What Costs Can You Expect to Pay When Buying a Home in Malta?
Isabella Zammit, Friday, 15 November 2013
This article is part of a series of 8 articles about buying property in Malta. The other articles in the series cover the following topics:
The cost of buying a property in Malta is higher than in a lot of countries due to the lack of homes. This country is a small island and there’s only so much space for high-quality builds. Both buyer and seller can expect to pay a number of fees when they buy a property. Here are the main ones you’ll have to pay.
The Stamp Duty
The stamp duty is the main tax buyers will pay. It’s a total of 5% on the total value of the property, or the purchasing price if this is higher. As an EU citizen, you will be able to pay the reduced rate of 3.5% in stamp duty on the first 116,500 Euros; this figure is subject to change.
You pay your first 1% of stamp duty when you sign the preliminary contracts. This is the contract you sign if you’re committed to buying the property, and if the seller is also committed to selling the property. The additional 4% of stamp duty applies once you sign the final contract and the property officially becomes yours.
The seller must also pay a stamp duty. This is deposited with the Inland Revenue by the notary and is 7% of the total value of the property.
Notary Fee
The notary fee is another fee paid by the buyer. You need a notary to apply to the Ministry of Finance for a permit. Your notary will also make sure everything is in order by confirming the seller is the real owner of the property.
Generally, you can expect to pay 1% of the property’s value in the form of a fee. This might differ slightly depending on who you employ, but this is the industry standard in Malta.
Architect Fees
You should always employ an architect to make sure the property isn’t breaking any laws. Contrary to what many people think, it’s not the duty of the notary to check if the property is legal. Many buyers have received an enforcement notice years down the line because their property didn’t have the correct permits.
You could quite easily lose your house if it breaches building regulations. Architects generally charge a flat fee. This fee depends entirely on the architect, though.
Capital Gains Tax
Capital gains tax is a tax incurred by sellers who sell their properties within five years of owning it. This applies because it’s now considered an investment not a residential property. Sellers who wait longer than five years to sell won’t have to pay capital gains tax.
The current tax system means you have to pay a flat rate of 12% of the total market value of the property. Alternatively, this can be determined by a progressive rate up to 35%. If you meet certain conditions, you can pay capital gains under the old tax system, which charges just 7% in capital gains tax.
Registration, Permits, and Fees
You need to register as the permanent owner of this property. It’s charged at a flat rate based on the property’s value. It doesn’t cost a great deal to do this. You’ll likely pay less than a hundred Euros, unless you’re buying a particularly expensive property. For example, every additional 23,293.73 Euros after 93,174.94 Euros upgrades the amount you pay for registration by 9.32 Euros.
Real Estate Fees
Both the seller and buyer must cover part of the commission for the estate agent. The seller must pay a total of 3.5% of the property’s value in commission. This only applies if the estate agent was a Registered Real Estate Agency. The commission goes up to 5% for an agent not using a sole- agency agreement.
The best deal for a seller is if they found a buyer through a private broker. The fee is only 1% here.
Buyers pay 1% of the total property value in commission if they used a private agent. If they found a property through a Registered Real Estate Agency they pay nothing at all.
Every fee given in this section is subject to VAT. As of this writing, the VAT rate in Malta is 18%.
The Different Agreements
The sole-agency agreement plays a significant role in how much buyers and sellers pay in commission. Let’s take a look at the two types of agency and what they mean.
This article is part of a series of 8 articles about buying property in Malta. The other articles in the series cover the following topics:
The cost of buying a property in Malta is higher than in a lot of countries due to the lack of homes. This country is a small island and there’s only so much space for high-quality builds. Both buyer and seller can expect to pay a number of fees when they buy a property. Here are the main ones you’ll have to pay.
The Stamp Duty
The stamp duty is the main tax buyers will pay. It’s a total of 5% on the total value of the property, or the purchasing price if this is higher. As an EU citizen, you will be able to pay the reduced rate of 3.5% in stamp duty on the first 116,500 Euros; this figure is subject to change.
You pay your first 1% of stamp duty when you sign the preliminary contracts. This is the contract you sign if you’re committed to buying the property, and if the seller is also committed to selling the property. The additional 4% of stamp duty applies once you sign the final contract and the property officially becomes yours.
The seller must also pay a stamp duty. This is deposited with the Inland Revenue by the notary and is 7% of the total value of the property.
Notary Fee
The notary fee is another fee paid by the buyer. You need a notary to apply to the Ministry of Finance for a permit. Your notary will also make sure everything is in order by confirming the seller is the real owner of the property.
Generally, you can expect to pay 1% of the property’s value in the form of a fee. This might differ slightly depending on who you employ, but this is the industry standard in Malta.
Architect Fees
You should always employ an architect to make sure the property isn’t breaking any laws. Contrary to what many people think, it’s not the duty of the notary to check if the property is legal. Many buyers have received an enforcement notice years down the line because their property didn’t have the correct permits.
You could quite easily lose your house if it breaches building regulations. Architects generally charge a flat fee. This fee depends entirely on the architect, though.
Capital Gains Tax
Capital gains tax is a tax incurred by sellers who sell their properties within five years of owning it. This applies because it’s now considered an investment not a residential property. Sellers who wait longer than five years to sell won’t have to pay capital gains tax.
The current tax system means you have to pay a flat rate of 12% of the total market value of the property. Alternatively, this can be determined by a progressive rate up to 35%. If you meet certain conditions, you can pay capital gains under the old tax system, which charges just 7% in capital gains tax.
Registration, Permits, and Fees
You need to register as the permanent owner of this property. It’s charged at a flat rate based on the property’s value. It doesn’t cost a great deal to do this. You’ll likely pay less than a hundred Euros, unless you’re buying a particularly expensive property. For example, every additional 23,293.73 Euros after 93,174.94 Euros upgrades the amount you pay for registration by 9.32 Euros.
Real Estate Fees
Both the seller and buyer must cover part of the commission for the estate agent. The seller must pay a total of 3.5% of the property’s value in commission. This only applies if the estate agent was a Registered Real Estate Agency. The commission goes up to 5% for an agent not using a sole- agency agreement.
The best deal for a seller is if they found a buyer through a private broker. The fee is only 1% here.
Buyers pay 1% of the total property value in commission if they used a private agent. If they found a property through a Registered Real Estate Agency they pay nothing at all.
Every fee given in this section is subject to VAT. As of this writing, the VAT rate in Malta is 18%.
The Different Agreements
The sole-agency agreement plays a significant role in how much buyers and sellers pay in commission. Let’s take a look at the two types of agency and what they mean.
- An open agency is where a property is advertised on the general market. You’ll be able to find the same property advertised with multiple competing estate agents. If you’ve seen a property with one agent, you aren’t allowed to go to another agent for a viewing of the same property.
- A sole agency offers a lower rate of commission, but it might take longer to facilitate a purchase. Properties are advertised with only a single agent.
All types of property for sale in Malta by private sellers and estate agents. Find your perfect house or apartment in St. Paul’s Bay, Bugibba or Qawra. Or in Valletta and Mosta in the north of Malta
We talk about the buying process from start to finish in Malta. This is the only guide you need to find out how to search for a house and the
professionals you need to help you through the purchase. It also explains some of the complicated legal rulings you might have to deal with.
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