A promise of sale is the first step towards becoming the owner of a property. It is the agreement signed before a Lawyer or a Notary Public that legally binds both the prospective buyer and the prospective seller. This agreement also specify a fixed period of time, as well as any agreed terms and conditions by the time the property is officially transferred from the seller to the buyer. The promise of sale needs to be registered with the Inland Revenue Department within 21 days since being signed.
If both parties wish to extend the promise of sale, a new agreement must be signed. This agreement will refer to the original promise of sale and agree to extend the validity of that promise of sale to a later date. This extension needs to be registered with the Inland Revenue Department within 21 days since being signed.
Notaries in Malta are publicly appointed officials usually chosen by the buyer and responsible for conducting all the necessary due diligence to make sure there are no issues with the property or the contract.
The notary fee is usually 1% of the purchase price, although this fee may vary if the property title requires deeper research.
Capital Gains is a tax that applies to the sale of property. Capital gains earned when the property was owned for less than seven years can be taxed in two ways: at a flat rate of 12% on the selling price or at progressive rates under the old system.
In Malta, the stamp duty is always paid by the buyer. With the exception in some cases where the property is donated by the parents in favour of their children and others similar cases, stamp duty is generally paid at rate of 5%. However, if one is purchasing a property with the intention to reside in it and make it his/her sole, ordinary residence, he/she will pay 3.5% on the first €150,000, and 5% on the rest of price. People who will be purchasing a property for the first time with the intention of moving into it as their residence will NOT pay any stamp duty (the 3.5% mentioned above) on the first €150,000 of the price.