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First Time Buyers Scheme

By ZPAZEZ | 28 June 2018

Currently Active – First Time Buyers Scheme

The 2018 Malta budget has been once again generous in favour of those prospective buyers of immovable property. The first-time buyers' scheme has been re-launched whereby prospective first-time buyers are fully exempted from paying stamp duty which is normally charged at 3.5% on the first €150,000 of the value of property. The full rate of 5% is then payable on the balance in value.

It is noteworthy to point that the scheme would apply to property which shall constitute the ordinary residence of the prospective buyers. There is no limitation whatsoever on the value of or type property as long as the prospective buyers would then declare at the time of writing the contract that the property which is acquired will serve solely as their residence. 

First Time Buyer Scheme: Inland Revenue Department Guidelines 

General Terms and Conditions

The First Time Buyers Scheme applies to transfers of property, which qualify for exemption from duty under article 32 (4)(a) of the Duty on Documents and Transfers Act. Therefore, the scheme applies in cases where the purchasers do not require a permit by the Minister for the purposes of the Immoveable Property (Acquisition by Non-Resident) Act and who are acquiring the property inter vivos for the purpose of establishing therein or constructing thereon their sole, ordinary residence.

In order for the purchasers to benefit from the First Time Buyer Scheme, the property must be their first immoveable property acquired inter vivos. The notary, who receives any deed of such a transfer, shall include in the deed a written declaration proving that the property in question is the first immoveable property acquired inter vivos by the purchasers. The notary shall warn the purchasers of the importance of the truthfulness of such declaration.

Provided that the above conditions are satisfied, no duty shall be chargeable on the first Eur 150,000 of the aggregate value of the consideration paid for the acquisition of such property.

The First Time Buyer Scheme does not apply to any transfer of property where a notice of a promise of sale or transfer relating to such property has been given to the Commissioner in accordance with the provisions of article 3 (6) of the Duty on Documents and Transfers Act or of rules made under that Act either before the 1st July 2013.

Promise of Sale Agreements

 I) Promise of Sale Agreement Registered on or after 1st July 2015.

Purchasers shall be eligible to apply to the Inland Revenue Department for a refund of the provisional duty paid on the first Eur 150,000 of the aggregate value of the consideration paid, or any proportionate amount, after publication and registration of the final deed of purchase. This provided that the final deed of purchase is to be signed by not later than 31st December 2018.

In the application for refund, the purchaser needs to include a declaration that the property in question is his/her first immoveable property acquired inter vivos and that the property is being purchased for the purposes of establishing therein his/her sole and ordinary residence.

II) Promise of Sale Agreement Registered before 1st July 2015

Purchasers will still be eligible for refund on the first Eur 150,000 of the aggregate value of the consideration paid for the acquisition, provided that the final deed of purchase is signed by not later than 31st December 2018.

The application for refund includes a declaration of the Purchaser that this is the first immovable property acquired inter vivos by such person and that the property is to be used as the sole ordinary residence of the purchaser.

Original Concession – Pre-First Time Buyers Scheme

Before the First Time Buyers Scheme, the following scheme was in pace. This concession will be re-activated once the temporary First Time Buyers Scheme is over, currently the 31st of December 2015. In the case where the property being purchased is to be the main residence and no other property in Malta or Gozo results to be under the name of the buyer(s) in question, then a special concession is made whereby the first €116,468.67 are subject to a discounted rate of 3.5%. The remaining balance will be subject to the normal rate of 5%. This concession is applicable only to EU citizens taking up residence in Malta.

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