Malta Property - General Purchasing Procedures

If you are overseas it is possible to browse through the selection of properties Malta which are listed on our website. This list does not include all the properties listed on our database so we strongly recommend that you get in contact with our office for further information and assistance.

Once the property intended for acquisition has been selected and conditions have been agreed upon, a Preliminary Agreement is signed between the vendor and purchaser. This Agreement binds both parties to purchase / sell immovable property under terms and conditions agreed upon. The signing of the final deed is, however, always subject to good title being proved and the issue of any relative permits to purchase. The agreements and contracts are written in English.

The agreement is usually valid for three months (term prescribed by law) or as mutually agreed by the parties. Subsequently to the signing of the Preliminary Agreement but before entering into a final deed of sale, a notary would be engaged by the purchaser to carry out the necessary researches into the property to confirm there is good title into the property, vacant possession, etc.

Once the relative permit has been issued and researches have proved clear title to the property, the final contract of sale may commence - the deed of sale being drawn by purchaser's Notary. The balance of the purchase price and Stamp Duty plus legal expenses are paid on the signing of the contract when vacant possession to the property is handed to the purchaser. (1% of the stamp duty due is payable on the signing of the preliminary agreement.)

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Property Malta- Permanent Residency

EU Citizens intending to stay in Malta for a period exceeding three months must apply to the Principal Immigration Office for a Residence Permit.

Persons who stay for a period exceeding three months are required to show proof that their income will enable them to live in Malta without becoming a financial burden on the Government. Generally, residents are subject to local tax conditions only if their stay exceeds an aggregate of 182 days in one calendar year. They are subject to tax only on remittances to Malta emanating from income, since remittances of a capital nature do not attract tax.

Conditions to be fulfilled

A prospective permanent residence has to provide evidence that he is in possession of €349,406 / Lm150,000 which need not be remitted to Malta or a worldwide annul income of €23,293 / Lm10,000 per annum.
The annual income remitted to Malta must not be less than €13976 / Lm6,000 for one person plus €2,329 / Lm1,000 for each independent.

Investment in real estate limited to one owner occupied residence is compulsory. It can either take the form of ownership of residence valued at not less than €116,468 / Lm50,000 (€69881 / Lm30,000 in case of an apartment) or rent / lease of not less than €4,192 / Lm1,800 (plus 5% vat) per annum. The investment is to take place within 12 months from the date of permit. There are no other restrictions to capital investment in Malta.

Concessions

Exemptions from customs Duty and Vat

The following items may be imported free to duty and vat within six months from the date of arrival in Malta. No import licenses are required in such circumstances :
Household and personal effects
Furniture and other domestic articles

Fiscal

Permanent resident holders are taxed at a flat rate of 15% on income remitted to Malta, subject to a minimum tax rate of €4,192 / Lm1,800 per annum, after relief from double taxation.

Repatriation of Capital and Income
Any amount of capital brought to Malta and any income there from accumulated during resident’s stay may be repatriated. Proceeds from sale of residence may also be repatriated.

Application Procedure

• A certificate from the applicant’s bankers confirming this criteria and the ability to remit the minimum stipulated amount to Malta.
  
• Police or judicial conduct of certificate issued from the authorities of the country residence of the applicant. Three different character references from bankers, solicitor, medical practitioner, employer, accountant or person of similar standing have to be submitted if the conduct certificate is not available.
  
• Copy of birth certificate of applicant and dependants.
• Copy of marriage certificate if applicable.
  
• Three passport sized photographs of the applicant and dependants.
  
• Copy of deed of purchase or rental agreement if the property is already acquired / rented.
  

Expenses on selling or buying Immovable Property in Malta

The main expenses payable on the completion of the contract are :

Purchaser :

• Stamp Duty
  3.5% on the first €69,881 / Lm30,000 (Thirty thousand Maltese Liri) of the immovable property price. This applies only on the purchase of one’s place of residence and subject to the purchaser having only one property in his name. (This does not apply for non EU citizens)
  5% on the amount greater than €69,881 / Lm30,000 (Thirty thousand Maltese Liri) of the immovable property price or on the full price if the concessions mentioned previously are not applicable.
  
• Notarial Fees
  Approximately 1% of the immovable property price is paid to the Notary who is usually chosen by the purchaser to ensure that the property is unencumbered and that there are no general hypothecs by an individual or bank institution.

Vendor :

• Capital Gains Tax
  The following could be taken as a general guideline, since every case must be taken under its own merits. At the time of signing of the Final Deed of Sale a provisional tax amounting to 7% of the total selling price is to be deposited with the Notary Public to be passed on to the Commissioner of the Inland Revenue, with the following exceptions:

If the immovable property has been the registered main residence of the vendor for a minimum of three years and is being sold within a year of when it is being vacated.

A garage attached to or underlying the property being sold, even in cases where the property forms part of a block of flats.

A garage of not more than 30 square metres, not attached but situated within 500 metres of the residential property and transferred through the same deed.

These exemptions are granted by the Department of Inland Revenue upon application prior to the signing of the Final Deed of Sale.

As mentioned above the tax being paid at this time by the vendor is only a provisional tax. The definite amount due is calculated by computing the capital gains less a series of expenses sustained at the time of purchase as well as maintenance and inflation allowance, brokerage fees (limited to 5% of the selling price) and other eligible costs sustained during the time of ownership of the property in question.

This sum is then added to all other incomes of the vendor for the current year and the income tax for that year is calculated. Rebates or additional payments are then received or to be deposited as the case may be.

Should you require any further information or clarification on the above please do not hesitate to call our offices at any time.

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Conditions for Non-Maltese purchasing property in Malta

Individuals who are NOT citizens of a European Member State may acquire immovable property after they obtain the relative permit known as an AIP permit. This permit will usually be issued within six weeks and will be granted subject to the following conditions :

The value of the property purchased for an apartment must be above €69,881 / Lm30,000 and €116,468 / Lm50,000 in the case of a house. Should the property need any refurbishment or finishing then the amount to do so will be considered as part of the global minimum price.

The property has to be used only as a residence by the applicant and his family. (private guests may stay while owner is present). This condition will be altered once the applicant obtains the relative permit to rent the property.

The immovable property purchased may not be sold or otherwise converted into more than one dwelling house.

Non-Maltese citizens may only own one property in Malta and Gozo except in special designated areas where one may purchase more than one property. Eg. Portomaso (St. Julians), Chambray (Gozo), Tigne Point and Cottonera Waterfront.

Once these applicants have purchased a property and wish to acquire another one, they may do so after having sold the first property although they would need to obtain from the Ministry of Finance.

Citizens of all European Union member states, who have resided in Malta continuously for a minimum period of five years at any time preceding the date of acquisition, may freely acquire more than one immovable property without the 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 i.e. take up residence in Malta, do not require a permit, nor do they require such a permit to purchase immovable property required for their business activities or supply of services.

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Advantages of Purchasing Property in Malta

• Resale of property is allowed.
  
• Repatriation of full resale price, including profits is allowed without any complaints.
  
  
• Mortgages are available for property purchased by Non-residents or Non-Maltese citizens residing on the island.
  
• Renting out of property purchased is allowed if :
  Villa has a pool, if worth in excess of €232,937 / Lm100,000 and if registered as holiday accommodation with hotel and Catering establishment;
  
• Short lets only and tax payable on all rental income (15%)
  Maximum period to obtain an AIP permit is of approximately 2 – 3 months.

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Buying Property In Malta

Perry Ltd. having years of experience (established in 1981) is able to advise you on rules and regulations regarding property purchase in the Maltese Islands. All staff members are trained and qualified to provide professional customer service as well as to solve specific problems in choosing the property you desire. They are also able to guide you in seeking legal advice and turnkey solutions.

Property on the Maltese Islands can be divided into six residential categories namely apartments, maisonettes, terraced houses, villas, houses of character and farmhouses. We also maintain an extensive photographic record of available properties to assist clients in selecting properties to view.

As a first approach, before you start looking for immovable property, you have to consider the following:

• Where would you prefer to live?
  
• What type of property would you like?
  
• What size would suit you / your families requirements?
  
• Would you go for a more modern home or one with traditional character ?
  
• What services and amenities would you require? (transport and schools)
  
• Have an idea on your budget. How is the purchase going to be financed ?

On finding the right property and reaching an agreement on the purchase price with the owner, a Preliminary Agreement is signed between the vendor and the purchaser. This Preliminary Agreement binds both parties to purchase / sell immovable property under terms and conditions agreed upon :

• The agreed selling price
  
• Ground rent, if applicable, temporary or perpetual
  
• Extras included in the price (fixtures and fittings)
  
• Payment terms. Would you require a bank loan ?
  
• Works to be undertaken by the owner
  
• Terms and conditions of the Promise of Sale. (subject to loan, permit)
  
• Deposit on account. Usually the deposit is the sum equivalent to10% of the final selling price, paid as a sign of good will by the purchaser and of their intention to appear on the final deed of purchase. It is very important to ensure that this payment, in fact recognized by both parties as being a deposit and never termed as ‘earnest’ which is less binding as neither party can oblige to appear on the final deed of purchase. The penalty is limited to the sum of the earnest. This deposit is binding and should the purchaser not appear for the final deed of sale without a valid reason at law the sum is forfeited by way of liquidated damages in favour of the vendor.
  
  
• When will the final deed be signed? A Promise of Sale agreement unless otherwise agreed, is valid for three months.

During the period between the convenium and the final deed (contract), the following issues must be implemented:

• The Notary Public (chosen by the purchaser) will, within 3 weeks of the signing of the Promise of Sale, register the said Promise of Sale agreement with the Inland Revenue Department, at which time the purchaser will pay a 1% provisional duty on the contract value of the property being transferred. On the signing of the final deed the said provisional duty will be set off against the final amount of stamp duty due. Naturally, should the deal fail to materialize the purchaser will be refunded the said provisional duty in full.
  
• The Notary will also carry out researches on the property and verifies clear legal title, assuring that there are no outstanding debts, hypothecs or liens on the property.
  
• Purchaser is to complete all the special requirements. Eg. Organize bank loan, making sure that the property is covered by a building permit.
  
• The vendor will complete all special requirements. Eg. Completion of works agreed upon and finishings.

Should you require any further information or clarification on the above please do not hesitate to call our offices at any time.

Once all the above have been completed all parties get together to sign the final deed. Generally the procedure is as follows :

• If a bank loan is required then the final deed is signed at the bank’s legal office. Otherwise it will be signed at Perry Ltd or at the Notary’s office.
  
• Contract is read out and if all is in order, will be signed by all the parties concerned.
  
• The balance due (total selling price less previous deposit paid) is paid to the vendor.
  
• Purchaser settles the remaining balance due to the Commissioner of Inland Revenue by way of Stamp Duty (rate as described below) as well as the notary’s fees.
  
• Both parties settle their respective expenses due as described in detail below.
  

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Expenses on selling or buying Immovable Property in Malta

The main expenses payable on the completion of the contract are :

Purchaser :

• Stamp Duty
  3.5% on the first €69,881 / Lm30,000 (Thirty thousand Maltese Liri) of the immovable property price. This applies only on the purchase of one’s place of residence and subject to the purchaser having only one property in his name. (This does not apply for non EU citizens)
  5% on the amount greater than €69,881 / Lm30,000 (Thirty thousand Maltese Liri) of the immovable property price or on the full price if the concessions mentioned previously are not applicable.
  
• Notarial Fees
  Approximately 1% of the immovable property price is paid to the Notary who is usually chosen by the purchaser to ensure that the property is unencumbered and that there are no general hypothecs by an individual or bank institution.

Vendor :

• Capital Gains Tax
  The following could be taken as a general guideline, since every case must be taken under its own merits. At the time of signing of the Final Deed of Sale a provisional tax amounting to 7% of the total selling price is to be deposited with the Notary Public to be passed on to the Commissioner of the Inland Revenue, with the following exceptions:
  
  

If the immovable property has been the registered main residence of the vendor for a minimum of three years and is being sold within a year of when it is being vacated.

A garage attached to or underlying the property being sold, even in cases where the property forms part of a block of flats.

A garage of not more than 30 square metres, not attached but situated within 500 metres of the residential property and transferred through the same deed.

These exemptions are granted by the Department of Inland Revenue upon application prior to the signing of the Final Deed of Sale.

As mentioned above the tax being paid at this time by the vendor is only a provisional tax. The definite amount due is calculated by computing the capital gains less a series of expenses sustained at the time of purchase as well as maintenance and inflation allowance, brokerage fees (limited to 5% of the selling price) and other eligible costs sustained during the time of ownership of the property in question.

This sum is then added to all other incomes of the vendor for the current year and the income tax for that year is calculated. Rebates or additional payments are then received or to be deposited as the case may be.

Should you require any further information or clarification on the above please do not hesitate to call our offices at any time.

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BOV Homelink

Seeking to purchase a new home or a second residence? The BOV Home Loan service is a versatile package that places our knowledge and experience at your disposal, to assist you in finding the appropriate financial option for your choice of property.

BOV Home Loans are based on simple borrowing principles, which give you more control over the type of loan you take. When you approach BOV personnel, you will find that we are prepared to give you a step-by-step guide of how the house loan process works, as well as down to earth advice on the type of loan that best meets your requirements. Our staff's practical experience is offered to you in a professional and friendly manner.

Whether you're buying your first home, moving home, making improvements, or considering a summer or second residence, you will find their range of home loans broad enough to suit your individual needs.

Choose your type of loan - click on:

• Homelink Savings for more details about how to start saving up for your future home
  
• Homelink Success for home loans of up to €81,528 / Lm35,000
  
• Homelink High Value Loans for home loans over €81,528 / Lm35,000
  
  

The choice of your home loan is as personal as your choice of home - so before you make a move talk to Bank of Valletta by visiting any BOV Branch or by calling on 2131 2020.

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HSBC Homelink

Click Here to see what HSBC can offer you.

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Volksbank Homelink

Click Here to see what Volksbank can offer you.

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