Stamp duty and capital gain tax applicable in Malta
Stamp duty applicable to first-time buyers
The normal Stamp Duty applicable when the property being bought is to be used as the purchaser’s ordinary place of residence, is usually charged at 3.5% on the first €200,000 and 5% on the remaining value.
Existing incentive for first-time buyers
The existing incentives being offered by the Malta government for First Time Buyers, you get away with paying no stamp duty on the first €200,000 of the property value and you only pay 1.5% on the remaining amount (up to a property value of €400,000). Any other amount above €400,000 gets charged at 5%. This enticement is only valid to first-time buyers who sign the property contract till end of June 2022.
It is good to keep in mind that no stamp duty is charged on the value of the movable property (furniture and fittings) being transferred with the immovable property.
Part of the stamp duty (generally 1%) must be paid on signing of the preliminary agreement. The balance is then settled on the signing of the final contract.
Tax exemption on sale and purchase of property that is vacant, located in a UCA, or built in a traditional style
Exemption from income tax on capital gains and duty on documents and transfers on the first €750,000 of the price of properties which:
- Were built more than 20 years ago and which have been vacant for more than 7 years;
- Are built in an UCA; or
- Are new properties and are built in a typical and traditional Maltese style and architecture.
This measure also applies to qualifying properties in respect of which a promise of sale has already been entered into as long as the final contract has not yet been signed.
Incentives for couples purchasing a property that is vacant, located in a UCA, or built in a traditional style
First time buyers buying qualifying properties will receive a grant of €15,000, increased to €30,000 in respect of properties situated in Gozo.
These measures are effective as from 12 October 2021 and will apply for all final deeds signed by 11th October 2024.
Grant on the value of VAT paid
As from the 12 of October 2021, anyone buying or already in possession of these types of properties will also be given a grant on the value of VAT paid up to a maximum of €54,000 on the first €300,000 incurred in restoration and finishing works.
This applies also to those who have already purchased property and are in the process of carrying out restoration works.
To prevent speculative activity and ensure that these measures are actually enjoyed by families, a set of regulations will be introduced, including that the property cannot be divided.
Extension of existing incentives for both buyers and sellers
The stamp duty reduction schemes applicable to first-time buyers, second-time buyers, and property acquisitions in Gozo will be extended by a further year.
Thus, the stamp duty exemption for first time buyers (exemption from stamp duty on the first €200,000 of the consideration), second time buyers (refund of duty paid on the first €86,000 of the value of the replacement property, or the first €150,000 in the case of persons with disability or guardians of persons with disability) and purchases of property in Gozo (rate of duty of €2 for every €100 or part thereof with respect to transfers inter vivos of residential property situated in Gozo) will be extended.
Stamp duty exemption for first time buyers on the first €200,000 has been extended until the end of 2022. This is equivalent to a maximum saving of €7,000.
Individuals who sell their home to acquire another residential property are eligible to a refund on stamp duty of up to €3,000 (or €5,000 for persons with special needs) provided that they do not own any other property at the time. This measure has been extended until the end of 2022.
If one purchases a property in Gozo before the end of 2022, the stamp duty will be reduced from 5% to 2%.
The reduction of the rate of stamp duty to 1.5% on the first €400,000 of the transfer value, and the reduction of income tax on capital gains to 5% on the first €400,000 of the transfer value will not be renewed and therefore will expire in June 2022.
Equity sharing plus scheme
This scheme is intended for those applicants who are unable to purchase their residence without the help of Housing Authority. The Scheme, entitled Equity Sharing Scheme will apply for persons over the age of thirty (30), who intend to buy their residence by purchasing at least fifty per cent of the property whilst the rest will have to be purchased by them at later stage. On the other side, the Housing Authority will purchase itself the remaining portion not purchased by the applicants which should not be more than fifty percent of the property. After twenty (20) years, the applicants will be obliged to purchase the Housing Authority’s share by paying the same price paid by the Authority Housing.
APS Bank plc, subject to all bank’s criteria being satisfied, will be granting applicants a maximum loan up to €160,000 to purchase a property in finished and habitable state or in shell form state which can be rendered to a habitable state at the total expense of €200,000.
Who can apply?
The following categories of persons, who on the date of the first publication of this advert in the Government Gazette, can apply under this scheme:
- one of the applicants must be 30 years old on date of application in case of married couples / two persons who have entered into a Civil Union;
- single parents over 30 years of age with an unmarried son/daughter or unmarried children living with him/her;
- one of the applicants must be over 30 in case of two persons applying jointly;
- single persons aged 30 years or over;
- legally separated persons over 30 years of age without children living with her/him the whole time.
- during the preceding year of application, the yearly income should not exceed the following maximum thresholds for both individuals and joint applicants:
35 – 39
30 – 34
Tax on private rent housing benefit scheme
The tax on the first €200,000 of acquisitions or disposals of property which have been rented out to tenants benefitting from the “Private Rent Housing Benefit Scheme” for a minimum period of 3 years but less than 10 to be halved. If the property has been rented to the acquiring tenant for more than 10 years, no tax shall be payable upon the acquisition and sale.
What is a Private Rent Housing Benefit Scheme?
Purpose of scheme
This Scheme provides a housing benefit to tenants on rent paid for premises leased as ordinary residence of the applicants and their family thus rendering the rent more affordable.
Qualification to apply for housing benefit under this scheme
A person shall qualify for a housing benefit under this Scheme, if the following conditions are satisfied:
- the applicant is a recognized lessee of the privately owned dwelling house on which the housing benefit is being applied for;
- the applicant must have entered into a contract of lease with the landlord on the residence he/she wishes to rent and must provide to the Housing Authority a copy of such contract.
The agreement must be of the following types:
- a lease agreement covering at least six months; or
- a contract of temporary emphyteusis not exceeding twenty-one (21) years.
Contracts of lease, which were entered into prior the coming into force of this Scheme, whether in their original period or after being renewed according to law, will only be considered if:
- the rent payable both before (for a period of at least six months) and after the coming into force of this Scheme is the same; or
- where the rent has increased, this has been the result of law, or as a result of a judgment of a competent court;
provided in both cases the Housing Authority is satisfied that there is no collusion between the parties; and
- the applicant is a Maltese citizen or an EU citizen, a person enjoying a refugee status, a person who possess the status of subsidiary protection, who enjoys a long-term residence status or who enjoys a specific residence authorization. In the case only of married couples but not separated, one of the couple must be a Maltese or EU citizen; and
- applicants are residents of Malta and have been so resident continuously for not less than eighteen (18) consecutive months immediately preceding the date of application; and
- in the case of married couples, two persons who have entered into a Civil Union, and who are not legally or de facto separated or more than three applicants together, the application for Assistance under this Scheme must be made jointly in solidum;
- the property is in a good state of repair and in a habitable condition;
- the lessor is an owner, or emphyteuta (provided that the relative emphyteusis does not exceeds twenty-one  years);
- the use of the premises for ordinary residential purposes is lawful and in accordance with the contractual obligations of the lease.
The benefit shall be based on the annual income of the applicants together with the rent being paid by them. The following table indicates the various categories of applicants who can benefit from this scheme, their maximum income permitted together with the maximum amount of housing benefit these applicants are entitled to:
Maximum Annual Income
Maximum Housing Benefit
Single parent with 1 child
Single parent with 2 children and more
Two adults without children
3 or more adults living together
Couple with 2 children and more
Couple with 1 child