deed of sale. Both documents, that is the preliminary agreement and the final deed (contract) and drawn up in front of a Notary Public who albeit an independent official, is engaged by the buyer.

EU citizens who have either resided in Malta continuously for 5 years may or EU citizens that are acquitting the property with an intention to establish their primary residence in that property need not apply for the AIP permit. EU and non-EU citizens that shall be acquiring immovable property within a Specially-Designated area also need not apply for an AIP Permit.

To date the Specially Designated areas are:

• Fort Cambridge
• Fort Chambray
• Kempinski Residences
• Metropolis
• Portomaso
• Ta' Monita
• Tas-Sellum Residence
• Tigne Point

Duty on Documents, more commonly known as Stamp Duty, at 5% is payable on the acquisition of immovable property. One per cent is payable on the signing of the Preliminary Agreement whilst the remaining four per cent is payable on the signing of the final deed. Sale of property is not subject to Value Added Tax (VAT).

Issues related to tax on Capital Gains
Property being sold that has been owned and occupied by the seller as the main residence for three years (and not vacated for more than one year) is not subject to capital gains tax or a final withholding tax by the seller.

If the above condition does not apply then the seller is subject to tax on the Capital Gain. The rate applicable is subject to the residence status.

Tax on capital gains is either at the applicable rate on the actual profit or a twelve per cent final tax on the sales consideration less agency fees. If the property has been acquired for more than five years (seven years during fiscal years 2010 and 2011), then the final tax only applies.

Transfers by foreigners / non-residents
In all cases of non-Maltese persons selling their property in Malta , the notary in charge of drawing up the deed of sale is required to notify the Commissioner of Inland Revenue in advance. The Commissioner may impose conditions on the transfer to the extent that the tax that may be due on the sale of property or any other tax that may be due is paid.

There is no restriction on the transfer outside Malta of proceeds from the sale of the property, subject to the payment of any outstanding tax. No VAT is due on the transfer of property. There are no net worth, real estate tax or any local taxes in Malta

At John Huber and associates we offer the following services directly related to immovable property and real estate matters. We are not affiliated with any specific estate agents thus ensuring that any third party advice opinion you require from us with regards to real estate purchase or rental is not partial or biased.

• Advice related to the tax implications, tax planning, tax compliance, capital gains computation and acquitting Inland Revenue's approval and authorisation for selling
• Negotiating and drafting of sale and letting contract agreements
• Recommending professional and experienced notaries for the promise of sale agreement and final deed of purchase or sale
• Representation on behalf of the client at the promise of sale agreement and on the final deed of purchase or sale
• Assisting buyers with AIP permits, if required
• Assistance during promise of sale agreement and on the final deed of purchase or sale
• Representation or appearing on one's behalf on all agreements

Any queries to be forwarded to info@johnhubermalta.com