Non Maltese nationals require an AIP (Acquisition of immovable property by a non-resident) permit to be issued by the local authorities prior to purchasing a property in Malta. This permit seeks to ensure that the purchaser is a person of good standing and is obtained by the notary once the preliminary agreement has been signed. This restriction does not apply to properties located in areas termed Special Designated Areas or to EU citizens when purchasing property which is to serve as their primary residence.
Where one of the spouses is an EU citizen and the other spouse is a non-EU citizen, both can likewise benefit from the exemption outlined above and acquire property without the necessity of obtaining an AIP permit, provided the acquisition is being made to establish therein their primary residence.
In the event that an AIP permit, the property must satisfy a certain minimum value as follows:
- €136,972 for apartments and maisonettes and
- €236,582 for villas, townhouses and other property. These values are index-linked and thus may be subject to revision annually.
Latest update (June 2020):
All Non-EU nationals holding LONG-TERM RESIDENT STATUS in Malta, do not require an AIP and are free to purchase one or more properties of their choice. Successful applicants can now benefit from all the Government concessions which an EU member can benefit from in relation to reductions in stamp duty as well as property tax (refer to Buying procedures local for a guide to acquisition tax).
Special designated Areas
As mentioned above a property situated in what is termed as a Special Designated Areas (SDA) does not require an AIP permit when acquired by a foreign national and this irrespective of whether that person is an EU national or not.
Under normal circumstances a foreign national may only own one property in Malta and Gozo however, this condition does not apply when the property is situated in an SDA.
Purchasing a property within an SDA provides certain benefits to foreign nationals, namely:
- the option to purchase an unlimited number of units under one name;
- the option to rent out to third parties;
- no requirement for an AIP permit
Duties and Taxes
Stamp duty: When acquiring a property, the purchaser is to settle stamp duty fees amounting up to a maximum of 5% of the purchase price. This fee is paid in two stages being:
- 1% of the purchase price is paid to the Notary on signing of the preliminary agreement. This fee will be passed on to the Inland Revenue and a subsequent receipt will be issued confirming payment.
- The balance of 4% of the purchase price is to be paid on the date of the final deed and handed over to the Notary for onward registration with the Inland Revenue. A full receipt will be issued by the IR Commissioner once the funds have cleared.
It is important to note that Stamp duty is only charged on Immovable Property. In the event, that the property being sold includes furniture and fittings these may be quoted separately in the final deed of sale. Therefore, no Stamp Duty is payable on any movable items (furniture and fittings) being transferred together with the immovable property.
When the property being purchased is to be used as purchaser’s ordinary place of residence, stamp duty is charged at:
- 3.5% on the first € 150,000 of the purchase price and
- 5% on any amount over €150,000.
- However, for any other property purchase, Stamp Duty is charged at 5% on the total value of the property.
Bank Loans
If you require a bank loan to proceed with the purchase, then once the ‘Promise of Sale’ is signed you should visit the bank and take a copy of the ‘Promise of Sale’ together with any relevant documentation for the application to be processed. It is advisable to hold discussions regarding possible bank finance or home loans with the banks prior to the signing of the ‘Promise of Sale’. Belair Property has very strong connections with all the leading banks and our team can assist you with the obtaining of home loans when necessary. (Note: When a bank loan is being applied for, a clause in the ‘Promise of Sale’ is usually included, where the agreement is subject to bank finance being approved, usually for a limited number of weeks.)