Guidance Note on the acquisition of residential property in Gozo

The Department of Inland Revenue has issued the following guidelines in relation to the announcement made by the Minister of Finance in the Budget Speech for 2017 relating to the acquisition of residential property in Gozo.  The duty payable on the acquisition of residential property situated in Gozo during the year 2017, will be chargeable […]

Written By ACT Team

On November 15, 2016
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The Department of Inland Revenue has issued the following guidelines in relation to the announcement made by the Minister of Finance in the Budget Speech for 2017 relating to the acquisition of residential property in Gozo. 

The duty payable on the acquisition of residential property situated in Gozo during the year 2017, will be chargeable at the rate of two euro (€2.00) for every one hundred euro (€100.00) or part thereof of the amount or value of the consideration for the transfer of the property or the value of the property, whichever is the higher. 

The above-mentioned reduced rate of duty applies to a transfer of residential property in Gozo when: 

  1. The notice of the promise of sale agreement in relation to such transfer is registered with the Commissioner for Revenue on or after the 18th October 2016 but before the 1st January 2018; 
  2. The final deed in relation to such transfer is registered with the Commissioner for Revenue by the 31st December 2018; 
  3. No relief is claimed under article 32C of the Duty on Documents and Transfers Act.   This relief refers to transfers by a gratuitous title by a person to his descendants in the direct line who acquire immovable property for the purpose of establishing therein or constructing thereon their sole, ordinary residence, wherein no duty is payable on the first €200,000, while the remaining value is charged at the rate of 3.5%. 

The benefit granted under this scheme does not apply to acquisitions of property made for the purpose of demolition and the construction of more than one unit, or to acquisitions of property in the course of a trade or business.  Furthermore, this benefit does not apply to acquisitions made by a body of persons. 

Residential property includes a garage attached to or underlying such residence or a garage situated in the same block of residential apartments of which the residence forms part or a garage of not more than thirty square metres situated within five hundred metres of such residence or block of apartments, and acquired together with such residence on the same deed. 

In the case of a transfer of land, the benefit under this scheme would only apply if one residential unit is to be built thereon. The benefit shall be forfeited in the case of a breach of this condition. 

Promises of Sale made before 18th October 2016

With respect to promise of sale agreements relating to residential properties in Gozo which have been registered with the Commissioner for Revenue before the 18th October 2016 and are either cancelled or expired after the said date, such notices are deemed to have been registered with the Commissioner before the 18th October 2016 if the said properties are: 

  1. transferred to the same person or persons appearing on the said promise of sale which has been cancelled / expired; or
  2. another property forming part of the same project or situated within the same building is transferred to the same person or persons appearing on the said promise of sale which has been cancelled or has expired. 

How can we help?  

For further information, please contact one of the firm’s tax partners, Stephen Balzan on [email protected] or Elaine Camilleri [email protected]. ACT can help you understand the changes to the tax rules and how these can impact your business.  

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on [email protected].