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Buying Property in Malta (for 2019)

Malta has an established reputation for being a friendly, English speaking, sunny nation.

In recent years, the Maltese Islands have received an even bigger boost, with its reaffirmation as one of Europe’s highly lucrative property investment propositions.

Although the European property market witnessed a downturn, the Maltese real estate market has only strengthened its value, earning itself a coveted reputation; stable and highly lucrative.

Immovable Property in Malta is still supported by the Maltese legal system, one that does not enforce a levy on ownership or wealth. This fact has been a catalyst for attracting many foreigners to take up residence on one of the Maltese islands.

A new high-rise policy has fueled further growth in the property sector, giving rise to multi-storey, large-scale developments. 

Read more on relocating to Malta here.

In this article, we will provide some guidelines for those who are interested in living in Malta, but not quite sure how to go about it.

Buying Property in Malta

Where to Buy Property in Malta?

When investing in property, you should keep in mind the main key points;

  1. Location
  2. Profitability 

Even on an island as small as Malta, location is key. To maximise profitability, you should ensure that your investment is located in a popular area, which will attract potential tenants. The island is incredibly diverse, so researching different localities will help you make your decision.

Depending on your situation, you will have to factor in your individual needs. In the case of a young entrepreneur, you might want to be close to the hustle and bustle of Sliema and St.Julians, in close vicinity to restaurants, bars and nightlife. If you have a family, you might consider areas with a good school, public gardens and supermarkets.

The most popular areas for buying property in Malta provide stunning sea views, are close to all essential amenities, as well as benefiting from local transport routes. Purchasing an apartment or house in the following areas is a fantastic investment:

  • Sliema;
  • St.Julians;
  • Valletta;
  • Mellieha;
  • San Pawl tat-Targa; and
  • Madliena.

It is also worth mentioning the sister island Gozo. Buying a property in Gozo could prove to be highly profitable in a few years, with the prices for real-estate showing a steady rise.

Conditions for Buying Immovable Property 

In order to increase the mobility of the property market and incite further investment, the Maltese government has set a number of measures which has boosted the market to even higher levels.

Buying a Property in Malta as an EU Resident

A benefit afforded to EU citizens who have resided continuously on the island for a period of at least 5 years, is that you may acquire immovable property, as your primary residence or for business activities, in Malta without the need to apply for an Acquisition of Immovable Property (AIP) Permit.  

EU citizens who have not resided in Malta on a continuous basis for at least five years, require an AIP permit to purchase immovable property as a secondary residence.

Buying a Property in Malta as a Non-EU Resident

As a Non-EU Resident, it is still possible to acquire immovable property in Malta through an AIP Permit, as a primary residence. 

A body of persons (excluding that of a commercial partnership), established and operating in the EU, may freely obtain immovable property that is required for the purpose for which the said group has been set up, as long as its beneficiaries are EU citizens.

In the instance of commercial partnerships which have been established and operate in an EU member state, an immovable property may be acquired for the purpose of the commercial partnership, and a minimum of 75% of its share capital must be owned by EU citizens.

In any other case, a permit will be granted only for the purpose of an industrial or touristic project, or as a contributor to the development of the Maltese economy.

Referred to as Specially Designated Areas, these zones have no restrictions to acquire a property. The high-end areas include:

Fort Chambray, limits of Għajnsielem, Gozo; Madliena Village, Madliena; Portomaso Development, St Julians; SmartCity; San Lawrenz Kempinski Development, Gozo; Fort Cambridge, Sliema; Cottonera Development; Manoel Island/Tigne Point, Gżira and Sliema; Tas-Sellum Residence, limits of Mellieħa; Ta’ Monita Residence, Marsascala; Pender Place and Mercury House, St Julians; Metropolis Place Gżira; and Vista Point, Marsalforn, Gozo.

Buying a Property in Malta as a Non-EU Resident

Malta Property Transfer Tax System

One of the main reasons which draw foreigners to relocate to Malta is the highly appealing tax rates. These tax rates extend to the transfer of property to the new buyer at the time of transfer.

All transfers of Immovable Property in Malta are dictated by the final tax rule under article 5A of the Income Tax Act. By default, a rate of 8% final withholding tax is set on transfers of Immovable Property in Malta. 

Different tax rates apply to the following situations:

2% of the transfer value

Property transferred, which, immediately before the transfer was owned by an individual or two co-owners who had declared in the deed of acquisition that such property had been acquired for the purpose of establishing therein, or constructing thereon, his/her or their sole ordinary residence, and the transfer is made not later than three years from the date of acquisition. 

5% of the transfer value

Where the property being transferred does not form part of a project, as defined, and the property is transferred within five years from the date of acquisition.

5% of the transfer value

Transfer of property situated in Valletta. Which was acquired before the 31st December 2018, and where such property has been restored and/or rehabilitated and works are certified by the Malta Environment and Planning Authority (MEPA) before the 31st December 2018. Such transfer must not be made more than five years from the 31st December 2018.

7% of the transfer value

The restored property where a notice of promise of sale has not been given prior to the 17th November 2014.

10% of the transfer value 

Property acquired prior to the 1st January 2004 and for which a transfer of promise of sale has not been presented to the Commissioner of Revenue before the 17th November 2014.

 

12% final tax is applicable to the difference between the transfer value and the cost of acquisition for the transfer of inherited immovable property, or 7% final tax on the consideration if inherited before the 25th November 1992. 

In the case of transfer of immovable property acquired through donation, 12% tax on the profits made also applies where the transfer is made more than five years after the date of donation.

Exemptions to Property Transfer Tax

Certain transactions are exempt from property transfer tax. These include:

  • Donations made by an individual to specific family members, or philanthropic institutions;
  • Transfer of property which had been owned and occupied by the transferee or if the property was used as the individual’s primary residence for a period of three consecutive years immediately following the date of transfer; 
  • Assignment of property between spouses ensuing a judicial or consensual separation or divorce;
  • Assignment of property that constituted part of the acquisitions between the spouses or jointly owned;
  • Transfer of property from one company to another where the companies meet the requirements, such as forming part of the same group;
  • Transfer of property by a company to its shareholder in the course of its liquidation or distribution of assets, provided certain conditions are met.

Malta Property Transfer Tax System

What is the Procedure to Purchase Immovable Property in Malta?

Once the individual decides on a property he/she would like to invest in, then both the buyer and seller will enter into a written agreement, also referred to as a convenium (preliminary agreement). A copy of this agreement must be submitted along with the AIP application form.

Renting Property in Malta 

Renting out a property in Malta is a swift process, in fact, an agreement can be signed within a few days! Unless otherwise stated, a final tax rate of 15% on the gross rent receipts is applied. 

Generally, rental of immovable property is exempt from VAT, therefore no VAT applied on the lease of immovable property. 

However, exceptions to the rule do exist, which means that some property leasing may be subject to VAT. In such instances, the taxable person will be required to charge VAT according to the relevant rate, and also will be able to claim VAT on any expenses incurred in the maintenance directly related to the leasing of the property. 

Some of these include:

  • Letting of, or the provision of, accommodation in any premises which, for the purpose of the said letting or accommodation is required to be licensed in virtue of Malta Travel and Tourism Services Act. The chargeable VAT rate is 7%.
  • Letting of immovable property by a limited liability company to another Article-10 tax registered person where the property being leased is used for the economic activity of that registered person. VAT chargeable on such transactions will be 18%.

Real Estate Opportunities in Malta

The Maltese market has earned itself an envied reputation for being stable with excellent return on investment benefits.

More information

Special Designated Areas in Malta

Learn about areas where no distinction applies between Maltese and non-Maltese citizens.

More information