Once the property and the price are decided upon between the parties a promise of sale agreement/ preliminary agreement (konvenju in Maltese) is signed binding the vendor to sell and the purchaser to buy the property in question subject to the satisfaction of certain conditions. The terms and conditions are generally agreed upon beforehand and the sale would typically be subject to good title and issue of all relative development permits (should any be required). The agreement is typically valid for a period between three and six months as mutually agreed by the parties. Subsequently to the signing of the 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 that the vendor has a good title into the property and vacant possession, amongst other.
In practice, the notary who drafts the promise of sale agreement would be responsible for such searches.
Within three weeks from when the promise of sale is signed, the deed needs to be registered by the notary and the duty of 1% (of the purchase price) is paid to the Government. The amount for the duty would be either given to the notary by the purchaser or alternatively given the notary by means of a cheque payable to the Department. The notary also needs to file the relative form at the Department together with site-plan and the capital gains tax (which is to be paid by the seller).
For non-residents looking to purchase a home in Malta, a home loan can typically be for up to 80% of the value of the property and this can vary depending on circumstances.
Loan repayments generally should not exceed 30% of your gross income and may be repaid over a maximum of 40 years (up until age 65).
A life assurance and building insurance policy to cover the replacement value of the property would also be required.
Upon the signing of the promise of a sale agreement the purchaser would provide a deposit of 10% of the property price. This deposit is left with the Notary for safe keeping. Typically 1% of the property price is also paid upon signing of the promise of sale agreement as part of the total stamp duty of 5%. The remaining 4% of the duty is paid upon the signature of the final deed.
The final deed is entered into by the parties before the promise of sale agreement lapses. If bank financing is required, the searches and approval from bank (if required) would be available generally within two months from the signing of the promise of sale.
The deed of sale is read out to the parties by the notary and if the parties agree to the final terms and conditions the contract will be signed. The balance due is paid to the vendor, together with the remaining tax and stamp duty and the keys of the property are then handed over to the purchaser.
The notary will then register the contract at the public registry.
A Condominium is a building or complex in which units of property, such as apartments, are owned by individuals and common parts of the property, such as the grounds, lifts and building structure, are owned jointly by the unit owners.
The law requires that every block is registered as a condominium and administered by an administrator. An administrator should be appointed by a majority during a condominium meeting and the maintenance of the common areas should then be administered by the appointed administrator.
You should ensure that you have a full understanding of the condominium changes and also have a copy of the condominium statute when acquiring a property having parts of condominium ownership.
|Maltese and EU Citizens - both with 5 years continuous residence in Malta||Maltese and EU Citizens - without 5 years continuous residence in Malta||Non-Maltese and Non-EU citizens|
|Primary Residence||No restrictions - No need to apply||No restrictions - No need to apply||Prior authorisation is required*|
|Secondary Residence or any other immovable property||No restrictions - No need to apply||Prior authorisation is required*||Prior authorisation is required*|
|Property in a Special Designated Area**||No prior authorisation is required and no limit||No prior authorisation is required and no limit||No prior authorisation is required and no limit|
|Immovable Property required for the person's business activities' or supply of services by such person||No prior authorisation is required and no limit||No prior authorisation is required and no limit||No permit granted unless required for an industrial or touristic project or as a contributor to the development of the economy of Malta|
* A permit will not be granted if applicant has already acquired immovable property in Malta – an exception however lies with 'Special Designated Areas'
** The Special Designated Areas are the following:
The purchased property must be intended for one of the following:
1. Personal residential use of the applicant exclusively;
2. Other purposes approved by Government;
3. An approved industrial or touristic project;
4. Any other project or purpose which is considered to contribute to the development of the Maltese economy.
If the property is sold within 12 years from date of acquisition, the vendor has the option to choose to be taxed either;
1. a capital gains tax based on gains realised after taking into consideration the cost of purchase and sale, as well as any improvements carried out on the property at 35%; or
2. a final withholding tax equivalent to 12% of the sale price of the immovable property.
If the property has been owned by the vendor for a period exceeding 5 years, capital gains tax is charged at a final withholding tax rate of 12% of the sale price of the immovable property.
Capital gains tax is not charged when the property being transferred has been the vendor’s own residence for at least 3 consecutive years immediately preceding the date of transfer and has been disposed of within 12 months of vacating the property.
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