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Last Monday evening, the Finance Minister announced the Budgetary provisions for 2015, amongst which are some interesting incentives related to the real estate market.
Final Tax on sales of property
The highlight of these initiatives revolves around the final tax one pays when selling a property. The current system will be overhauled such that as from the 1st January 2015, the final tax when selling a property will be reduced from 12% to 8% of the transfer value subject to the following exceptions:
· Transfers of immovable property acquired prior to 2004 will be subject to a final withholding tax of 10% of the sales value (down from 12%);
· Transfers of immovable property by non-property traders with the first five years of acquisition will be subject to a final withholding tax of 5% of the Sales Value;
· In cases where the Promise of Sale (Konvenju) was registered before 17th November 2014 the current tax system will apply;
Certain existing exemptions available under the current tax system should also remain available under the revised rules. These include exemptions:
· on transfers of property used as a primary residence for at least three (3) years; although the budget speaks of a system to be introduced where individuals would be required to elect and state their main residence according to transparent rules and conditions.
· transfer of property between spouses following a separation or divorce;
· transfer of property between group companies.
Duty Exemption on property division between co-owners
A stamp duty exemption will be introduced for divisions of property where the owner acquires a share of the property which has the same value as that of the undivided portion of the property thereby facilitating property divisions without incurring excessive taxes.
The one-time exemption from the payment of duty on the first €150,000 of the property value which was given in 2014 for all those buying a property for the first time is now being extended for similar contracts signed till 30th June 2015.
In addition the Finance Minister confirmed that a 'White Paper' will be launched to discuss the regulation of real estate agencies and property consultants in Malta, a suggestion which Belair Property is keen to see implemented and to give our contribution to enhance the legal framework for our industry and improve the overall standard of property sales in Malta.
For more information kindly contact us on firstname.lastname@example.org or on 2011 8000 / 2014 8000