After you have found the right property, viewed it, and your offer has been accepted by the seller, the process of purchasing the property begins.
The Preliminary Agreement a.k.a Promise of Sale (konvenju in Maltese)
This document is drawn up by a notary and sets down the terms of the sale, which include:
- Ground rent (if any)
- Payment terms
- Any works to be undertaken by the owner
- Any extras included in the price, such as furniture
- Date of the final contract (usually 3 months after the Promise of Sale)
- and any additional terms
At this point, 10% of the purchase price is left with the notary or agent as a deposit. A 1% provisional duty (part of the total 5% stamp duty) is payable on the value of the property.
Once this document is signed, the notary will carry out searches on the history of the property to ensure that it can be transferred freely.
Final Contract of Sale
This document is drawn up by the buyer’s notary. Once all terms set down in the Promise of Sale have been fulfilled, the parties get together to sign the final deed of sale. The balance of the purchase price is paid to the vendor, and the balance on the stamp duty is due, and the notary’s fees are also paid. The keys to the property are handed to the new owner, and the notary registers the contract of sale at the public registry.
When purchasing property as a foreigner, you will need the services of trusted professionals to get the process done correctly. Choosing the right professionals will save you time and money, while also ensuring you don’t find problems down the line.
Will inspect the property and make sure there are no irregularities, structural issues, and that everything is up to standard. Your architect will also be able to provide you with a valuation of the property.
Your notary will draw up the contract and make sure that the seller is legally allowed to transfer the property, and that there is no obligation upon it. The notary will also register the sale with the Public Registry.
Will help you to find the right property and negotiate the price with the seller. Your agent will also advise you on how to go about the legal obligations involved and can suggest other professionals.
Energy Performance Certificate
When buying property in Malta, the law requires that the seller presents an energy performance certificate to the buyer. This document informs the buyer about the energy performance of a building. Certificates are prepared by a qualified assessor who is registered with the Building Regulation Office. The certificate is valid for 10 years unless there are significant changes made to the building.
Tax Exemptions for Expats
Residents of Malta are exempt from tax on foreign-sourced income not remitted to Malta. They are also exempt from tax on any foreign-sourced capital gains whether remitted to Malta or not. Permanent residents are taxed at a rate of 15% on remitted income.
Acquisition of Immovable Property (AIP) Permit
If an EU citizen is purchasing property in Malta as their primary residence, they do not need an AIP permit.
If an EU citizen has resided in Malta for more than 5 years, then they will not require an AIP permit.
If an EU citizen is purchasing property in Malta as a second home (and therefore not as a primary residence), then they will require an AIP permit, unless they have resided in Malta for more than 5 years.
The minimum property values are:
- Flat/Maisonette: €136,972
- Any other property: €236,582
These values were updated in August 2020, however, they may change according to the Property Price Index.
A fee of €233 is charged per permit.
The permit is usually issued within 35 days.
Special Designated Areas (SDAs)
When buying property in an SDA, the AIP permit is not necessary. Anyone may buy property in Malta within special designated areas, without restrictions or permits.
The current special designated areas are:
- Portomaso Development, St. Julians, MaltaTigné Point, Tigné, Malta
- Tas-Sellum Residence, Mellieha, Malta
- Madliena Village Complex, Malta
- SmartCity, Malta
- Fort Cambridge Zone, Tignè, Malta
- Ta’ Monita Residence, Marsascala, Malta
- Pendergardens, St. Julians, Malta
- St Angelo Mansions, Vittoriosa
- Vista Point, Marsalforn, Gozo
- Fort Chambray, Ghajnsielem, Gozo
- Kempinski Residences, San Lawrenz, Gozo
- Stamp duty 5%*
- Notarial fee around 1%
- Searches (the cost of searches varies on a case-by-case basis)
- AIP (where applicable) €233 plus professional fees for an accountant, auditor, lawyer, etc.
- Recognition fee equivalent to one year’s ground rent
(only applicable to properties subject to ground rent)
*Some reductions may apply depending on the purpose of the purchase.Real estate agency fees are the responsibility of the vendor.