Sales guide

Selling your property

In Malta, the process of selling property is relatively easy and straightforward.

Dhalia’s marketing strategy advertises your property directly to interested buyers. These efforts result in viewings of your property. After securing a viewing request, the consultant will give you a call to arrange a viewing appointment at a date and time that is convenient for you. During the appointment, the consultant will show your property to potential buyers.

The first step is to put the property on the market, ideally listing it with a reputable agent who can guide you on the asking price, and what kind of timeframe you can expect.

Your agent will assist you in identifying a potential buyer and also guide you through the negotiation process. It is important to keep in mind that the actual selling price may be different from the asking price.

The official part of selling a property is signing the Promise of Sale Agreement (also known as Konvenju or Preliminary Agreement). This document is drawn up by a notary and sets down the conditions of sale as well as the price and the period of time before the final contract is signed (usually 3-6 months). At this point, the buyer will set down a sum as a deposit – usually 10% of the price. This sum may either be kept by the notary or as agreed upon between the parties.

The set period of time before the contract allows all parties to carry out any conditions stated in the Promise of Sale. The notary will also perform searches related to the property in order to determine the title.

The final step is signing the Contract. Also known as the Final Deed of Sale, all parties will sign the document prepared by the notary confirming the transfer of ownership. The balance of the price is paid to the seller, and the keys are handed over to the buyer.

Property Transfer Tax

In Malta, the tax charged on the transfer of property is called the Final Withholding Tax.

As a general rule, the final withholding tax charged on the sale of property acquired from 2004 onwards or forming part of a project is 8% on the value of the property. For property acquired before 2004, the tax is charged at a rate of 10%.

Exceptions to the rule

  • When the property is not part of a project, and the property is transferred less than 5 years from the date of acquisition, then the tax shall be 5%.
  • If the property was used as a sole ordinary residence and transferred within 3 years of acquisition, then the final withholding tax is 2% (as long as the transferor does not own any other property at the time of the transfer).
  • Sale of property falling under one of the following categories do not pay any final withholding tax on the first €750,000:
    • The property lies in an Urban Conservation Area (UCA);
    • The property has been built for at least 20 years and has been vacant for at least 7 years prior to the transfer.
    • The property is built in a typical and traditional Maltese style and architecture
  • If a property was acquired through inheritance prior to 25 November 1992, 7% of the transfer value is payable.  If the property was inherited after 24 November 1992, tax is charged on the difference between the transfer value and the acquisition value at a rate of 12%.
  • If the property was acquired by donation more than 5 years prior to the transfer, there are two options. One may either pay the tax at 12% of the difference between the transfer value and the acquisition value or, pay a final withholding tax of 10% or 8% depending on the date of acquisition. If the property was acquired by donation within 5 years from the date of transfer, then the final withholding tax applies.

Exemptions to the final withholding tax

  • When the property is donated to a spouse, descendant, ascendant, spouse of ascendant or descendant, sibling, a descendant of a sibling, or philanthropic institution.
  • When the property has been owned and occupied by the transferor as his residence for at least 3 consecutive years immediately preceding the date of transfer and the property is transferred within 12 months.
  • The property between spouses is transferred as part of a divorce or separation.

Brokerage fees are deductible and should not be included before applying the final withholding tax.

The above is for informative purposes only. Consult your notary to find out your tax situation.