Update: Property Tax Incentives Extended Until December 2021!
: The local authorities have extended the tax incentives and reduction on property sales stamps until December 2021. This applies to the first €400,000 of a property’s value and is an extension of the savings measures that were announced mid last year.
First announced in June 2020, The Maltese Government unveiled a multi-million economic stimulus package expected to help Malta recover from the economic consequences of the COVID-19 pandemic over the next few months. The measures introduced are meant to ensure ongoing growth and prosperity over the years to come. The recovery programme also includes a number of property-related incentives that make the next nine months ideal to buy or invest.
“We have seen so much success come out from this measure that we have chosen to extend it again to those individuals who form a convenium by December of 2021, and subsequently be present for a final contract by June 2022,” Prime Minister Robert Abela said.”
The Malta Developers Association’s statistics reported that construction employed more than 40,000 people and that Promises of Sale have raised in excess of €1.4 billion for the past year, adding about eleven percent to Malta’s economy.
It was also reported that the prices of affordable property have remained stable for the first time in seven years. The incentives have proven invaluable in stimulating the economy during the pandemic and also had the added benefit of resulting in considerable savings for buyers and sellers.
Learn more about the tax incentive program:
Reduction of property stamp duty to 1.5%
With this government incentive, buyers can benefit from a reduced stamp duty rate of 1.5% from the current 5%. The measure can be availed of by Maltese and EU residents who enter a promise of sale by the end of 2021 (and subsequently sign the property contract by end June 2022). The pending promise of sale agreements can also avail of the stamp duty exemption.
First Time buyers will still be exempt from paying stamp duty on the first €200,000 of the price of the property.
The first-time buyers’ scheme was also adjusted so that those who had bought a garage would still be eligible.
Property Transfer Tax reduced to 5%
From the vendor’s side, property transfer tax has been reduced to 5% from the current 8%, for all contracts signed until end of March 2021.
Down payments on the purchase of second home retained at 15%
The Central Bank eased some of the proposed rules for the foreseeable future for those wanting to purchase a second property.
The minimum amount for down payments will be retained at 15% of the purchase price up to July 2021: earlier this was proposed to increase to 25% from the 1st of July this year.
The repayment burden threshold for borrowers was set at 40% of an applicant’s monthly income and this will be eased for six months on the condition that a borrower can prove that surpassing this limit is temporary. As it is one of the primary conditions for the approval of the granting of a loan by lenders/banks, this is completely at the discretion of the said lender or bank.
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