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Improved Property Valuation System in Malta

Written by: Bridgewest

Improved-Property-Valuation-System-in-MaltaMaltese property valuation has recently changed thus enabling sellers and buyers to save time and money. If until now the process meant that an Inland Revenue Department (IRD) architect to value the property, the new reform allows the buyer to select the architect performing property valuation.

What was the old valuation process for Maltese properties?

The old property valuation procedure implied an architect sent by the tax authorities in order to appraise the property’s value which led to significant delays due to the fact that there were only a few authorized Inland Revenue Department architects and the valuation was thought to be subjective. Moreover, the valuation proceeding would be done long after the property had been purchased.

The old property valuation system would also mean new owners had to obtain another appraisal from the bank they concluded the loan contract with. Also, if major differences between the agreed property price and the IRD valuation price were to be found, the vendor would have been subject to a fine for underdeclaring the real price of the property.

The new valuation system when buying property in Malta

Replacing the old valuation proceedings means that a new owner can select the bank’s architect to come and value the property to be bought. This procedure will mean saving time and money, as only one valuation will be performed and the stamp duty will be significantly reduced as it will only be paid on the sale of the property.

However, the IRD will still analyze any valuation report that does not respect the Government’s provisions. It is also possible for seller and buyer to agree on the valuation system to be implemented when drafting the sale-purchase contract, meaning they can select the old valuation system within the first six months after concluding the contract.

The Finance Minister stated that consultations with the Malta Developer’s Association, Chamber of Architects and the Maltese Notarial Council had taken place before deciding the implementation of this new system. The new valuation procedure is available for any type of real estate property transfer.

What are the benefits of the new property valuation system in Malta?

The new valuation system comes with benefits for first-time buyers of a property in Malta, as the first three hundred of them will receive a 2.5% subsidy on interest rates for the first eight years. The stamp duty has been increased from 116.469 euro to 150,000 euro meaning buyers are able to save 1.5% of the 5% stamp duty. Also, those inheriting a property, as a donation, are no longer subject to the 5% stamp duty. The period for choosing to delay the payment of the capital gains tax on property transfer has been extended from 7 to 12 years now. A reduced stamp duty rate of only 2% is applied to those wanting to purchase a property outside an Urban Conservation Area for restoration or development scopes.

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