Budget 2022 highlights for property buyers: UCA grants and tax cuts, extension of stamp duty reduction for first-time buyers

Yesterday, the Government announced its budget for 2022, and included among the new measures were several incentives aimed to stimulate the property market in Malta.

The budget speech also confirmed that the stamp duty exemption for first-time buyers on the first €200,000 of their property value will be extended once more.

Promoting the conservation of older buildings

One of the most notable measures introduced in next year’s budget is the exemption from capital gains tax and duty on the first €750,000 of the value of properties which:

  • were built over 20 years ago and vacant for more than 7 years
  • are located in an Urban Conservation Area (UCA)

This exemption shall also apply to new properties built in a typical and traditional Maltese style and architecture.

Qualifying properties for which a promise of sale (konvenju) has already been entered into shall also benefit from this measure as long as the final contract has not been signed yet.

New incentives for first-time buyers

First-time buyers who purchase properties qualifying for the scheme above can also apply for a grant of €15,000 to help restore their home, while buyers of similar properties in Gozo will receive a grant of double the amount at €30,000.

Moreover, current and prospective owners of qualifying properties may alsobenefit from a VAT refund of up to €54,000 on the first €300,000 spent on refurbishment works.

These measures will enter into effect from the 12th of October 2021 for a period of three years.

Other measures for property buyers

The government has also announced that it will extend again the stamp duty exemption offered to first-time buyers on the first €200,000 of the value of the property, while second-time buyers will benefit from a refund of duty on the first €86,000 of the new property (the first €150,000 for people with disability or their guardians).

Transfers inter vivos of residential properties in Gozo will be chargeable at a rate of duty of €2 for every €100, or part thereof.

The reduction of stamp duty rate to 1.5% on the first €400,000 of the property value and lowering of income tax on capital gains to 5% on property transfers will not be renewed and shall expire in June 2022.