Property Related Budget Measures 2022

What’s New? The Malta budget 2022 for the local property market


Tax incentive for ‘Older’ type properties and property in Urban Conservation Areas

Malta Budget 2022 has introduced an interesting tax benefit for those looking to purchase property in Urban Conservation areas (UCA) and older type properties.  This incentive seeks to encourage people to embrace older buildings and restore and renew.

People who purchase property built more than 20 years ago and which have also been vacant for seven years, as well as, properties in Urban Conservation Areas (UCA) will be entitled to tax waivers both in the form of stamp duties for the buyer and sales tax for the sellers.  The same applies for new properties built in ‘typical Maltese Style’.

The scheme will be capped up to the first €750,000 of the value of the properties. Up to this figure no duties or capital gains tax will be charged and this measure will also apply for properties which are still under promise of sale agreements.

In addition, First-time buyers of such properties will also receive a grant of €15,000 which increases to €30,000 for Gozitan couples who wish to buy such properties in Gozo, thereby encouraging young people to continue to live in Gozo but more importantly to maintain its heritage.

These measures are effective as from 12 October 2021, for a period of 3 years.

VAT refund on renovation works

Malta budget 2022 will also seek to introduce a VAT refund up to €54,000 on the first €300,000 spent on renovation works for specific types of properties and those in Urban conservation areas.  Details of this scheme have still to be issued however, this measure is set to improve the overall environment in Village Cores.

In an attempt to avoid property speculation, such properties cannot be divided (as is the case when they are split up into a number of apartments) if they are to benefit from such schemes.

COVID – Economic stimulus package 

The reduction of the rate of stamp duty to 1.5% on the first €400,000 of the transfer value, and the reduction of income tax on capital gains to 5% on the first €400,000 of the transfer value will not be renewed and therefore all Promise of Sale Agreements (POS) will need to be signed by the 31st December 2021 to avail oneself of these reductions. Final deeds will need to be signed by June 2022.

Sale of rented property to existing tenants

Tax and stamp duty on transfers and acquisitions of property that was previously being rented to tenants eligible for any schemes administered by the Housing Authority shall be reduced by half on the first €200,000 of the value of the property. No tax and stamp duty shall be levied in the case of a transfer of the said property to the previous tenants.

Equity Share scheme extended

The ‘Equity Sharing Plus’ scheme shall be extended to persons over 30 years old and shall provide security for up to 50% of the value of the property.

The Equity Sharing Scheme previously applied to persons over the age of 40, who intend to buy their residence by purchasing at least fifty per cent of the property whilst the rest will have to be purchased by them at later stage. On the other side, the Housing Authority will purchase itself the remaining portion not purchased by the applicants which should not be more than fifty percent of the property. After 20 years, the applicants will be obliged to purchase the Housing Authority’s share by paying the same price paid by the Housing Authority.