The unveiling of Budget 2024 on October 30, 2023, by the Minister for Finance and Employment brings forth significant changes poised to impact the real estate landscape in the Maltese islands in the coming year. In this comprehensive exploration, we delve into the Malta Budget 2024 Real Estate Highlights shaping the property market and influencing potential buyers and investors.
1. Incentives for Property Buyers in Malta and Gozo
First-time property buyers continue to be a focal point in Malta’s budgetary plans, with an annual government grant of €1,000 extended for ten years. This strategic initiative aims to facilitate entry into the property market, especially considering the notable surge in property prices over recent years.
All property purchasers, not limited to first-time buyers, enjoy income tax and stamp duty exemptions on the first €750,000 of the property’s value or consideration. To qualify, the property must meet specific criteria, including being vacant for a continuous seven years and situated in an Urban Conservation Area (UCA). This incentive encourages property acquisition in historically significant areas or properties contributing to the preservation of Malta’s architectural heritage.
2. Property Restoration Schemes for Homeowners in Malta and Gozo
Preserving Malta’s cultural heritage remains a priority, evident in the extension of incentives for homeowners of qualifying properties. For an additional year, properties meeting the criteria of being constructed for 20 years or more, vacant for seven continuous years, and situated in a UCA, benefit from a VAT refund on restoration expenses. This includes costs such as construction materials, rental equipment, and administrative expenses.
First-time buyers of a UCA or vacant property in Gozo receive an added incentive with an extra grant of €10,000, totaling €40,000. The equivalent grant for similar properties in Malta remains consistent at €15,000. This dual incentive aims to stimulate investment in property restoration projects, fostering the conservation of Malta’s historical buildings.
3. Removal of Tax Incentive for Properties Purchased in Gozo
Budget 2024 marks a shift in the stamp duty rate for property purchases outside a UCA in Gozo. The reduced rate of 2%, introduced in Budget 2023 to stimulate economic activity, will cease on December 31. From January 1, 2024, the stamp duty rate for Gozo properties will revert to the standard 5%. This adjustment aims to address concerns about overdevelopment, particularly in areas sensitive to certain types of property development.
The potential rush of buyers eager to secure properties before the return to the 5% rate by the end of the year is anticipated, adding a dynamic element to the property market in Gozo.
4. Transfers of Rented Properties in Malta and Gozo
A novel proposal in Budget 2024 introduces a Housing Authority scheme benefiting property owners who have leased their properties to the Housing Authority. Property owners opting to transfer these rented properties to their tenants will enjoy a complete removal of capital gains tax and stamp duty on the first €200,000 of the property value. This initiative serves a dual purpose by providing tenants with stability and property owners with an incentive to transfer residential properties efficiently.
5. Real Estate Investment Trusts (REITs) Focus
Budget 2024 outlines the Government’s intention to introduce fiscal incentives applicable to Real Estate Investment Trusts (REITs). The aim is to bolster existing regulations, allowing small investors the opportunity to invest in shares of companies holding a portfolio of rental properties. These companies commit to distributing a minimum of 85% of their profits in dividends annually.
The specific fiscal incentives planned for REITs are yet to be disclosed. However, the proposed measures indicate a commitment to enhancing the real estate investment landscape and opening avenues for smaller investors.
In conclusion, Malta’s Budget 2024 introduces a range of measures designed to influence and shape the real estate market. These incentives not only target first-time buyers but also emphasize the importance of preserving Malta’s architectural heritage and ensuring sustainable property development. The adjustments in tax rates and introduction of new schemes contribute to a dynamic real estate landscape, offering opportunities for both buyers and investors.
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