Lower Property Tax for the next few months as part of Malta’s multi-million economic stimulus package
On Monday 8th June, 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.
Reduction of property stamp duty to 1.5%
Buyers can now benefit from a reduced stamp duty rate of 1.5% from the current 5%. The measure can be availed of by all buyers who sign their property contract by end of March 2021. Pending promise of sale agreements can also avail of the stamp duty exemption. The measure applies for residential properties only and covers the first €400,000 of the property value.
First Time buyers will still be exempt from paying stamp duty on the first €175,000 of the price of the property, but the first-time buyers’ scheme will be adjusted so that those who had bought a garage would still be eligible.
First-time buyers eligible to apply for a €17,500 home loan from the government
First-time buyers between the age of 21 and 39 years can also apply for a government loan of up to €17,500 to assist them raise the 10% deposit usually asked for as a down payment when buying a property. The total amount planned for under this scheme is €3 million as declared in the October budget. Those given the green light will have to pay back the interest-free loan over a period of 15 years. Local banks BOV and APS have already agreed to partake in this scheme.
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 March 2021.
Down payments on 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 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.
In addition to the above measures, we would like to remind you of the following incentives still available.
Stamp duty on property set in Urban Conservation Areas (UCAs)
In the case of property set in Urban Conservation Areas the applicable stamp duty is at a rate of 2.5% as opposed to the standard 5%. This reduction has been extended into 2020 as part of the last budget.
Urban Conservation Areas refer to areas that are protected, preserved, and carefully managed. Generally, these areas are of special architectural or historic interest and it is desirable to preserve or enhance the character or appearance of such areas.
Furthermore, in the case of sale of property in UCA, the rate of final withholding tax that will be levied on transfers of restored property stands at 5% (instead of the standard 8%).
Stamp duty on property purchased in Gozo
Similarly, individuals acquiring residential property in Gozo can benefit from a reduced rate of stamp duty of 2%, as opposed to the standard rate of 5%.
Should you wish to discuss how you can avail from the above measures, feel free to contact any of our branches, or request a one-to-one no-obligation appointment. We would also be happy to arrange a video chat if you find this more convenient.