Buying property in Malta may seem to be a rather complex process initially so one has to know where the law stands in this respect. First of all it is important to confirm that the property being purchased is in a development zone with full permits and that there are no outstanding issues regarding its location.
Secondly one has to go through the process of the promise of sale agreement before purchasing a property. This involves the drawing up of a pre-contract where a percentage of the property price (usually 10 per cent) is paid to the notary who keeps it until the actual sale is made. Here it is important that all documentation is checked properly and that all property plans are authenticated. A 1% Stamp Duty is also payable at this juncture.
After a pre-arranged period of time, the contract to purchase the property is made where the rest of the balance is paid in the presence of the notary and if a loan is taken up to purchase the said property, at the bank. Here it is essential once again to confirm that the property documents are correct and that all dues are paid. Tax is charged at a rate of 7 percent on the profit being made by the seller or alternatively at a rate of 12 per cent on the full value of the property, this is in accordance with the new Capital Gains tax regime.
Foreigners have some benefits when purchasing property in Malta and these include the following: A reduced rate of tax when purchasing property although the minimum spend has risen from EUR 93,000 to EUR 120,000. The rate of tax is around 5 per cent and there are other advantages including easier residency status if one has a property in Malta.
Legal issues are important in anything but in property they are doubly important as any problem will probably be solved far easier if all the paperwork is correct. Property is a sensitive issue and with large sums of money involved, the exact nature of the legal documentation is rather crucial.