Pierre Faure Real Estate welcomes the budgetary measures related to the property sector announced by the government on the 12th October 2015.
The main points covered in the budget included new laws with regards to first time buyers, tax on commercial letting and incentives for properties in Urban Conservation areas.
First-time property buyers:
Any resident of Malta that has never purchased a property will have no stamp duty to pay on the first €100,000 . Basically this is an exemption from the payment of duty on documents up to a maximum of EUR 5,000 on their first property. This will apply retrospectively for preliminary agreements entered into as from 1st July, 2015. Those first time buyers who have in the meantime entered into a preliminary agreement and final deed of sale after the 1st July, 2015 will be refunded the duty on documents they paid.
This scheme has already proved extremely successful since it was introduced last year, boosting sales throughout all budgets and naturally giving a helping hand to lower earning individuals to get onto the property ladder.
Tax on Rental:
In 2015 the goverment announced that tax on residential letting will be reduced to 15%. This was well welcomed and a large amount of landlords registered their properties with the authrotities and declared their incomes.
In this years budget, complimenting the success of this lower rate in reduction, it has been announced that A 15% withholding tax shall also apply to rental income deriving from commercial properties or from property rentals to companies.
The law shall be amended so that in cases were properties have been inherited and a minority of the heirs do not wish to sell such properties, the properties may be sold after 3 years if the majority of the heirs so wish. Once sold, these properties will be registered on the Land Registration Area register.
The main aim of this measure is to release dilapidated properties which cannot be sold due to family or inheritance disputes, reducing the amount of vacant homes, embellishing areas which look unpleasant due to neglect and releasing more properties on the market without the need to construct them.
Special benefits for UCA’s
Purchasers of properties in Urban Conservation Areas shall benefit from a reduction in duty on documents to 2.5% instead of 5%,. Subject that the final contract of purchase is entered into between 1 January 2016 and 31 December 2016.
Urban Conservation Areas (UCAs) are important areas within the towns and villages in Malta with certain architectural value. These areas represent the identity of the various localities. Again we feel that incentives to persons that regenerate old properties into their original former glory is a good measure that should release properties that are high in demand without the need for modern blocks
On the same line, when a refurbished property in an Urban Conservation Area is re-sold, the Final withholding Tax shall now be reduced to 5%.
Stefan Consiglio – Office Manager – Pierre Faure Real Estate & Malta Property Auctioneers