Buying a Property in Malta

Once the property has been selected and price and conditions agreed upon, an appointment is set to sign the Preliminary Agreement or what is commonly known as ‘Konvenju’. This agreement binds both parties to purchase/sell the immovable property under the terms and conditions agreed upon. Upon signing of the preliminary agreement the buyer will be required to pay 1% provisional stamp duty as part payment of the full 5% which the balance is due on signing of the final deed and an agreed deposit which is generally 10% in such circumstances. In the case of those purchasing their first immovable property, the stamp duty on the first €150,000 has been removed as a concession, and calculated at 5% on the remaining balance of the property.

During the preliminary agreement

Notary Public carries out the necessary searches to verify legal title and to ensure that there are no outstanding debts, hypothecs or liens on the property. Purchaser is to complete all the special requirements e.g. organise bank loan, check on building permits, etc. as agreed upon with seller and stipulated in the preliminary agreement. Vendor will complete all special requirements e.g. complete the building, or finishing certain works etc. as agreed upon with buyer and stipulated in the preliminary agreement.

Once all the above has been completed by all parties concerned a date is set for the actual signing of the Final Deed. The venue of the signing will be held at the local banks legal offices in the case that one may be obtaining finance or at the office of the Notary Public. The final deed is read and agreed upon and the balances due will be paid accordingly. These are the balance of the selling price to the vendor; the balance due to the Commissioner of Inland Revenue for stamp duty as well as Notary fees to the Notary Public.

Non-EU Resident

If you are a foreigner to the European Union or if you are a Citizen of a European Union however the property you are purchasing is not for a prime residence in order to purchase a property in Malta there is a minimum price that one must pay for an apartment as well as for a house or a villa to be able to obtain an AIP (Acquisition of Immovable Property) permit which is granted by the Ministry of Finance and usually takes some 6-8 weeks. These prices are € 169, 205 for a house or villa and € 101, 551 (Lm43, 596) for maisonettes or flats.

Buying a Property in Malta as a primary residence

Citizens of all European Union member states, who have resided in Malta continually for a minimum period of five years at any time preceding the date of acquisition, may freely acquire more than one immovable property without necessity of obtaining a permit.EU Citizens, who have not resided in Malta for at least five years, but have the intention of purchasing their primary residence (take up residence in Malta), do not require a permit, under chapter 246, nor do they require a permit to purchase immovable property required for their business activities or supply of services.

Income Tax/ Tax on Capital Gains

The good news regarding real estate in Malta is that our legal system does not impose wealth or property taxes, adding one more important advantage to buying property in Malta which at the time of preparation of this document this regime was structured as follows:

Renting out

In cases where income is derived from activity generated directly through the employment of the immovable property itself. In other words if the property is rented out resulting in revenue being generated through this activity then this revenue will become subject to taxes which as foreign nationals will be subject to the (still) very favourable flat rate of 15%.