Malta Budget 2016 extended the scheme for the relief from duty for First Time Buyers. Through the First Time Buyer Scheme, purchasers will save up to a maximum of Eur 5,000 when purchasing their first residential property.
On the 12th October 2015, the Government presented its fourth budget of the legislature to Parliament. The Minister of Finance Edward Scicluna highlighted the success of the previous budget which provided the foundation for further reforms in this year`s budget. Malta Budget 2016 offers a number of fiscal incentives concerning the local property market.
First Time Buyer Scheme: Extended Period
Malta Budget 2016 extended the First Time Buyer scheme, which had expired on the 30th June 2015, to another term from 1st July 2015 until 31st December 2016. The First Time Buyer Scheme will apply retrospectively i.e. transferees who entered into contracts after 1st July 2015 will be eligible to apply for a refund.
Following the above declarations, on 16th October 2015, the Inland Revenue Department issued a set of guidelines on the First Time Buyer scheme.
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
- 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 2016.
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.
- 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 2016.
Final Deed of Purchase on or after 1st July 2015
First Time Buyer who acquired the property on or after 1st July 2015, purchasers shall be eligible for a refund of the duty paid on the first Eur 150,000 of the aggregate value of the consideration paid, or any proportionate amount, paid on the deed of acquisition.
Provided that 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.
