Real estate in Malta

Malta has a very strong domestic real estate market. Coupled with demand from buyers from overseas moving to the island and also for second homes for holidays, the prices have risen gradually in recent years.'Houses of Character' which need renovating are particularly popular among British buyers who renovate them and bring the homes back to their former glory, but there is a dwindling supply of these now and often the houses of character seen available for sale are already converted. Malta offers a good choice of apartments and villas for sale as well and there are many estate agents on the island.

Investing in Malta

Taxes or the lack of them is one of many good reasons to invest in property in Malta or Gozo. The followings are the advantages of investing in Malta

• No municipal taxes
• No federal taxes
• No provincial taxes
• No taxes on the purchase of a property except for a one-time 5% stamp duty
  

No tax is charged on the sale of property that has been the owner’s place of residence for three years. The stock market has certainly not been a good investing choice over the past few years and today more and more people are realizing the Real Estate Market is the place to be. Here are few more points on as to why invest in Malta;

• Malta is a member of the European Union
• Malta has a safe environment and is relatively crime free
• Malta is English-speaking (many Maltese also speak Italian)
• Malta has a great social life for all ages
• Malta has good year-round weather
• Malta has very friendly people
• Malta is politically stable
• Malta has high standards of education
• Malta has no religious or racial problems
• Malta is surrounded by beautiful blue sea
• Malta is accessibly located in the centre of the Mediterranean
• Malta has a low cost of living

Property buying Procedure

All property bought in Malta is subject to a 5% Stamp Duty which payment is due to the Commissioner of Inland Revenue. This percentage is based on the value of the property as stated in the Preliminary Agreement (Konvenju) and is paid in two stages. 1% at the time of signing of the Konvenju and the remaining 4% settled at the time of signing of the Contract of Sale.

Typically the time period between the signing of the Preliminary Agreement and that of the Contract of Sale is of three months. This time is required by the Notary Public, in most cases elected by yourself as the buyer, to conduct all necessary searches which would enable him/her primarily to confirm that: There is good title to the property (ie that the seller is the actual owner of the property and/or that he has legal authority to be selling that same property to third parties) and that it is not burdened by any liabilities such as hypothecs, special privileges etc. and that should it be the case then these liabilities can be waivered or settled by the date of signing of the Contract of Sale;

The property comes with vacant possession (ie that it's not currently being occupied by anyone else or that if it is it will still be vacated at the time of signing of the Contract of Sale); as well as that all other legal details pertaining to the property in question are in order. Moreover the Notary will also take care of registering the necessary paperwork required for the issuance of the Acquisition of Immovable Property (AIP) permit in cases where it is needed to complete the sale.

Stamp Duty dues are also paid (in the schedule as outlined above) through the Notary who also has the responsibility of registering both the Preliminary Agreement and the Contract of Sale with the competent authorities within the stipulated time frames thus rendering the said documents official and public. All relevant receipts as issued by the department of the CIR will be passed on to yourself as the buyer in due course in confirmation of these payments.

At this point it is also important to note that should the Promise of Sale Agreement lapse or otherwise get cancelled, the amount paid by way of Stamp Duty paid will be refunded in full.

Income Tax / Tax on Capital Gains: The good news regarding real estate in Malta is that the legal system does not impose wealth or property taxes, adding one more important advantage to buying property in Malta.

Renting out: In cases where income is derived from activity generated directly through the employment of the immovable property itself. In other words if the property is rented out resulting in revenue being generated through this activity then this revenue will become subject to taxes which as foreign nationals will be subject to the (still) very favourable flat rate of 15%.

Selling: The tax structure set out for this eventuality although simple to follow is detailed to explain and does not really fall within the scope of this document. May we kindly direct you to the specific document which you will find at the end of this link  for a full explanation of this structure.

Necessary Permits
When required the permit in question is termed as an AIP (Acquisition of Immovable Property) Permit. In the case where the property being purchased forms part of an SDA (Special Designated Area) Development and/or the buyer is a citizen of an EU Member State taking up residence in Malta, and/or the purchaser has spent a minimum of 5 continuous years living in Malta at any moment of his/her lifetime, no permit is required.

All other situations require the AIP permit which will be issued following a formal application through the Notary Public to the competent authorities. In most cases this permit is a formality and the process from application to issuance is between 6 to 8 weeks. Meeting the requirements is relatively simple and mainly depends on the verification that the funds being used for the purchase are of legal foreign origin and that the reason for the purchase is within the scope of the law.

All non Maltese nationals are bound to spend not less than the established minimums which at the time of preparation of this document stood at € 98,066 in the case when purchasing an apartment and € 174,703 for all other types of properties.

Non-Maltese citizens are not allowed multiple property ownership, unless within SDA (Special Designated Area) Developments as well as the ownership of properties of historical value (this category does not include farmhouses and houses of character). There is a vast number of SDA Developments distributed around the islands of both Malta and Gozo, typically offering superior quality standards of living, to choose from.

Purchasing Property in Malta - The Benefits
Resale of property is allowed; Repatriation of full resale price, including profits after taxes, is allowed without complications; (for a comprehensive explanation of the tax structure please refer to link mentioned above)

Mortgages are available for property purchase by non-residents or non-Maltese citizens residing in the islands: - once permission is granted by Central Bank of Malta, you can borrow as much as you wish from the local banks within the established commercial conditions.

You can rent out your property to third parties (some limitations do apply)

In summary, Citizens of an EU Member State enjoy the benefit that they can buy their first property in Malta without restriction. Permits are not required in most cases and when there are they are easily issued to all bona-fide purchasers without any major requirements.

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