UPDATED: Fiscal incentives for property buyers and sellers: Stamp duty reduced to 1.5%; final withholding tax to 5%
UPDATE: The government plans to extend again the measure which reduced stamp duty to 1.5%. Acquirers will have until the end of July to sign a promise of sale and benefit from the reduced rate.
We’ll keep you posted about further announcements.
The government announced temporary financial incentives for Maltese property buyers and sellers as part of a COVID-19 economic recovery package launched on 8th June 2020.
Legal Notices 240/2020 and 241/2020, concerning the payment of stamp duty and property transfer tax, provide for the following revisions to the fees that must be paid for contracts that occur by 1st April 2021:
- Property buyers will see their stamp duty reduced to 1.5% from the present rate of 5%. Schemes that are currently in existence (such as First Time Buyers and UCA Scheme) can be used in conjunction with this rate of stamp duty.
- Property sellers will pay a final withholding tax of 5%, a decrease from the 8% / 10% tax currently in place.
These reductions apply to property values up to a maximum of €400,000.
Properties valued over this amount will have the reduced rates applied to the first €400,000. Any fees due over and above this amount will be calculated at the normal rates.
Donations of immovable property (under Article 32C of the main Act) are not subject to the revised stamp duty rates.
The new measures apply to transfers of immovable property made on or after the 9th June 2020, but before 1st April 2021. These transfers will qualify for the reduced rates if the notice of the final deed is given to the Commissioner for Revenue by 30th April 2021.
In a related announcement, the government said it will also amend the First time Buyers Scheme so that people who had previously bought any property that doesn’t constitute a residence (e.g. a garage) will be able to qualify for this scheme when purchasing a new home.