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Buying and Selling Property in Malta and Gozo
Procedure of Property Purchase in the Maltese Islands
A local estate agent will typically accompany clients to visit all properties selected by themselves or the agent.
Once a property to the liking of a client is identified and an offer is made and accepted, as well as terms and conditions are agreed upon - then a preliminary agreement (Konvenju) is signed. This is an agreement whereby the vendor and the purchaser bind themselves to sell or to buy the property at an agreed price and within an agreed timeframe.
A deposit (typically but not specifically 10%) is paid and is held by the notary, estate agent or vendor depending on what has been agreed.
The preliminary agreement (Konvenju) is usually written by and signed in front of a notary - being the only official allowed at law to publish deeds.
The agreement may be subject to some conditions (e.g loan, architects approval etc.,) as agreed by the parties, but a time frame is usually given within which these are valid so as not to leave the vendor in uncertainty for too long.
Once the notary has carried out the searches on the title of the property, and bank loans are approved - then the contract can be signed.
A loan would involve a sanction letter and it is important that all insurances are taken out and conditions of sanction are met well before contract due date to avoid last minute hiccups.
A typical time frame between preliminary agreement (Konvenju) and contract is 3 - 6 months. This time frame can be much longer or shorter as part of negotiations.
If a bank hypothec needs to be cleared on contract, then the contract will usually be held at a bank - although the notary might collect funds due to the bank him/ herself, in which case this would not be necessary.
If a loan is to taken out to purchase the property, then the contract will be held at the issuing bank.
A preliminary agreement or promise of sale must be signed undertaking to purchase a property of not less than € 104,509 in the case of an apartment or maisonette, and not less than € 174,333 for a house or any other type of residential property. Naturally, properties in shell form or requiring renovation may be purchased at lower figures, provided that the estimated cost of works for completion (as confirmed by an Architect) plus purchase price total not less than the € 104,509 in the case of an apartment, and not less than € 174,333 for any other type of residential property. The thresholds are adjusted on a yearly basis according to the inflation rate.An A.I.P. (Acquisition of Immovable Property) Permit (cost €233) is required from the Ministry of Finance and is normally granted within 2 months of application. The Notary Public will apply for the permit after a promise of Sale Agreement has been signed.
A non-resident may sell his/her property to another non-resident, provided that efforts have been made to find a local buyer. Once again, approval is required from the Ministry of Finance.
Moneys for the purchase have to originate from a source outside of Malta.
Properties having historical value or listed as part of the Island's heritage may not be purchased by non-residents. This does not apply to most farmhouses and houses of character on the market.
No Stamp Duty is charged on the value of the movable property (furniture
and fittings) being transferred with the immovable property.
Purchase Expenses
- Stamp Duty as per table below:
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Local
First Time Buyers
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3.5% on first
€116,468.66 and
5% on the remainder
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EU
citizen taking up residence in Malta, having sold overseas properties
and having Malta Property as sole residence
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5%
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|
Local
second time buyer who has sold first residence and is buying as
primary residence.
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5%
|
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Donation of property by parents to their children |
3.5% on one donation of such property by parents to children (other rules apply) |
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Transmission of a persons ordinary residence to surviving spouse |
Nil (as long as property not sold by surviving spouse) |
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All
other cases
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5%
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Causa
Mortis
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5%
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- Notarial Fees
Selling Expenses
- Agency Fees as agreed
- Capital Gains if applicable as per table below:
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Title
of Transferor
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Provisional
Tax on Capital Gains
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Final
Witholding Tax
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|
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Deriving
from Inheritance prior to 25th November, 1992
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7%
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||
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Deriving
from Inheritance after 24th November, 1992
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12%
on difference between value declared in causa mortis and deed of
sale.
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||
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Deriving
from Partition of property which itself related to inheritance prior
to 25th November, 1992
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Vide
Category 1
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||
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Deriving
from Partition of property which itself related to inheritance after
24th November, 1992
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Vide
Category 2
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||
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Deriving
from Donation over 5 years prior to deed of sale
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12%
of sale price less value of donation
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||
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Deriving
from Donation less than 5 years prior to deed of sale
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12%
of sale price
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||
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Property
regarding which konvenju registered prior to 22nd November, 2005
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7%
provisional as long as deed published prior to 31st March, 2006
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Else
12% of sale price
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|
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Property
owned less than 5 years prior to deed of sale
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either
7% provisional
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or
12% of sale price
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Property
located in a specially designated area, regarding its first transfer.
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either
7% provisional
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or
12% of sale price
|
|
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a)
Exemption issued by CIR ;
b) Donation by family to family members; c) Ownership and residence for over 3 years; d) Transfer by engaged couples of ½ share to the other party; e) Property assigned in a separation agreement. |
nil
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nil
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|
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All
other categories
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12%
of sale price or 35% Capital gains if owned for more than 5 years
(extended for 7 years from 2006)
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||
Acquisition of Immovable Property Permit
Foreign purchasers might or might not need permission from the Ministry of Finance (AIP Permit). See table below or go to www.aip.gov.mt for more info:
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AIP
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Required
or Not
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Number
of properties allowed
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EU
citizen buying a holiday home
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AIP
Required
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1
|
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EU
citizen buying home as full time residence in Malta and registering
for NI, tax etc in Malta.
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NO
AIP Required
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1
|
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EU
citizen having lived in Malta for a period of over five years and
registered for NI, tax etc., in Malta.
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NO
AIP Required
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unlimited
|
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Non-EU
citizen buying property in Malta for whatever reason.
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AIP
Required
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1
|
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Maltese
citizen or passport holder having lived here for a period of five
consecutive years.
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NO
AIP Required
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unlimited
|
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Maltese
citizen or passport holder having lived for less than five years.
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AIP
Required
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1
|
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After
five years living in Malta
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NO
AIP Required
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unlimited
|
|
Special
Designated Areas
|
||
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Maltese
or EU citizens irrespective of number of years in Malta, whether
living permanently or not.
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NO
AIP Required
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unlimited
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Non-EU citizens
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NO
AIP Required
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unlimited
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